Europeans Not Having a Nice Day After TTAB Rules in Wal-Mart's Favor.

CHICAGO, May 20, 2009 -- Two european parties appealed to the U.S. District Court for the North District of Illinois after the Trademark Trial & Appeal Board of the U.S. Trademark Office refused to register their "Smiley" trademark.

The Smiley Company SPRL, a Belgian company, and frenchman Franklin Loufrani filed suit today in the hopes of overturning the decision of the United States Patent & Trademark Office (USPTO) refusing to register their "Smiley" trademark. The USPTO said the "Smiley" mark was not inherently distinctive was likely to cause confusion with Wal-Mart's registered mark resembling a "happy face."

The dispute has a long procedural history. Mr. Loufrani's federal registration applications were recommended for registration by the Examining Attorney handling the applications and published for opposition.

As part of the federal trademark registration process, the USPTO publishes the trademarks seeking registered status in a regularly published gazette to satisfy notice and due process requirements under the U.S. Constitution. The publication period of 30 days is meant to give interested parties an opportunity to oppose the registration of a trademark for good cause.

Wal-Mart opposed the registration of the Loufrani's marks. Loufrani, in turn, opposed the registration of the Wal-Mart mark.

Typically, the first party to use a mark has the superior claim of ownership and may exclude others from using a confusingly similar trademark subsequently. The first user is said to have priority over subsequent users.

Loufrani claims to have started using his "Smiley" trademark in the early 1970s in the United Kingdom and Europe. Mr. Loufrani and the company to which he later transferred his ownership, The Smiley Co., now own trademark registrations in approximately 85 countries for the "Smiley" mark. Wal-Mart first used their "Happy Face" design in connection with retail store services on January 31, 1996.

Despite having priority, the owner of a trademark must show that the mark serves as an identifier of the source for goods or services, which is known as secondary meaning.

After re-examining the "Smiley" trademark as part of the opposition proceeding brought by Wal-Mart, the USPTO ruled the "Smiley" mark was not inherently distinctive and had not acquired secondary meaning. On the other hand, in Loufrani's opposition to the Wal-Mart registration, the USPTO ruled Wal-Mart's "Happy Face" had acquired distinctiveness and secondary meaning in a little more than eighteen months.

Loufrani argued in its opposition to the Wal-Mart registration that the design of the Wal-Mart mark was "in the public domain" and confusingly similar to the "Smiley" trademark. Just as contradictory is Loufrani's claim of priority over Wal-Mart when the applications filed with the USPTO were intent-to-use applications. Intent-to-use applications are used when the trademark has not been put into use in interstate commerce in the United States by the applicant.

Mr. Loufrani created the "Smiley" logo and established the original Smiley World company to sell and license the design. During the pendency of the TTAB opposition proceedings, Mr. Loufrani assigned his rights to the Smiley design to The Smiley Co.

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