Precedential No. 11: Junior User Awarded All of USA Except Arizona in "3 PALMS" Concurrent Use Battle

In a rare, contested concurrent use proceeding, the Board awarded junior user ABF concurrent use registrations for the three marks shown below, for hotel and motel services, in the entire United States except for the State of Arizona. The Board ruled that although Abbott was the first user of the mark 3 PALMS, his inaction over a considerable time amounted to an abandonment of his right to expand beyond his original trading area. America’s Best Franchising, Inc. v. Abbott, 106 USPQ2d 1540 (TTAB 2013) [precedential].

Applicant ABF provided its services to eight 3 PALMS hotels, one each in California, Georgia, and South Carolina, and five in Florida. It named Roger Abbott as an excepted user to its right to use the mark in commerce. At the time the concurrent use proceeding was commenced, Abbott licensed his 3 PALMS mark to a single hotel in Scottsdale, Arizona. However, he contended that Internet marketing and promotion had necessarily expanded his territory nationwide, or at least to something significantly beyond Arizona.

It was undisputed that Abbott was first to use 3 PALMS in April 2004 in Scottsdale. He has not offered hotels services under that mark outside of the Scottsdale location, but he has made "fairly extensive use of the mark on the Internet." He placed advertisements on prominent search engines and travel-related websites, and in various online travel directories. About half of the hotel's customer are from outside Arizona, and the Internet is the primary tool for generating sales. Abbott claimed that since 2006 he intended to expand his use of 3 PALMS, and in 2007-2009 he made offers or sought loan commitments for eight other hotels. All told, he made 40-50 offers to purchase hotels, but every one was rejected. All of the hotels were in Arizona, New Mexico, or California.

ABF first used its 3 PALMS marks in 2008 in Florida, unaware of Abbott's use. It first learned of Abbott's use in mid-2008. Subsequently, it reached service agreements with hotels in Indiana, South Carolina, Georgia, Michigan, and California.

The Board found that the first condition to issuance of a concurrent use registration was met: ABF adopted its marks in good faith, in its own geographic area of Central Florida, without knowledge of Abbott's prior use in Arizona. Moreover, ABF began use of its mark prior to any trademark filing by Abbott. There remained, then, the question of the registrable rights of each party in the remainder of the United States. 

The second condition is that there be no likelihood of confusion when an appropriate geographic restriction is put in place. Here, the involved services are identical, and they are offered in the same channels of trade - the Internet. The parties' respective marks are somewhat similar (Abbott uses his 3 PALMS mark in standard characters and in the design form shown below).

However, the question is whether confusion may be avoided by a geographic restriction, and the Board answered yes.

First, the word PALMS is a weak formative because it is used by a number of third parties for hotel services. Second, a geographic restriction would make confusion unlikely, especially when purchasers have been conditioned to consider other factors when faced with hotel marks that contain the terms PALM or PALMS. In fact, the Board has often found a geographic restriction sufficient even when the marks and the goods or services are identical or highly similar.

Abbott argued that both parties cater to travelers and, in light of the Internet marketing of the services, the relevant territory is the entire country. The Board disagreed.

Hotel services are by definition rendered in a particular geographic location, even if they are also offered, by the same ultimate source, in other geographic locations under the same mark. In fact, a hotel’s physical location is among its most salient features.... *** Thus consumers, already conditioned to focus less on PALMS and palm trees than other features of the parties’ marks, will also be unlikely to be confused because those searching for an Arizona hotel will not encounter any of ABF’s 3 PALMS hotels.

Because Abbott has not expanded beyond Scottsdale, and because there is no evidence that Abbott's hotel has a reputation beyond Arizona, the fact that both parties advertise online is not enough to result in a likelihood of confusion.

Finally, the Board found that the lack of actual confusion over several years of contemporaneous use is at least somewhat relevant.

Turning to the issue of the appropriate territorial restriction, the Board observed that it was not limited to considering only ABF's actual use prior to Abbott's filing date. Moreover, there is a policy of rewarding those who first seek registration under the Lanham Act, and there is "no bias in favor of the prior user."

The Board found that Abbott, through his inaction, abandoned his right to expand the use of his mark. ABF's activities and expansion throughout most regions of the United States entitled it to the territory it requested, "especially since ABF was the first to seek federal registration."

And so the Board ruled that ABF is entitled to concurrent use registrations for its 3 marks for the entire United States except for Arizona.

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TTABlog comment: The fact that Abbott promoted his hotel on the Internet was given little weight in the geographical calculus, because consumers looking for a hotel are focused on a particular location. But what if the services were not so geographically centered - like hot dog stands.  A hot dog is a hot dog anywhere in the country. In that case, would Internet advertising carry greater weight on the issue of likelihood of confusion? 

And what about a case involving goods rather than services? Is it possible or likely, in this Internet age, that the Board would allow concurrent use registration of trademarks for goods?

Text Copyright John L. Welch 2013.