“First to File” vs. “First to Use” in Trademarks
Trademarks play an important role in protecting brand identity and goodwill, making it utmost important for businesses to secure their trademarks. When it comes to trademark protection and laws, priority rules determine who has the right to use and register a trademark. Across various jurisdictions globally, two fundamental principles govern how trademark rights are established: "first to file" and "first to use." These principles dictate whether ownership of a trademark is determined by the date of application filing or the date of actual commercial use. Each rule has its advantages and disadvantages, so a detailed study of both the rules is of significant importance to protect the brand and proceed with trademark registration.
First to File:
Many countries around the globe follow the principle of “First to file” instead of “First to Use”. That is to say, in such jurisdictions, prior applicant would enjoy superior rights than prior users. This principle is predominantly followed by many countries worldwide.
In these jurisdictions, the date of filing the trademark application becomes crucial in determining priority and ownership. This system incentivizes prompt registration and provides a clear framework for resolving disputes over trademark rights.
Disadvantages of the First to File System:
One of the significant down sides of the “first to file” system is that trade mark squatters manage to secure trade mark registrations (primarily for renowned/ famous/ well known marks) in these jurisdictions and then attempt to sell out the registrations to original/ lawful proprietor. Thus, to avoid such trade mark squatting, it is imperative for businesses (should they have long term plan of expansion in foreign jurisdictions) to secure rights in such countries. Another down side of this rule is that it also creates a “race to the office” that prioritizes speed over legitimate use.
An Illustrative list of countries which follows “first to file” rule is placed below:
Algeria, Anguilla, Argentina, Austria, Belarus, Belize, Benelux, Bolivia, Botswana, Brazil, Chile, China, Colombia, Croatia, Curacao, Czech Republic, Dominican Republic, Ecuador, El Salvador, Estonia, European Union, Finland, France, Germany, Greece, Guatemala, Hungary, Iran, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lithuania, Mexico, Moldova, Montenegro, Nicaragua, Nigeria, Norway, Peru, Philippines, Poland, Qatar, Romania, Russian Federation, Slovenia, South Korea, Spain, Syria, Taiwan, Uganda, Ukraine, United Kingdom, Venezuela, Vietnam, and Zambia
First to Use System:
Under the "first to use" system, trademark rights are granted to the entity that can demonstrate the first commercial use of the mark, regardless of whether they have registered the trademark. Countries such as the United States, Canada, and India follow the “first to use” principle. Approach to this principle can vary; for example, in the United States, trademark rights are primarily established by demonstrating first use in commerce, which can precede formal registration. In India, while registration is important, prior use can be a basis for challenging or opposing trademark applications.
The “first to use” system recognizes the efforts and investments made by businesses in building brand recognition and customer loyalty through commercial activities. It provides protection to those who have established goodwill in the market, even if they have not yet filed for formal registration. The “First to use” rule also allows new businesses to develop their brand, explore the market, and seek registration after establishing the brand, which can be ideal if the business doesn’t work out.
Disadvantages of the First to Use System:
The "first to use" rule has several downsides, including uncertainty in determining who used the mark first, lack of protection outside the local jurisdiction, burdensome proof requirements, and vulnerability to trademark squatting. these issues can lead to disputes and restricted brand expansion.
An Illustrative list of countries which follows “first to use” rule is placed below:
India, Australia, Canada, Costa Rica, Cyprus, Denmark, Fiji, Hong Kong, Iceland, Brunei Darussalam, Ireland, Israel, Jersey, Kenya, Lebanon, Malaysia, Malta, New Zealand, Papua New Guinea, Puerto Rico, Samoa, Singapore, South Africa, Trinidad & Tobago, United States, Uruguay, and Zimbabwe.
Implications and Considerations
The choice between first to file and first to use systems significantly impacts how businesses strategize trademark protection:
Conclusion
In conclusion, the distinction between first to file and first to use systems underscores the importance of strategic planning in trademark protection. Whether prioritizing early registration for certainty or leveraging established commercial presence, businesses must align their trademark strategies with the legal frameworks of relevant jurisdictions. By doing so, they can effectively safeguard their brands and maintain competitive advantage in a global marketplace governed by diverse intellectual property laws.
Disclaimer: This article was first published in the S&A Law Offices - 'Intellectual Property (IP-Tech)' newsletter in August 2024.