The general rule under U.S. trademark law is that the first to use a trademark in U.S. commerce has priority in the mark over other "would-be" users of the same, or confusingly similar, mark. This applies in both common law and as to rights obtained by registration. Priority and ownership of the mark are required elements of a trademark infringement claim.
But, as with most rules, there are exceptions. This includes registrations obtained under the Madrid Protocol, as the Ninth Circuit recognized in Lodestar Anstalt v. Bacardi & Company Limited (April 21, 2022), a case involving competing claims to the marks UNTAMED and UNTAMEABLE for rum products.
The Madrid Protocol enables foreign trademark owners to obtain a U.S. trademark registration without requiring first use of the mark in U.S. commerce, an exception to the traditional “first-to-use” rule. To do so, the foreign applicant must aver to having a bona fide intent-to-use the mark in U.S. commerce at the time it applies for U.S. registration. In this manner, extensions under Madrid are similar to intent-to-use applications filed directly in the U.S. under § 1(b) of the Lanham Act. In either case, the applicant is not required to use the mark before registration. However, unlike § 1(b) applications which cannot issue as registrations until the applicant uses the mark in U.S. commerce, Madrid applicants are not required to use the mark in U.S. commerce prior to registration.
Lichenstein-based Lodestar applied for and obtained a U.S. registration for the mark UNTAMED for rum under Madrid, without using the mark in U.S. commerce. Despite its knowledge of Lodestar's registration, Bacardi began actual use of UNTAMEABLE for rum in U.S. commerce. Lodestar did not use UNTAMED in U.S. commerce until after Bacardi’s use of UNTAMEABLE began. Nevertheless, Lodestar sued Bacardi for trademark infringement, alleging priority in UNTAMED by virtue of its Madrid registration. Bacardi, in turn, alleged that it had priority in UNTAMEABLE by virtue of having actually used the mark in U.S. commerce first. Lodestar addresses an apparent question of first impression. Who has priority in a mark registered in the U.S. under the Madrid Protocol if the senior foreign registrant did not actually use the mark in U.S. commerce before a junior user did?
The Ninth Circuit sided with Lodestar, holding:
[U]nder the Madrid Protocol, . . . a foreign applicant who obtains a registration without showing actual use in the U.S. has a right of priority, as of the relevant “constructive use” date [which here was the filing date of Lodestar’s foreign registration], over another company who first uses the mark in the U.S. . . . And once that registrant begins actually using the mark in the U.S.—and does so even after the competing user has begun using the mark—the registrant may bring an infringement action (subject to any applicable defense) based on that superior right of priority.
While Lodestar won the priority battle, it did not win the infringement war. First, the Ninth Circuit affirmed the district court’s exclusion of certain evidence of Lodestar’s use of UNTAMED, though it did so for a different reason than the district court. Initially, Lodestar only used the UNTAMED word mark in a non-prominent manner on the back label of its The Wild Geese Soldiers & Heroes brand rum:
After Bacardi began use of UNTAMEABLE, Lodestar introduced its “Revolutionary Rum” with prominent, front-label use of UNTAMED as the main brand:
The district court excluded “Revolutionary Rum” from the likelihood of confusion analysis under a bright-line temporal rule excluding any consideration of a senior user’s post-infringement use of the mark on additional goods.
The Ninth Circuit found this categorical rule to be legal error. The rule could not be squared with the Madrid Protocol itself, which grants priority to the foreign registrant even if that registrant does not actually use the mark in commerce until after the alleged infringer began use.
A central purpose of the intent-to-use and Madrid Protocol frameworks is to ensure that a company planning to use a mark does not lose that right to a potential infringer who jumps ahead and actually uses the mark first. . . . It would be fundamentally inconsistent with that purpose to limit the registrant to only those particular uses that it contemplated at the time of its application.
Further, the rule did not account for the “long-understood notion” that trademark owners can expand the use of their mark “even in the face of then-existing competing infringing uses.”
Nevertheless, the Ninth Circuit affirmed exclusion of Lodestar’s post-infringement use on its “Revolutionary Rum” because it did not reflect bona fide use of UNTAMED. “Bona fide” use of a mark means use of the mark in the ordinary course of trade, not merely to reserve a right in a mark. The use must be for genuine commercial reasons, not merely to reserve rights for a lawsuit. But here was “Revolutionary Rum”—the same rum bottled under The Wild Geese Soldiers & Heroes brand—being released in the weeks after Bacardi began using UNTAMEABLE. According to Lodestar’s principal, the rum was conceived in part “to combat Bacardi’s attempts to take over our Untamed mark.” The Ninth Circuit held “the inference is inescapable,” the use of UNTAMED on the "new" rum was not a bona fide use of the mark, but an attempt to reserve rights and provide a basis for a suit against Bacardi.
Finally, while finding minor errors in its likelihood of confusion analysis, the Ninth Circuit affirmed the district court’s conclusion that no reasonable jury could find for Lodestar on its claims. Owing to numerous third-party uses of “untamed” in relation to alcoholic beverages, it agreed that UNTAMED was suggestive rather than arbitrary, but found the district court erred in concluding the mark was weak since “suggestive marks are ‘inherently distinctive’ and entitled to ‘greater protection.’” It agreed with the district court that the different manner in which the marks were encountered by consumers—only on the back label on Lodestar’s rum versus prominently on Bacardi’s rum—weighed against confusion.
This case also involved reverse confusion, where the alleged infringer’s intent plays a prominent role. It found the district court erred in concluding that intent did not weigh in Lodestar’s favor because of Bacardi's "undisputed" knowledge of Lodestar’s UNTAMED mark before use. Nevertheless, on balance of all the likelihood of confusion factors, the Ninth Circuit agreed that Lodestar’s claims failed as a matter of law because there was no likelihood of confusion.
Lodestar serves as an important reminder that for U.S. and foreign registrants alike, applying early for trademark registration—either under the intent-to-use provision of the Lanham Act or the Madrid Protocol—can be very beneficial. Priority is a required element of every trademark infringement claim under U.S. law. The intent-to-use regimes provide the benefit of priority pre-dating actual use of the mark, so long as the registrant has (and can prove) a bona fide intent to use the mark in U.S. commerce at the time it files the application.
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