Trademark Ownership Determined by Priority of “Lawful” Use

Case: CreAgri, Inc. v. USANA Health Sciences, Inc., No. 05-15305 (9th Cir. Jan. 16, 2007)

The One Sentence Summary: Only lawful use of a mark will enable a party to establish trademark ownership through priority of use.

What They Were Fighting About: The Plaintiff, CreAgri, Inc., used the mark “Olivenol” to sell a dietary supplement containing a beneficial antioxidant, hydroxytyrosol. Olivenol’s label, however, misidentified the amount of hydroxytyrosol actually contained within the supplement, in violation of the Food, Drug, and Cosmetic Act’s (“FDCA”) labeling requirements. USANA Health Sciences, Inc., the Defendant, starting using the mark “Olivol” sometime after the Plaintiff’s first use of Olivenol. The Plaintiff argued that Olivol infringed its mark because the two marks were confusingly similar. Central to the Plaintiff’s infringement claim was its assertion that it owned the “Olivenol” trademark through priority of use.

Federal Circuit Holdings:

• The court found that the Plaintiff’s prior use of its mark did not establish priority because its use was an unlawful violation of the FDCA’s labeling requirements. The court held that only lawful use of a mark in commerce enables a party to establish ownership through priority of use.
• The court explained its rationale as two part: First, it would be absurd to grant rights to a party pursuant to the government’s law by virtue of that party violating the government’s law. Second, “to give trademark priority to a seller who rushes to market without taking care to carefully comply with the relevant regulations would be to reward the hasty at the expense of the diligent.”