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Establishing “actual use” standard in service mark infringement cases

October 1, 2021
October / November 2021 IP Newsletter

The U.S. Court of Appeals for the Tenth Circuit recently faulted a lower court for applying the wrong legal standard when determining whether the plaintiff had used the service mark in an infringement case. The result revived a lawsuit over a bank’s trademark for a mobile app.

Virtually identical marks

Erik Underwood registered a service mark in Georgia on “E.R.I.C.A.” for a computer-animated woman who verbally tells the news through cell phone and computer applications. Bank of America Corporation (BofA) owns a registered federal trademark for a mobile banking application known as “ERICA.”

Underwood sued BofA for infringing his mark, and BofA counterclaimed to cancel Underwood’s Georgia registration. The court ruled in BofA’s favor on both claims and Underwood appealed.

The standard to actually use

To acquire a protectable interest in a mark under Section 43(a) of the Lanham Act, a person must make bona fide use of it in commerce. A service mark is used in commerce when: 1) it’s used in the sale or advertising of services, and 2) the services are rendered in commerce.

Actual use in the market to identify and distinguish its services is one way a plaintiff can demonstrate sufficient use to establish a protectable interest. The trial court found that Underwood hadn’t shown actual use because no customers had purchased goods or services offered under the mark, and he hadn’t generated any revenue from the mark. 

The appellate court disagreed with this analysis. A service mark is used, the court said, when the service provider benefits third parties, regardless of its reason for providing services.

The trial court also limited the services at issue to those listed in the Georgia state registration. The appellate court found that it should have considered the entirety of the search engine and personal assistant services Underwood claimed to offer on his website.

To establish a protectable interest based on actual use, the court of appeals said, Underwood needed to establish that:

The trial court failed to consider whether Underwood had done so.

Answer not found

It’s not over yet. The appellate court didn’t rule on whether Underwood had established the necessary evidence, instead returning the case to the district court to address.