In a recent decision, the U.S. Court of Appeals for the Federal Circuit affirmed the partial cancellation of Dollar Financial Group’s “MONEY MART” trademark registrations in a case that goes beyond financial services and has implications for brands across industries. To be exact, the ruling from the Federal Circuit offers guidance for a broad array of consumer goods brands – from fashion firms and sportswear companies to jewelry brands and automakers – that are increasingly stretching their trademarks into adjacent sectors in a bid to cater to consumers.
The Background in Brief: The case got its roots back in 2013 when Dollar Financial Group (“DFG”) – a company long associated with check cashing and loan financing under the “MONEY MART” mark – was granted two trademark registrations for “MONEY MART” for pawn shop services. While DFG alleged a first use of these trademarks in 1984, its expansion into pawn brokerage and pawn shop services started in 2010 and it began using the trademark in commerce in connection with these services in 2012.
Texas-based Brittex Financial sought to cancel the registrations, citing its common law rights in the “MONEY MART PAWN” mark, which it began using back in 1993.
The U.S. Trademark Trial and Appeal Board sided with Brittex, finding that it had priority to the MONEY MART mark for pawn services due to its earlier use of the mark. Among other things, the Board determined that DFG could not rely on the zone of natural expansion to establish priority because this doctrine is purely defensive and does not grant a proactive right to register a mark on an expanded line of goods or services, prompting DFG to appeal.
The Zone of Natural Expansion
In a decision dated March 19, the Federal Circuit upheld the Board’s decision to partially cancel DFG’s registrations on the basis that it (the target of a cancellation petition) cannot use the defensive zone of natural expansion doctrine to claim priority. DFG had argued that since pawn services are a “natural expansion” of its financial business, its rights in the MONEY MART mark extend to these services. (In accordance with the concept of the zone of natural expansion, a trademark holder’s rights extend beyond the immediate goods/services for which it is using the mark to related goods or services that consumers would reasonably expect the owner to offer under that brand name.)
The Federal Circuit reaffirmed that the “zone of natural expansion” doctrine is strictly defensive – it can be used to oppose a junior user’s registration, but it cannot be wielded offensively to override existing common law rights. In other words, while DFG has strong brand equity in MONEY MART for financial services, which it can enforce, that strength does not entitle it to retroactive priority in pawn services – especially not in light of Brittex’s consistent and prior use of its own mark. As the court put it, DFG could not use that earlier mark (and corresponding registration) to bootstrap new rights simply because the categories are adjacent.
>> In the court’s own words: “DFG cannot use the zone of natural expansion doctrine offensively to defeat Brittex’s intervening rights. DFG could have properly invoked the zone of natural expansion in a defensive manner had Brittex attempted to register its MONEY MART mark in connection with pawn services in the 1990s and DFG opposed that registration. In that scenario, DFG could assert the doctrine defensively to protect its right to expand into pawn services and prevent consumers from assuming that Brittex’s pawn services were associated with any of DFG’s existing services, if subsequent analysis supported finding that pawn services are a natural expansion of business for loan financing. But the doctrine may not be used offensively to establish priority in the manner DFG suggests because that would essentially grant DFG the right to register its mark on a line of expanded goods, even though it would likely cause confusion with Brittex’s established common law rights.”
The Bigger Picture for Brands
Hardly a pawn shop-specific scuffle, the case is worthy of attention for trademark holders across industries, especially as companies increasingly aim to reposition themselves as broader-spectrum lifestyle entities. A few notable examples come by way of luxury goods groups like LVMH expanding its footprint in the hospitality segment (starting with its $2.6 billion acquisition of global hotel firm Belmond in 2018); AMAN building out a lifestyle brand to complement its hotels; and brands like Ralph Lauren, Armani, Louis Vuitton, and Tiffany & Co. continuing to expand into restaurants and cafes.
At the same time, Equinox is actively looking to bridge the gap between its upscale gym chain and the larger wellness and lifestyle segment by way of spa treatments, concierge services, and hotels, and the likes of Aston Martin, Bentley, and Bugatti, for instance, are branching out into residences, while Porsche continues to engage in collaborations with fashion brand Aimé Leon Dore.
As the court makes clear in this case, legacy trademarks do not carry limitless rights – just as they do not future-proof a brand’s expansion into every adjacent market. Practically speaking, this means that companies need to “carefully monitor their trademark registrations to ensure that any expansion beyond the description of goods or services is protected with a new trademark filing,” Vedder Price’s Daniel Shulman stated in a recent note. Companies are also encouraged to “actively watch the publication of third-party marks with goods or services that are covered by [their] trademark registrations.”
The case is Dollar Financial Group v. Brittex Financial, 2023-1375 (9th Cir.).
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