Brief Fact Summary. L’Oreal, S.A. (Defendant) was sued under the Lanham Act for using a mark for its hair products that was already in use.
Synopsis of Rule of Law. Only with active use are consumers allowed to associate a mark with specific goods and notify other firms that the mark is so associated.
The Seventh Circuit put it explicitly: A good faith junior user is one who begins using a mark with no knowledge that someone else is already using it.View Full Point of Law
Issue. Are consumers allowed to associate a mark with specific goods and notify other firms that the mark is so associated with active use only?
Held. (Easterbrook, J.)Â Yes.Â Only active use allows consumers to associate a mark with specific goods and notifies other firms that the mark is so associated.Â ZHD’s (Plaintiff) sales of hair are products were not sufficient as a matter of law to establish national trademark rights at the time L’Oreal (Defendant) put its electric hair colors on the market.Â Plaintiff applied for registration of ZAZU after Defendant had applied to register the mark and had also put its product on the market nationwide.Â Intent to use a mark, like a naked registration, does not establish any rights whatsoever. Whether Defendant may have had any knowledge of Plaintiff’s plans is irrelevant because the mark was not registered for use in conjunction with hair products.Â The district court erred in equating a use sufficient to support registration with a use sufficient to generate nationwide rights in the absence of registration.Â Reversed and remanded.
Dissent. (Cudahy, C.J.)Â Even if ZHD (Plaintiff) did fail to demonstrate more than a de minimis market penetration nationally, at the very least it successfully established exclusive rights within its primary area of operation.Â Plaintiff has achieved market penetration and exclusive rights to the ZAZU mark, at the very least in the Chicago area.Â L’Oreal (Defendant) did not act in good faith since it had prior knowledge of ZHD’s (Plaintiff) use of the mark.
Discussion. The Lanham Act defined a trademark and codified common law protection for trademarks. Congress made several important changes in trademark law in 1989 before this case was decided.Â Prior to 1989, actual use in commerce before registration was a requirement of registration.Â The Trademark Law Revision Act of 1989 adopted an â€œintent to useâ€ registration under Â§ 1 of the Lanham Act.