Dell EMC’s Confidential Use of Brand Name Not Enough to Secure Trademark Rights

The intricacies of trademark law at the intersection of where trademark rights arise under common law and where trademark rights are secured through federal registration can lead to some interesting water cooler conversations – at least for trademark attorneys. Trademark rights under common law arise primarily through the use of a mark in commerce in connection with goods or services. Trademark rights and legal presumptions secured through trademark registration are generally given a priority date, once secured, as of the date the trademark registration application was filed. However, common law trademark rights arising prior to registration of a mark can prevail over the registration so long as they are also prior to common law rights of the mark secured by the registration. Starting to sound a little complicated?

This gets even more complicated when one considers issues relating to the geographic scope of common law rights and concurrent use. For example, if a trademark owner has senior rights in a trademark but has only established use in a certain geographic area, the trademark rights may be limited to that geographic area under common law. If the trademark owner secures a federal registration for the mark, then by virtue of the registration it will also receive a legal presumption that those rights extend throughout the entire geographic region of the United States. If no registration is secured, however, then a subsequent junior user of the mark who registers the same mark in the same class may be able to secure rights in all other geographic regions of the United States and restrict the senior user to the limited geographic region established by its common law rights. The extent of the prior user’s trademark rights can depend on the amount of actual use in commerce.

Dell EMC was recently reminded that they type of use matters when it comes to trademark rights. Not only does the geographic scope matter, but how public and notorious your use of the mark is matters. In 2015, EMC, a data storage company later acquired by Dell, started describing its new product as “Unity” in over 80 presentations to up to 100 customers, partners, and potential customers. EMC began shipping beta versions of its Unity product as well. The kicker, though, is that all of this activity was done under confidentiality agreements.

However, despite the confidentiality agreements, a Nexsan employee inadvertently overheard discussions at a bar about EMC’s plans for a new “Unity” product. A few days later, Nexsan filed two trademark applications with the USPTO for the UNITY mark. These were “intent-to-use” applications – meaning Nexsan had not yet used the UNITY mark. Once Nexsan did start using the UNITY mark, EMC’s attorneys sent threatening letters claiming Nexsan needed to cease and desist its use of UNITY. So, Nexsan sued EMC.

Probably to the surprise of EMC, the court held that “EMC has not carried its burden to establish prior use, and thus Nexsan has priority to the “Unity” mark based on its intent-to-use applications.” So, even though EMC’s first use of the UNITY mark pre-dated Nexsan’s first use of the UNITY mark, and even though EMC’s first use of the UNITY mark predated Nexsan’s filing of its “intent-to-use” trademark applications, Nexsan prevailed.

Interestingly enough, had EMC simply filed a single intent-to-use trademark application for UNITY before doing all of its presentation on the new product, it could have quickly and easily secured its senior rights and would have avoided the legal action or at least would have more likely prevailed in the case. This is a good example of why early trademark filings can be advantageous and worth the relatively small investment. Trademark law can be tricky. If you have trademarks you haven’t registered, strongly consider retaining a good trademark attorney to secure registrations.