In the field of trademarks, an aspect of intellectual property ownership, there are two fundamental principles: first-to-use and first-to-file, which reflect the operation and activity of a country’s intellectual property law system regarding trademarks. In the United States, and other countries, one of these two principles is applied. However, in the US market, the first-to-use principle is relatively unique. Although it is technically based on the first-to-use concept, the US does not strictly adhere to this method but also applies the first-to-file method in their examination and granting process.
Characteristics of the two types of intellectual property registration methods:
- First-to-File principle: According to this principle, intellectual property rights belong to the first person to file a trademark application with the intellectual property office and have it approved and granted protection. This means that even if an individual creates a unique image, brand, logo, or distinctive symbol that they want to register, if they do not file for registration, someone else can register it first and obtain intellectual property rights over that trademark.
- First-to-Use principle: According to this principle, intellectual property rights belong to the first person to use the brand, logo, distinctive symbol, or creative image in commerce, and thereby achieve trademark protection for that asset without necessarily having to register with the intellectual property office.
The first-to-use principle
When a country applies the first-to-use principle, the trademark department of that country’s intellectual property office will operate based on the priority principle for the party that first used that trademark in commerce. This means that in a conflict between two parties regarding ownership rights to a trademark, the rights to that trademark will be prioritized and granted to the party that can prove they used that trademark in commerce first.
In some cases, even if another party has already registered the trademark and been granted protection, if another party can prove that they used that trademark first in commerce and achieved a high level of recognition among customers and consumers in a certain market, the protection certificate for that trademark can be canceled.
The first-to-use principle is not limited to trademarks; it also applies to works protected by copyright and related rights. In fact, disputes over first use mainly occur with these types of assets, such as poems, songs, melodies, paintings, and photographs.
First-to-use principle in the US market
As the world’s largest economy, the United States is an ideal destination for many businesses, organizations, and individuals seeking stable development with vast opportunities and potential. The first-to-use principle in the United States has been in existence since the early days of the country, contributing significantly to the development of US intellectual property law.
However, despite its long history, the first-to-use principle has many limitations, which are particularly evident at present and even more so when it was first enacted.
The most notable limitation is the requirement to prove prior use of the trademark by one of the disputing parties. In the 21st century, when information and communication systems are extensive, there are still cases where a trademark or brand hangs on a small store without any evidence other than the store owner’s statement that the sign has been there for decades.
Due to the difficulty of proving prior use of a trademark in commerce, the first-to-use principle in the United States is not accepted or applied by other countries. Instead, those countries apply the first-to-file principle, which promotes fairness, transparency in business, competition, and dispute resolution.
Especially in the United States, the first-to-use principle in trademarks is mainly symbolic due to the reasons mentioned above. The U.S. trademark office, USPTO, also applies a combination of the first-to-use and first-to-file principles in its system, meaning that whoever registers a trademark first will have rights over that trademark.
Clearly, the simultaneous application of both principles creates unresolved conflicts. For example, if Party A starts using a trademark in January 2023 but does not register it, and Party B files an application in March, establishes a priority date, and gets the trademark registered and publicly published in the U.S. trademark system. Upon receiving this information, Party A realizes the importance of trademark protection and claims that Party B has no rights over the trademark, requesting that the USPTO cancel the registered trademark’s validity because they have established and have sufficient evidence that they used the trademark before (prior use) from January 2023.
Upon confirming Party A’s evidence, because the first-to-use principle is the primary principle applied in the United States’ filing system, the USPTO will cancel the trademark’s validity of Party B and acknowledge Party A as the owner of the trademark. Throughout history, the USPTO has made numerous rulings canceling trademarks of entities that failed to prove their registered trademarks were “used in commerce” prior to registration, under pressure from other parties with verified evidence.
The litigation process and dispute resolution in a country following the first-to-use principle are complex, often lengthy, and financially burdensome for both parties, and most importantly, not effective. So why is this principle still maintained in the United States? Why hasn’t it changed?
Aware of this problem yet changing a deeply-rooted system in the United States is not simple. Furthermore, trademarks, in general, are not considered particularly important in the United States, and thus, changing the system is given low priority as disputes like the example above, although they exist, are relatively rare. Disputes over first use, prior use usually involve copyright owners, and proving the process of making, creating songs, photographs, etc., is often simpler.
However, it should be noted that the United States is not resistant to change, and the country is just temporarily prioritizing the official change of this system under other certain issues. A prominent example is that in 2013, the United States officially abolished the “First-to-invent” mechanism, which applied to inventions, scientific creativity, and innovation.
The United States, as a science and technology powerhouse, heavily relies on inventions. In order to grant patent protection, inventors need to register their inventions with the USPTO. However, under the first-to-invent principle, if a dispute arises, resolving that dispute can be even more time-consuming and costly compared to trademark disputes.
Therefore, on March 16, 2013, the United States abolished the first-to-invent principle and transitioned to the first-inventor-to-file principle and has been applying it to the present.
Countries applying the first-to-use principle in trademarks
Some countries that still apply the first-to-use principle in trademarks include: Aruba, Australia, Brunei Darussalam, Canada, Costa Rica, Cyprus, Denmark, Fiji, Hong Kong, Iceland, India, Ireland, Israel, Jersey, Kenya, Lebanon, Malawi, Malaysia, Malta, New Zealand, Papua New Guinea, Puerto Rico, Samoa, Singapore, South Africa, Swaziland, Trinidad & Tobago, United States, Uruguay, Zimbabwe.
In comparison to first-to-file principle
In reality, it is common for ideas to unintentionally overlap or be similar, leading to confusion. This often occurs in trademark protection when entities tend to choose names that are their own personal names, family names, or related to their products or services.
In the world of 8 billion citizens, it’s highly likely that people will come up with the same idea, or at least have the same name or trademark that they want to register and protect.
Therefore, applying the first-to-file principle helps determine the rights for the person who files the registration application first. This helps prevent idea theft and the misuse of someone else’s trademark for unhealthy competition in business.
Thus, even if the entity did not intentionally imitate or steal from others, if they are the second applicant, the entity that filed first will be protected, and the later applicant will be rejected. Therefore, if one wants to establish their rights, it is advisable to register their intellectual property assets as early as possible to enjoy the benefits of this principle.
The benefits of the first-to-file principle are not only to encourage the early establishment of intellectual property rights for the rightful owner but also to help the state authority easily determine which entity should be granted protection and reduce disputes over rights in society.
However, although the first-to-file principle facilitates the registration process for the registration authority, in some cases, certain entities exploit this for their own benefit by registering trademarks that belong to others or even registering the trademarks of their partners or competitors.
Therefore, in practice, the first-to-file principle also reveals certain limitations. To address this situation, regulations on the obligation to use trademarks and regulations on unfair competition have been introduced to overcome the disadvantages of the first-to-file principle.
You can find a list of USA IP Firms here.