Opinion ID: 560376
Heading Depth: 1
Heading Rank: 3

Heading: ownership of service marks

Text: 19 It is elementary that service mark ownership is not acquired by federal or state registration. Rather, ownership rights flow only from prior appropriation and actual use in the market. See 1 J. McCarthy, Trademarks and Unfair Competition, Sec. 16:5, at 733 (2d ed. 1984). However, while registration of a service mark is not dispositive on the question, it is at least prima facie evidence of the registrant's ownership and exclusive right to use of a mark. 15 U.S.C. Secs. 1057(b), 1115(a). 20 One difficulty of this case is deciding which marks are owned by whom, and which marks are to be compared for purposes of determining whether a likelihood of confusion exists. The parties both argue that the relevant comparison is between the two companies' HMS-roof design marks (Figures 2 and 3). The District Court agreed. However, the District Court failed to make a finding as to which party has ownership, through priority of continuous use, of an HMS-roof design mark. 2 Instead of making a finding on that question, the District Court found that Homeowners had ownership of the mark consisting solely of the initials HMS. This is not disputed by the parties. The problem arose in the next step of the District Court's analysis where the court held that [t]he first party to use the mark HMS would logically have the right to use the mark HMS with a rooftop design.... Since [Homeowners] has shown prior and continuous use of the mark HMS, [Specialists] has no rights to the mark HMS with or without a rooftop design. We cannot agree that it is a question of logic whether a party's ownership of a mark containing mere initials acts to convey ownership of marks consisting of those initials plus other designs. Instead, it is a question of fact and law. 21 Ownership of a mark confers both the right to use a particular mark and the right to prevent others from using the same or a confusingly similar mark. It is the second aspect of ownership, i.e., the right to prevent others from using a particular mark, that is at issue in this and virtually every infringement case. It is this aspect of ownership that the District Court conferred upon Homeowners without analysis, as a matter of logic[ ]. However, ownership of the mark HMS includes the right to exclude others from using a mark, such as Specialists' HMS-roof design mark, only if use of the subsequent mark will lead to a likelihood of confusion with the mark HMS. Therefore, once the District Court found that Homeowners owned the mark HMS, Homeowners had the right to prevent Specialists from using a particular mark only if the court further found, by comparing Homeowners' mark HMS with Specialists' allegedly infringing mark(s), that a likelihood of confusion would be created in the marketplace. The District Court failed to undertake this analysis. 22 To summarize, the mark consisting of the initials HMS alone is the only relevant mark that was found to have been used by Homeowners prior to Specialists' use of its HMS and HMS-roof design marks. Homeowners argues that since it has ownership of a mark consisting of the initials HMS, such ownership extends to other marks containing those initials along with other words or designs. This is the argument accepted by the District Court without proper analysis. Homeowners cannot make out an infringement case against Specialists by showing ownership of one mark (the initials HMS alone) and a likelihood of confusion based on a comparison between a different mark (the HMS-roof design mark) and Specialists' marks. 23 On remand of Homeowners' claim, if Homeowners cannot show first use of an HMS-roof design mark, the proper comparison will be between Homeowners' HMS mark and Specialists' HMS and HMS roof design marks. 3 If Homeowners can show first use of an HMS-roof design mark, then a comparison of the parties' respective HMS-roof design marks will be proper.