As of Wednesday, July 08, 2015, the Washington Redskins have lost a long-fought batter to maintain its federal trademark registrations covering “REDSKINS.” Back in June of 2014, the United States Patent and Trademark Office (“USPTO”) ruled to cancel the team’s trademark registrations because the names were “disparaging” to American Indians.

Disparagement under Section 2(a) of the Lanham Act

Despite what many people think, not all trademarks are eligible for federal trademark protection. For instance, Section 2(a) of the Lanham Act (17 U.S.C. § 1052) states that a mark shall be refused registration if it “[c]onsists of or comprises . . . matter which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute . . .” According to the five American Indians who brought the cancellation action before the USPTO, the term REDSKINS is not eligible for trademark protection under Section 2(a) of the Lanham Act because it is disparaging.

Cancellation of a Federal Trademark Registration

So what happens when your federal trademark registration gets cancelled? A trademark owner whose registration is canceled loses its exclusive use of the trademark at the federal level, along with other federal benefits. However, because a federal registration does not create a trademark—only use creates a trademark in the United States—cancellation proceedings do not automatically dissolve an owners trademark rights. Said another way, while federal benefits are stripped away, a trademark owner still may have common law rights over its trademark.

Common law trademark rights are based solely on usage, i.e., wherever someone is using a trademark, they will acquire common law rights in that specific geographic area. Essentially, a trademark owner’s common law rights are based solely upon where they have established a marketplace. There can be several unregistered uses of a similar mark, so long as these uses are geographically remote from one another.

Federal trademark rights, on the other hand, are not based on an established marketplace. In fact, a federal registration is akin to having a constructive marketplace over the entire country. Below is a good diagram and explanation to help show the difference between these two sets of rights:

Company A is located in Des Moines, IA. Company A has been in business for 2 years and has an established marketplace that includes the state of Iowa. The yellow represents Company A’s common law trademark rights.

Company A decides to file a federal trademark application after being in business for 2 years, and secures a federal trademark registration. The blue area represents the scope of Company A’s federal trademark rights.

Why the REDSKINS Mark is Not Up For Grabs

 The Washington Redskins have been using its trademark since at least as early as 1967. Throughout this time, it has presumably sold merchandise all over the country, and has been gaining substantial common law rights in combination with its federal rights. Although the federal blanket of rights has been lifted, it’s more likely than not that the Washington Redskins have substantial common law rights that cover much of the country.

So before attempting to commercialize on the fact that the Washington Redskins no longer have federal trademark protection, remember that they may legitimately still have some common law rights to their trademark. What will be interesting to see unfold is whether in a state common law infringement claim, the Washington Redskins will have an issue with a similar state statute relating to “disparaging” or “immoral” trademarks.