Franchisor Beware: Registered Trademarks Does Not Mean Impunity from Priority Local Use Challenge
Federal trademark registration is the Holy Grail for companies, especially franchises, looking to expand their footprint and access a national audience. But even though trademark registration confers on owners certain exclusive rights and benefits, such as constructive national notice of use, protects against registration of confusingly similar marks, provides notice of ownership, and enables recovery of statutory and exemplary damages in appropriate cases, it does not extinguish the rights of an owner of a substantially similar mark who has used the mark in commerce prior to registration. This can be especially problematic for growing franchises that have built their business on a recognizable name and charge significant fees for franchisees to use that name in running a local franchise location.
