Trademark lawyers are often asked: "What's the difference between a trademark and a service mark?" In general, a trademark refers to a brand name used in connection with goods, while a service mark is one that is used in connection with the provision of services. The services must be provided for the benefit of someone other than the mark owner. But the Trademark Trial and Appeal Board ("TTAB") ruled in a recent precedential decision that operating an online retail store under a particular brand name can qualify as use of a service mark, even where the owner only sells its own branded products via the online store. What separately registrable service(s) is the seller providing merely by selling its own products on its website? The TTAB's decision seeks to answer that question.
In Blizzard Entertainment, Inc. v. Ava Labs, Inc., Opp. No. 91285851 (TTAB July 18, 2024), opposer Blizzard Entertainment sought to prevent registration of applicant Ava Labs' trademark application for BLIZZARD for various business services, asserting likelihood of confusion with Blizzard's prior registrations for BLIZZARD and BLIZZARD ENTERTAINMENT for online retail store and mail order services. In response, Ava asserted a counterclaim for cancellation of Blizzard's registrations on the basis of nonuse, arguing that Blizzard only ever sold its own products via its e-commerce website. Such use, Ava argued, does not constitute use of a service mark because services must be provided primarily for the benefit of others, and selling one's own products primarily benefits the seller. The Board disagreed.
In reaching its conclusion, the Board noted that, in order to qualify as a service under U.S. trademark law, an activity must be real, it must be performed for the benefit of someone other than the seller, and it must be qualitatively different from anything necessarily done in connection with the sale of the seller's goods (i.e., it cannot simply be ancillary to the sale of the products). With respect to the second prong, the Board added that the relevant question is who primarily benefits from the activity. The Board ultimately concluded that Blizzard's provision of an e-commerce website primarily benefited consumers, even though Blizzard was only selling its own products on the site:
"[O]nline retail store and mail order activities featuring one's own goods primarily benefit consumers in that the activity provides a central location to find, examine, and purchase various goods; and this is true even though the retailer derives the benefit of selling its own goods"
This ruling would appear to cut against the traditional wisdom that "[t]he sale of one's own product does not constitute a 'service' within the meaning of the Lanham Act." McCarthy on Trademarks and Unfair Competition § 19:89 (citing IdeasOne, Inc. v. Nationwide Better Health, Inc., 89 USPQ2d 1952 (TTAB 2009)). In other words, activities by a seller that are ancillary to the sale of goods (e.g. advertising one's own products) have generally not been considered to be separately registrable services. Moreover, even assuming arguendo that providing an e-commerce site to sell one's own products provides a benefit to the consumer, it is unclear from the Board's decision how the benefit to the consumer is greater than the benefit to the seller, i.e. how providing an e-commerce site "primarily" benefits the consumer rather than the seller.
In any event, practitioners and brand owners should take this decision into consideration when determining how to best protect their brands. For example, if a maker of toy cars sells them under the hypothetical brand ABC, it would likely be advisable to register ABC as a trademark for "toy cars" in International Class 28. Following the Board's Blizzard decision, if that same toy maker were to set up an e-commerce website to sell its ABC toy cars, the seller may consider separately registering ABC as a service mark for "online retail services featuring toy cars" in International Class 35. While it is debatable how much additional protection the Cl. 35 registration would actually provide, one could argue that an additional registration may increase the chances that a trademark examiner will cite the brand owner's mark as a basis for refusing registration of a confusingly similar third-party mark, thereby potentially allowing the brand owner to avoid having to file an opposition. Moreover, trademark registrations are assets, and such assets of course affect valuations in the event of acquisitions, licensing agreements, and other corporate transactions.
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