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53 Notre Dame Law. 869 (1977-1978)
Trademark Protection under the "Natural Area of Business Expansion" Doctrine

handle is hein.journals/tndl53 and id is 869 raw text is: TRADEMARK PROTECTION UNDER THE NATURAL AREA OF BUSINESS EXPANSION DOCTRINE Roger H. Marks* The past several decades have witnessed a dynamic growth and diversifica- tion of business enterprises.' Stouffers Corporation, for example, has broadened its pursuits from a restaurant chain to the marketing of frozen foods and, more recently, to the lodging industry. Technological and socio-economic changes, new marketing patterns, and keen competition from the industrial leaders have compelled even the smallest entrepreneur to engage in related product and service activities. A business experiencing such growth will naturally wish to retain the goodwill it has achieved, as symbolized by its mark, by applying that mark to its new products and services; but, the successful extension of its mark to these new areas depends on whether the particular product or service represents a natural area of business expansion.' The natural expansion of business doctrine involves balancing a number of factors. Of paramount consideration, however, is whether a business enterprise seeking protection under the doctrine asserts its rights in a timely manner so that the defense of laches does not bar it from using the mark in a related product or service area. If this defense is inoperative, a court will then weigh the equities of the situation to determine whether the doctrine should be invoked. Specifically, courts will examine the strength of the mark, the reasonable likelihood of a busi- ness to expand into another product or service line, the extent to which these other products and services possess similar descriptive properties, the marketing scheme of the related products or services, and the existence of other uses and registrations of the mark. I. Laches By prior use of a mark on certain products and services, a business obtains the right to preempt the mark not only for related products and services3 but also for those which reasonably can be assumed to emanate from the enterprise in the * Attorney, United States Gypsum Company, Chicago, Illinois; J.D., 1976, Cornell Uni- versity; B.S., 1973, University of Pennsylvania; B.A., 1973, University of Pennsylvania. The views expressed herein do not necessarily reflect those of United States Gypsum Company. 1 In 1976 there was a resurgence of mergers and acquisitions due to a rebounding stock market, soaring corporate profits, declining interest rates on borrowing, and investment in American companies by foreigners. Unlike the 1960's, however, when any company in any field that seemed potentially profitable was fair game for the conglomerates, [companies today want] the product line of the firm they acquire to mesh with their own company's products or at least fit logically into their marketing and management setups. Time, May 10, 1976, at 61. 2 The expansion of business doctrine, which presupposes two owners of the same or similar mark, generally arises in the context of noncompeting products and services. See Instructo Corp. v. Parents' Magazine Enterprises, Inc., 178 U.S. Pat. Q. 62 (TTAB 1973) in support of this proposition. If the products were directly competitive and sold under the same or related mark, the prior user would have a legally enforceable right against any sub- sequent infringing user and consequently this doctrine would not come into play. It should also be noted that the doctrine arises in a number of different contexts including oppositions, cancellation and interference proceedings, actions for infringement and unfair competition, contracts, and declaratory judgment actions filed by shareholders. 3 That protection extends to all goods of the same class even though the alleged infringe- ment is not upon the same species of articles was recognized early in trademark case law. See e.g., Emerson Electric Mfg. Co. v. Emerson Radio & Phonograph Corp., 105 F.2d 908, 42 869