Hotel's trademark held to extend beyond its geographic region

In Dorpan SL v Hotel Melià Inc (Case No 12-1679, August 28 2013), addressing the issue of whether a senior trademark user of a mark related to travel was entitled to trademark protection outside of its geographic region, the Court of Appeals for the First Circuit has explained that travel-related marks (in this case for a hotel) were entitled to protection beyond their geographic regions.

Plaintiff-appellee Dorpan SL is a subsidiary of Sol Melià SA (collectively Dorpan), which owns and operates the largest hotel chain in Spain and third largest in Europe. Dorpan has held several US trademarks for 'Melià' since the late 1990s in connection with the hotel industry. Dorpan opened a Sol Melià about 80 miles outside of Ponce, Puerto Rico in 2007. Defendant-appellant Hotel Melià Inc has operated the Hotel Melià in Ponce, Puerto Rico, for over 100 years, although it had never registered for a trademark. The parties sued each other for trademark infringement, and the case was removed to federal district court in Puerto Rico.

The district court granted Dorpan’s motion for summary judgment, finding that there was no likelihood of confusion between Dorpan’s marks and Hotel Melià’s marks, relying heavily on the lack of intent of Dorpan to capitalise on Hotel Melià’s common law marks. The district court concluded that Hotel Melià could operate in the Ponce, Puerto Rico region, while Dorpan could operate in the rest of Puerto Rico and the United States. Dorpan appealed.

Before the First Circuit, Dorpan argued that it held an incontestable trademark. However, relying on Section 15 of the Lanham Act, the court explained that incontestability is limited in situations where a common law owner is a senior user of the mark, like Hotel Melià. Thus, Dorpan’s rights are limited by Hotel Melià’s senior use, regardless of the incontestability of the mark.

The First Circuit then considered an eight-factor likelihood of confusion analysis, focusing on actual instances of confusion shown by Hotel Melià where the public believed that a Dorpan hotel was actually a Hotel Melià hotel. Although the evidence was “not overwhelming”, the court held that evidence of actual confusion does not need to be overwhelming to rise to a reasonable inference of confusion. The First Circuit also considered the substantial similarity between the marks, given the closeness in name as well as in hotel-related services.

Most importantly, the First Circuit reasoned that companies that rely on commerce through a much larger area, such as hotels, than typical local only businesses have a broader geographic scope for their trademark rights. The court referenced retail outlets and professional services companies as examples of local customers, whereas hotels seek to attract customers physically distant from the point of service. Thus, the First Circuit concluded that the appropriate scope of Hotel Melià’s mark likely extends well beyond Ponce, Puerto Rico, and thus disagreed with the district court’s analysis that Hotel Melià was entitled to use its mark only in that geographic area.

The decision shows that travel-related and other trademarks that seek to attract physically distant customers can extend the reach of common law trademarks beyond the geographic area in which companies typically operate.

Jeremy T Elman, McDermott Will & Emery, Miami