On August 2, 2021, the Eleventh Circuit Court of Appeals (the federal appellate court for Florida, Georgia, and Alabama) issued a lengthy opinion (here) regarding—but not fully resolving—a trademark dispute between two advertising companies, both named Pinnacle Advertising and Marketing Group (one is based in Illinois, the other in Florida). The opinion covers a lot of ground. I won’t bore you with all the details, but there were a few points that are just crucially important for anyone looking to register a trademark and protect their brand.

Here’s the case ELI5: these two companies have the same name, but only one of them (Pinnacle Illinois) has registered the name with the U.S. Patent and Trademark Office (PTO). That company sued the other (Pinnacle Florida) in federal court for trademark infringement. Pinnacle Florida counter-sued asking the court to cancel Pinnacle Illinois’s trademark as “merely descriptive.” (I’ll explain what that means and why it’s important below.) The trial court gave the green light on the cancellation counterclaim, but yesterday the appellate court hit the breaks. The Eleventh Circuit panel vacated that order because, among other reasons, the trial court didn’t determine exactly what Pinnacle Florida needed to prove to cancel the trademarks—whether they lack acquired or inherent distinctiveness.

So why is this case important for startups or anyone thinking of starting a business? Because, in the words of Judge Branch: “[d]istinctiveness is the key to trademark protectability.” Pinnacle, Slip. Op. 21. And cultivating and protecting your trademarks is key for any business.

Only distinctive trademarks (marks that serve the purpose of identifying the source of goods or services) are entitled to federal trademark protection. But what is distinctiveness?

There are two ways that trademarks can be distinctive: they can either be inherently distinctive or they can acquire distinctiveness over time. Only inherently distinctive trademarks can seek immediate protection. We call those trademarks “arbitrary,” “fanciful,” or “suggestive.” The Trademark Manual of Examining Procedure section 1209.01(a) provides some good definitions and examples for these types trademarks:

On the other hand, if your trademark is deemed to be merely descriptive of your goods and/or services—meaning “it describes an ingredient, quality, characteristic, function, feature, purpose, or use of the specified goods or services,” see TMEP section 1209.01(b)—then your mark must be capable of acquiring distinctiveness for protection and registration. That’s what Pinnacle Florida was arguing in its counterclaim—that the other Pinnacle’s trademark was descriptive and had not acquired distinctiveness to merit trademark protection.

So how do your descriptive marks acquire distinctiveness? According to the appellate panel in Pinnacle, trademarks that have acquired distinctiveness are “marks that initially might have described a broad class of products, but that over time developed ‘secondary meaning . . . that links [the mark] to a particular source.” Another recent Eleventh Circuit panel, in Royal Palm Properties v. Pink Palm Properties, No. 18-14092 (link), provided a succinct explanation of what that means:

A mark obtains a secondary meaning—and therefore acquires distinctiveness—when, in the minds of the relevant consuming public, the “primary significance of the term . . . is not the product but the producer.” Am. Television & Commc’ns Corp. v. Am. Commc’ns & Television, Inc., 810 F.2d 1546, 1549 (11th Cir. 1987) (quotation omitted). So, in this case, Pink Palm Properties had the burden to prove the opposite—that when the relevant consumers hear “Royal Palm Properties,” they think of the “product”—i.e., the homes within Royal Palm Yacht & Country Club—rather than the “producer”—i.e., the specific brokerage services that Royal Palm Properties provides.

Royal Palm, Slip. Op. 13.

Of course, whether your trademark is merely descriptive of your goods and/or services or suggestive—meaning it requires some imagination or thought to link the mark to those goods and/or services—is highly nuanced. If you can successfully demonstrate that your trademark is suggestive instead of descriptive, then it doesn’t need to acquire distinctiveness and it can be registered right away. Courts and the Trademark Trial and Appeal Board (TTAB) will often look to “incongruity” in word combinations to guide whether the trademark is suggestive rather than merely descriptive. See In re Shutts, 217 USPQ 363, 364–5 (TTAB 1983) (SNO-RAKE held not merely descriptive of a snow-removal hand tool because a classic rake would not be a useful snow-removal tool).

