This post details Denny Esford’s thoughts on the Shake Shack article recently posted. To read the original post, click here.
To begin, if I were Shake Shack’s General Counsel, I might be demanding a full refund of the attorneys’ fees. Just a basic search of Chicken Shack on the USPTO database shows an exact USPTO name registration for the Detroit stores in 1998.
Reverse confusion usually occurs when someone in a small town or area has the same or substantially similar name for a similar product or service, are the first user in commerce, but have never registered the mark at the USPTO or under state law, so they can be missed in a typical trademark search (called a “clearance”). Searches beyond both the USPTO and State databases are ridiculously expensive (on a scale of $50,000 or more versus $5,000 or less) and are usually only undertaken when a large firm is making a national brand launch.
The USPTO allows for “intent to use” trademark applications that do not require use in commerce for up to 36 months. This basically holds your place in line ahead of a subsequent filer of a similar name in a similar class of goods or services. But this does not protect you from someone who was and is using the same or similar name for the same or similar product or service before you filed your “intent to use” application. The best you can hope for is to demonstrate the senior (first) unregistered user is small and without a desire and/or ability expand beyond a limited geographic area. An example, if there was just one Chicken Shack in Detroit run by a Mom and Pop, unless it was unusually famous, someone outside the area would not likely be confused by the same name in a different area of the country. In this case, these guys (Shake Shack) are toast because a USPTO registration presumes an ability to expand throughout the United States that must be overcome by clear evidence.
I learned this doctrine at law school from the horse’s mouth so to speak. We had a guest lecturer from Servicemaster which owns the “Merry Maids” national brand. There was a cleaning lady in Jackson, MS with the same name long before Servicemaster’s use and registration, so they simply decided not to franchise there when they got a cease and desist from the lady’s lawyer. The key thing to remember is that registrations do not create trademark rights, use in commerce does, with the one limited exception of “intent to use” applications if someone’s else’s use begins after the application is filed.