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What is trademark hoarding?

Trademark hoarding (sometimes called trademark squatting) is when a person or entity files a large number of trademark registrations to prevent other businesses from being able to use those marks. Trademark hoarding is a bad-faith practice when the business or individual has no intention of using the registered trademark in the future.

In the long run, trademark hoarding disrupts the market and interferes with fair competition by limiting how other businesses can market their offerings. Trademark hoarding may also limit other businesses from accessing legal protections for their intellectual property.

Why is trademark hoarding bad?

When someone files a trademark application, it limits others from using that trademark even if the application is not immediately approved. While this is the goal of trademark protection, it stifles creativity and entrepreneurship when the company or individual registering the mark does not intend to use it. Rather than relying on trademark protection as a shield, the hoarder wields it as a sword to deter competition.

In general, registered trademarks are filed in good faith that applicants will use the trademark in commerce, if it is not already being used. In fact, one requirement for each trademark registration is that it is either already in use in commerce or the applicant will use it in commerce.

As part of the application process, the applicant must provide written assurance that they intend to use the mark in commerce at a future date if the mark is not already being used. Without that required intent an application may be rejected.

Trademarks are issued on a “first come, first serve” basis. As a result, registering a trademark and then doing nothing with it can be a problem for anyone who wants to use an otherwise unused trademark. It disrupts normal business practices and undermines the distinctiveness requirement in registering trademarks and intellectual property law.

Ultimately, trademark hoarders limit competition so that their preferred trademark remains prominent. Some hoarders will trademark various symbols or “spin-off” logos in an attempt to take over a specific symbol that is highly associated with a brand or well-known trademark. This is against the public interest because it dampens competition and hurts consumers in the long run, it can often also be unnecessary as the protection provided by registration allows a trademark holder to challenge confusing or similar.

What does the law say about trademark hoarding?

The United States has some laws limiting trademark hoarding, but they are not very straightforward.

Unfortunately, the U.S. Patent and Trademark Office does not review trademarks to ensure intent is met for every trademark application. Instead, it assumes applicants do not make bad-faith trademark applications. 

In a 2015 case, the U. S. Supreme Court  decided that companies could not claim trademarks they registered but did not use. Essentially, the Court determined that a registrant relinquishes the right to use the trademark when they fail to use it in commerce. While this may sound like clear guidance, the ruling gave registrants a “reasonable time” to use a mark, but did not establish guidance for how much time is reasonable.

What can I do if I suspect a competitor is hoarding trademarks?

If you suspect trademark hoarding, talk to a lawyer about your legal options. Trademark laws are complex, so even the courts (and the Trademark Review and Adjudication Board) disagree about what constitutes trademark hoarding and what grievances can be filed. Nevertheless, an attorney can help you navigate whether challenging a competitor’s right to a mark is a worthwhile pursuit. If you can demonstrate that a company has no intent to use its registered trademarks, you can request the invalidation or cancellation of a trademark that is not in use.

Alternatively, you may potentially negotiate a deal with the company hoarding the trademark you want. In those situations, you might pay a fee to the hoarder so that they release or cancel the trademark. This strategy can work if your goal is to free up a trademark quickly, however, this can also backfire. If the company’s goal is to prevent others from using the mark, it can start using the mark, which would make a legal challenge to an unused mark much more difficult.

To learn more about how to obtain a trademark, or what to do if the mark you want is already taken, reach out to a Rocket Lawyer network attorney for affordable legal advice.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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