One Sale Meets the Lanham Act’s “Use In Commerce” Requirement

On November 14, 2016, the Federal Circuit held that a single sale of two hats is sufficient to meet the Lanham Act’s “use in commerce” requirement for trademark registration, potentially contravening longstanding jurisprudence on “token use.”

Christian Faith Fellowship Church began selling caps and shirts emblazoned with the phrase “Add A Zero” in January 2005.  In February of the same year, the Church made one sale of two ADD A ZERO-marked hats to an out-of-state resident, and in March, the Church applied for federal registration of the ADD A ZERO mark. 

In 2009, Adidas sought a clothing trademark for ADIZERO, but the USPTO refused its application based on the Church’s ADD A ZERO marks. Adidas then sought to cancel the Church’s marks arguing, among other things, that the Church had failed to use the marks in commerce prior to registration. The Board agreed, finding the Church’s February 2005 sale to be de minimus and not sufficient to satisfy the “use in commerce” standard under the Lanham Act. The Board did not address Adidas’s other cancellation arguments.

The Federal Circuit reversed. According to the Court, the question turned on whether the Church had made a sale of marked goods in commerce regulable by Congress before applying for its marks. The Court first noted that Congress’s power under the Commerce Clause is broad.  In a 1942 case involving a farmer who grew wheat for commercial sale (but also for personal and farm use), and who argued that his wheat harvesting was local in nature and had only a trivial effect on interstate commerce, the Supreme Court stated:

That [the farmer’s] own contribution to the demand for wheat may be trivial by itself is not enough to remove him from the scope of federal regulation where, as here, his contribution, taken together with that of many others similarly situated, is far from trivial.

Under the “substantial effects” doctrine, when “a general regulatory statute bears a substantial relation to commerce, the de minimus character of individual instances arising under that statute is of no consequence.”  The Court noted that the Lanham Act is a comprehensive scheme for regulating economic activity, and that the Federal Circuit’s past Lanham Act “use in commerce” cases similarly reflect the broad scope of Congress’s Commerce Clause powers.

In light of this precedent, the Court found it indisputable that the private sale of goods to an out-of-state resident is “quintessentially economic,” and concluded: “[T]he Church’s sale of two ‘ADD A ZERO’-marked hats to an out-of-state resident is regulable by Congress under the Commerce Clause and, therefore, constitutes ‘use in commerce’ under the Lanham Act.’” According to the Court, this transaction, taken in the aggregate, would cause a substantial effect on interstate commerce; the Church did not need to present evidence to that effect.  The Court therefore reversed and remanded to the Board to address Adidas’s other cancellation grounds.

The Case is Christian Faith Fellowship v. Adidas AG, Case No. 2016-1296 (Fed. Cir. Nov. 14, 2016).