Cognate's Trademark Blog

Delinquent Corporation Wins Common Law Trademark Battle

The next federal case where common law rights were in play is much more recent than our first post. This ruling, which also deserves consideration, just came down in August and requires a little bit of background before we get into the court’s ruling.

The plaintiff (Southern California Darts Association) sued the defendant, a former member of the association (Dino Zaffina) for using their marks to conduct his business. The defendant registered “Southern California Darts Association, Inc.” with the State of California and as a domain name.

The judge ruled in favor of the plaintiff but the defendant appealed, in part, on the grounds that the plaintiff couldn’t sue because the (original) SCDA was a “delinquent corporation” under California’s corporation laws, having been suspended by the state in the 1970s.

Southern California Darts Ass’n v. ZaffinaUnited States Court of Appeals, Ninth Circuit, 762 F.3d 921 (August 11, 2014)

Southern California Darts Association brought a legal action against a former member and the new association he formed under the same name. The plaintiff alleged violations of the Lanham Act (the federal trademark act) under California Business and Professions Code, under common law trademark infringement, and for unfair competition. The United States District Court for the Central District of California entered summary judgment in plaintiff’s favor, and defendant appealed. The federal court of appeals for the 9th circuit affirmed the district court’s entry of summary judgment based on SCDA’s Lanham Act claim, under 15 U.S.C. § 1125(a).

“We hold that unincorporated associations do, indeed, have the capacity to own trademarks. This conclusion is implicit in our decision in Idaho’s High Desert…where we upheld a judgment for trademark infringement in favor of an unincorporated association.  Persuasive authority supports the rule endorsed implicitly in Idaho’s High Desert. The Seventh Circuit has stated that ‘[a]ny person, partnership, corporation, or unincorporated association capable of holding title to personality may acquire the right to a trade mark.’” U.S. Ozone Co. v. U.S. Ozone Co. of Am., 62 F.2d 881, 885 (7th Cir.1932). Other courts have tacitly found that standard trademark law applies to the trademark claims of unincorporated associations.

English translation:

Prior use of a mark creates common law trademark rights. Those rights stand up in court even when that mark is not, and never has been, registered in the U.S. Patent and Trademark Office. Furthermore, your business doesn’t have to be officially incorporated to earn these rights. If you own a trademark, you can own trademark rights through your use of the mark. It doesn’t matter whether you are just an individual, or a partnership, or some other kind of incorporated entity. In fact, this court seems to believe that the fundamental principal of trademark ownership by the first user permits them to own and enforce their trademark rights in a federal court, applying the federal trademark law – even when that company is in poor standing with its state’s government (a “delinquent corporation”).

If you’re using a name to do business, list it now. You’ll help establish a timeline of use for your mark and a make record of what you mark is and how you use it. The court recognizes that you can enforce rights in a common law trademark. While the defendant here knew about the plaintiff’s mark before using it, rights in a common law mark are not limited to a situation where the infringer is doing it on purpose. Someone who uses your name unknowingly can be an infringer. Listing on COGNATE could go a long way to helping you avoid someone else use your mark, whether intentionally as in this court case, or inadvertently.

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