Background
The history of Burger King offers a clear indication of the advantages of a federally registered trademark. Gene and Betty Hoot bought an ice cream business called the “Frigid Queen” in 1952, and later expanded the business to also include hamburgers. In 1959, they coined the name “Burger King” to reflect the nature of their business. However, their attorney advised them to register the trademark at the state level as opposed to the federal level. In the meantime, Burger King Miami opened its first fast food outlet in Illinois under federal law in 1961. By the time Gene and Betty Hoot went to court to sue Burger King Miami for infringing on their trademark (this was in 1967), the company had already opened some 50 outlets across Illinois. Gene and Betty Hoot lost the case. The court argued that because Burger King Miami had been incorporated under federal registration, the company thus enjoyed nationwide protection, save for the Mattoon area where Gene and Betty Hoot had exclusive rights (an area of about a 20-mile radius).
A key aspect of trademark law that has placed lawmakers in a difficult situation is the issue of geographical scope of protection. Before 1870, individual states were charged with the responsibility of establishing the geographical scope of such protection (Brauneis & Schechter, 2006). By 1905, Congress had already sanctioned legislation that permitted federally recognized marks as a solution to the differing state approaches to the matter (Legal Information Institute, n.d.). The enactment of the Lanham Act in 1948 was also instrumental in restricting the operations of rivals in certain geographical areas.
Reasons why this decision was made
Since Burger King was a registered mark under federal law, this effectively gave the company (in this case, Burger King Miami) exclusive rights to use it in the whole of Illinois, save for the 20-mile radius of the Mattoon area, where the Hoots made use of the trademark, before its utilization by Burger King Miami (the plaintiffs) under federal registration. If only the Hoots had made use of the trademark across Illinois before the plaintiffs had obtained federal registration, this would have in turn afforded them exclusive rights to the trademark, not just in the Mattoon area. Instead, the court granted the Hoots exclusive rights to the use of the trademark over an area of a 20-mile radius where the plaintiff was restricted from opening an establishment. What this appears to suggest is that, unlike state legislation, federal registration is much more powerful (International Trade Association, 2014).
In this case, a state registration only had the mandate over a small area of about a 20-mile radius where the Hoots’ operations were based. In its ruling, the court established that the market where the Hoots operated could be defined by a geographical region of no more than a 20-mile radius. This therefore puts a limitation on the jurisdiction over which Gene and Betty Hoots operated. However, if only a federally registered trademark was in place, no such limitation would have been encountered. If at all the Hoots had obtained a federally registered mark before Burger King (Miami) launched their company, such a trademark would have afforded them bargaining power relative to Burger King (Miami). Consequently, Burger King would have been in a position to open various outlets in Illinois and beyond, as they sought to expand their business operations. However, since this did not happen, the Hoots were confined to a limited geographical area, even as Burger King (Miami) enjoyed the freedom to use the trademark and open up restaurants across Illinois save for the defined area of operation by the Hoots.
Significance of the case in U.S. Trademark law jurisprudence
This case underscores the importance of trademark protection as a means of protecting businesses from unfair competition. This is a celebrated case in U.S. law schools as far as trademark law jurisprudence is concerned (Port, 2010). In this case, the decision of the court has helped to inform intellectual property rights courses taught at American law schools. The case also helped to redefine the Lanham Act which plays an instrumental role in trademark law. The case is also a clear indication that a federal trademark registration will almost always prevail when pitted against a state trademark registration, even in a case whereby the state registrant preceded the federal registrant in using that trademark. Moreover, the case also underlines the court’s limitation in expanding common law rights to other jurisdictions beyond a certain jurisdiction. While the Hoots may have used the trademark first in Illinois, the federal trademark held by Burger King (Miami) was superior to their state trademark registration and hence reveals its weakness.
The issue highlighted in the Burger King case draws a parallel with the claims of infringement of intellectual property that Nike had accused Already, LLC Yums of. Nike had registered this product as their trademark but Yums went ahead to manufacture shoes that bore resemblance to the Air Force 1 shoe line, effectively infringing on Nike's trademark. Yums counterclaimed to revoke Nike’s trademark, arguing that the trademark registration by Nike limited Yum’s capacity to act as a formidable competitor in the manufacture of athletic footwear (Legal Information Institute, 2012). In its ruling, the Supreme Court was meant to establish if it is okay for holders of intellectual property to drop infringement actions and still be immune to defending counterclaims on the same. The decision arrived at, in a similar way to the court's ruling in Burger King, could result in considerable effect on intellectual property litigation.
References
- Brauneis, R., and Schechter, R.E. (2006). Geographic Trademarks and the Protection of Competitor Communication.
- International Trade Association (INTA) 2014.
- State Trademark Registration in the United States.
- Legal Information Institute n.d. Trademark.
- Legal Information Institute (2012). Already, LLC v. Nike, Inc.
- Port, K.L. (2010). The Expansion Trajectory: Trademark Jurisprudence in the Modern Age
