Extending Use Under Trademark Law

An interesting 1st Circuit opinion extended a hotel’s common law trademark into territory encroaching upon an incontestable junior registered mark of a competing hotel.  In the case of Dorpan, S.L. v. Hotel Melià, Inc., Dorpan, a European hotel chain using the brand, Sol Melia, as a registered trademark faced off with the Hotel Melia “HMI” located in Ponce, Puerto Rico.  Dorpan also registered the Melia mark in the United States and opened the Gran Melia hotel in CoCo Beach, Puerto Rico within 80 miles of the Hotel Melia.  Although it had been in existence for over 100 years the Hotel Melia had never registered its trademark and its rights stemmed from common law as the senior user.

The fact that Dorpan had an incontestable registered mark did not foreclose the rights of HMI.  As the Court noted, trademark users may still gain state law rights to use a trademark either through registration with a state government or through use in that state. In fact, Section 15 of the Lanham Act grants federally registered marks the right to exclusive use of the mark only insofar as they do not conflict with any pre-existing rights acquired under state law.  Unlike a retail location, The Court noted that a hotel naturally draws from an extended geographical area.  They also found relevant relevant that a reasonable consumer’s mistaken beliefs about the relationship between the two hotels could cause an injury to HMI’s goodwill and reputation. For example, a reasonable fact finder could conclude that HMI has a valid concern that customers traveling to Puerto Rico who have had a bad experience at Gran Meliá, might impute that bad experience to Hotel Meliá when booking a subsequent trip or influencing others traveling to Puerto Rico.  Therefore, the Court found that use of the competing names within the 80 mile distance could present a likelihood of confusion and remanded the case back to the District Court of Puerto Rico for reconsideration of this issue.

The case illustrates the deference to be shown a senior user, particularly one in the travel industry.  When considering registration of a mark, it is always prudent to check historical use of similar marks that may one day impede brand development.  Before the Internet, searches of this type were expensive and time consuming.  However, with the advent of Google and domain searching techniques, it is much easier to spot these potential conflicts even in international locales.