The company called Hotel California Baja, LLC has just answered a complaint for trademark infringement filed by Eagles Ltd., the business arm of the iconic group, The Eagles. Hotel California Baja (which I’ll just call “Baja”) found itself in the position of many entrepreneurs who believe they have legal rights to use a name, even when some other bigger, more famous (or in this case very famous) entity claims to have some prior rights. Where to begin?
In a dark L.A. courtroom
Heated words everywhere
Warm smell of infringement
Rising up through the air
The Eagles song Hotel California, from their 1976 album of the same name, has become legendary. Of course the Eagles will have to prove that to the court. (Disclosure: I once successfully defended a suit against The Eagles where we believe they were overly aggressively asserting rights in The Eagles’ domain name and a toll-free number, but with the passage of time, I don’t think that taints my view of this situation.)
But let’s assume that may not be a difficult task. Not surprisingly, they claim to have sold significant amounts of merchandise over the years using the “Hotel California” name, going back many years. But they never got federal registration. What does that mean to a trademark owner’s case?
Actually, not very much. The U.S. federal trademark law goes a very long way to provide protection to trademarks that are proven to have been used in the United States. This is an issue of great interest to many entrepreneurs which may have lacked the revenue or resources to register one or more of their important trademarks (or even some of their subsidiary marks and names). The Eagles’ lawsuit is pending in federal court on the basis of a federal statute that prevents unfair competition and “false designation of origin.” Since the time that the current federal trademark act was implemented back in 1946, the courts have constantly expanded the protection of unregistered trademarks to a degree where an unregistered mark has most (not all) of the very strong protections that are provided to trademark registrations under the federal trademark act. This means that virtually every entrepreneur can assert some kind of trademark rights in its business and product names, even if it has never worked with the U.S. Patent and Trademark Office. So do not fear. You may still have very strong rights.
Down the road in the distance
There’s a simmering fight
The case grew heavy, the complaint was in,
Now we’ll see who is right
Back to the lawsuit…The hotel is actually in Mexico, but the owners are incorporated in California which makes it easier for them to be sued there. The band claims that the hotel plays recordings of The Eagles’ music in the lobby, and sells merchandise calling the hotel “legendary.” The Eagles claim that if Hotel California is legendary, there can only be one source for that legend – the band itself.
Welcome to the Hotel California,
Such a lovely place
There seems to be little doubt that Baja’s actual Hotel California in Mexico has been around since long before the Eagles. As usual, the timeline of who did what, and when, is almost always important. In disputes over trademarks, being the first user of the mark will not guarantee you victory. Being the first user name, for example, of hotel services, does not give you the legal right to use that same name on bicycles, or breakfast cereal. It gives you the right to use the name on hotel services and other services (or even products) which may be very closely related to your hotel services. Many companies new to the world of trademark protection make that mistake.
Sometimes, though rarely, you may own a name like “Hotel California,” and someone else starts their own use after yours in a very famous way, which dwarfs your own use. You may have rights to stop that enterprise. But nothing in the answer that they filed yesterday seems to indicate that the Mexican hotel believes that The Eagles have overtaken their rights. What they do say is that even if The Eagles had some claim against Baja, The Eagles have either acquiesced to Baja’s use, or waited way too long to defend their rights. In trademark law, you cannot sleep on your rights. Once you know there’s an issue, you have to act against it. Baja is represented by a respected trademark law firm. Baja really has disclosed no significant information in its answer to The Eagles’ complaint. The defenses by Baja are intentionally broad at this early stage. A party sued for infringement will almost always claim delay by the plaintiff. Whether they believe this is truly the case, or whether they are just reciting all of the standard types of legal defenses, it is far too soon to tell.
If a court believes that Baja has certain rights, they will have a certain degree of latitude to exploit those rights, even if that exploitation brings them closer to The Eagles band. An entrepreneur finding herself in this situation will always have to ask the question: where can you draw the line?
Sometimes when a small entity gets caught up in the whirlwind of the federal court system – whether right or wrong – they can easily feel like they want to run for the door, and find the passage back to the place they were before. It will be interesting to see how Baja reacts from here.
This post originally appeared on Forbes.