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The Limit of Sky’s Natural Zone of Expansion

Posted by Thomas P. Howard | Dec 21, 2021 | 0 Comments

By James Juo.

Trademark rights may extend beyond the specific goods or services offered in connection with a trademark to include a “natural zone of expansion” which grants a senior user of a mark superior rights as to “any goods or services which purchasers might reasonably expect to emanate from it in the normal expansion of its business under the mark.” Mason Eng'g & Design Corp. v. Mateson Chem. Corp., 225 U.S.P.Q. 956, 962 (T.T.A.B. 1985); Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1047 (9th Cir. 1999); Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 666 (5th Cir. 2000) (noting “consumer perception is the controlling factor”). In other words, if consumers believe that the natural tendency of producers of the type of goods marketed by the senior user is to expand into the market for the type of goods marketed by the junior user, then the junior user's product is within the senior user's natural zone of expansion. The scope of a natural zone of expansion is determined based on the “circumstances prevailing at the time when the subsequent [junior] user first began to do business under its mark.” Mason, 225 U.S.P.Q. at 962; Tally-Ho, Inc. v. Coast Cmty. College Dist., 889 F.2d 1018, 1027–28 (11th Cir. 1989).

This “natural zone of expansion” doctrine is similar to the relatedness of the goods inquiry for likelihood of confusion. Scarves by Vera, Inc. v. Todo Imports Ltd., 544 F.2d 1167, 1173 (2d Cir. 1976) (“Absent equities in the junior user's favor, he should be enjoined from using a similar trademark whenever the non-competitive products are sufficiently related that customers are likely to confuse the source of origin.”); Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188, 202 (5th Cir. 1998) (“The danger of affiliation or sponsorship confusion increases when the junior user's services are in a market that is one into which the senior user would naturally expand.”). In trademark prosecution, the “expansion-of-trade doctrine” normally applies in inter partes cases in the context of the parties' dueling claims of priority, see Orange Bang, Inc. v. Olé Mexican Foods, Inc., 116 USPQ2d 1102, 1119 (TTAB 2015), but, in ex parte prosecution, the normal relatedness analysis is applied, see In re 1st USA Realty Prof'ls, Inc., 84 USPQ2d 1581, 1584 & n.4 (TTAB 2007). Trademark Manual of Examining Procedure 1207.01(a)(v).

The Federal Circuit recently addressed the natural zone of expansion issue in Sky International AG v. Sky Cinema LLC, No. 21-1575 (Fed. Cir. Dec. 17, 2021) involving an opposition of the SKY CINEMAS mark and Sky International's marks containing the word “SKY” including the SKY NEWS marks for “news reporting services” and “broadcasting and/or transmission of radio and/or television programs and/or films.”

The Trademark Trial and Appeal Board had ruled against Sky International in the opposition, finding that operating movie theaters was not within Sky International's natural zone of expansion.

Although “there is an overlap of customers and direct competition between Sky Cinemas' and Sky International's services,” there are “numerous services involved in operating a movie theater that Sky International does not offer, such as ‘food and beverage services,'” and “theaters offer a ‘night out' experience” different from that offered by streaming services. In addition, evidence of Sky International's use outside the United States, namely its movie theater facilities in the United Kingdom, was excluded, so “there is no record evidence showing that companies that produce films or distribute films over users' personal devices have expanded to owning or running movie theaters.”

Thus, the Federal Circuit held that substantial evidence supports the Board's finding that operating movie theaters is not within the natural zone of expansion for businesses offering news reporting, film production, or video streaming services.

The trademark attorneys at Thomas P. Howard, LLC are experienced in the prosecution of trademark applications before the USPTO, as well as in enforcing trademarks or defending against infringement claims in litigation nationwide including in Colorado.

About the Author

Thomas P. Howard

Thomas Howard is an experienced trial lawyer that handles intellectual property litigation nationwide, including copyright, trademark, trade secret and patent litigation, as well as complex civil litigation, including breach of contract, interference with contract, breach of fiduciary duty, conspiracy, fraud and fraudulent transfer of assets.


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