This suggestive/descriptive dichotomy is another good reason to have an experienced trademark attorney help you with branding and trademark registration.

Now you know some basics about distinctiveness and types of trademarks. But the Pinnacle opinion doesn’t end there. The appellate panel ultimately kicked the question of distinctiveness back to the trial court to determine what presumption the registration afforded Pinnacle Illinois. The panel also found that the trial court had improperly disregarded the jury when it found that the Pinnacle Illinois trademark was protectable and distinctive.

The panel’s discussion of the applicable presumption and general analysis of cancellation and infringement also provide some important takeaways for trademark owners.

Your delay in stopping infringement is at your own peril.

In Pinnacle, Pinnacle Illinois waited several years to file its trademark infringement claim against Pinnacle Florida. The Eleventh Circuit panel affirmed the district court’s finding that Pinnacle Illinois had simply waited too long to sue for trademark infringement—its monetary claims were barred by the doctrine of laches (a fancy term for “you snooze you lose”). Because the Lanham Act does not contain a statute of limitations, the period to determine when laches would apply is not uniform and may depend on your jurisdiction. The Eleventh Circuit has held that “the period for analogous state law claims is to be used as a touchstone for laches.” AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1545 (11th Cir. 1986). In Florida, that limitations period is 4 years. Id.

The panel also explains some of the differences between challenging a trademark before and after the fifth anniversary of the mark’s registration. If possible, you have more options if you challenge a registration within the first 5 years of its registration. Within that period of time, the “valid grounds for discontinuing registration include any reason for which the registration should have been barred in the first instance.” Pinnacle, Slip. Op. 23 (citation omitted); see also TMEP § 307.02. After that five-year period, there are limited grounds for cancellation. In Pinnacle, the Pinnacle Illinois trademark was registered fewer than 5 years before the counterclaim was filed, so Pinnacle Florida was able to challenge the mark as lacking distinctiveness. It wouldn’t have been able to do that later on.

Next, what presumption applies when you are seeking cancellation is also important. Remember: Pinnacle Florida argued that the Pinnacle Illinois trademark should be cancelled because they it was merely descriptive and lacked secondary meaning (acquired distinctiveness).

When a trademark has been registered with the PTO, there is a “rebuttable presumption that the marks are protectable or ‘distinctive.’” Pinnacle, Slip. Op. 23. An appropriate challenger under the appropriate circumstances must therefore demonstrate that the mark is not distinctive.

The Pinnacle panel noted that—at least in the Eleventh Circuit—whether a trademark holder is entitled to a presumption of inherent distinctiveness or acquired distinctiveness depends on what proof the PTO required during the registration process. If the PTO required proof of secondary meaning, then there is a presumption the mark has acquired distinctiveness through secondary meaning. If the PTO didn’t require any such proof during the registration process, then the mark is presumed inherently distinctive in a cancellation action.

In Pinnacle, the PTO hadn’t required any proof of secondary meaning when Pinnacle Illinois registered its trademark, so the panel concluded it should have been presumed inherently distinctive. This is true in the Eleventh Circuit, but other circuits have held that when the PTO does not require evidence of secondary meaning it can create a rebuttable presumption of both inherent and acquired distinctiveness. See U.S. Search, LLC v. U.S. Search.com Inc., 300 F.3d 517, 524 (4th Cir. 2002) (holding that when the PTO issues a certificate of registration without requiring a showing of secondary meaning, it provides prima facie evidence that the mark is suggestive or, if descriptive, has acquired secondary meaning).

When seeking to cancel a trademark, the registration history before the PTO is important for so many reasons, including determining what presumptions apply to the registered mark. Experienced trademark counsel is key to helping your business and brand stay protected.

Learn more about our flat-fee trademark registration services here.