Nationwide Priority is an exception to the common law rule that the first person to use a mark in a territory has priority in that territory. A federal trademark registration allows whoever is first to register a mark to have priority in any territory in which the mark is not already being used. Without federal registration, or nationwide priority, a trademark owner can be the first to use a mark in one area of the country, but a junior user is free to use the original owner's mark in a different area of the country. What's more, the junior user can stop the original owner from expanding his/her business into any area where the junior user is using the mark. If the original user owned a federal trademark registration, he/she could stop the junior user. Failing to register the mark means the junior user can do so, and then be the beneficiary of nationwide priority, allowing him/her to keep the original owner from expanding anywhere in the nation, except the small area in which the original owner is using the mark, or in some cases, within the oringinal owner's zone of natural expansion.
Once a company has nationwide priority via a federal registration, they can use the mark without restriction anywhere in which any prior user is not already using the mark. However, the registered owner cannot sue to prevent prior users of the mark from expanding into new regions, until the registered owner of the mark can show actual use or in some cases an imminent intention of using the mark in that region. For example, if BeeBop establishes rights to a mark in territory XYZ, and then DooDah registers the mark federally, DooDah can claim priority over all regions in the country except XYZ. While BeeBop can still expand into regions in which DooDah is not using the mark, BeeBop can be forced to discontinue use in the new region the moment DooDah can demonstrate a presence of the mark in that region or an intent to imminently enter that region. Until DooDah can demonstrate such a presence or imminent intention, the federal registration cannot be used to enjoin BeeBop from using the mark in that territory.
How the Internet may affect nationwide priority
Historically, nationwide priority is listed by trademark attorneys as one of the most important reasons to register a trademark. However, there is an open question raised by the operation of a business over the Internet and whether or not trademarks used on a site are automatically given nationwide priority without a federal registration. Arguably, an Internet site containing a company's trademark is an advertisement available in any state in the country. Trademarks used in advertising are capable of establishing priority under the common law, provided the advertisement creates an association in the mind of the consuming public between the mark and the goods or services. Therefore, one might think that nationwide priority is automatically established by maintaining a web site. However, until the law of the Internet is more evolved, there is no certainty that this will be the case. For example, there is reason to believe this will not be the case for companies that are geared toward a local audience only. In this instance, it should perhaps be irrelevant that the site can be accessed nationwide, as long as the market niche remains local. In fact, the courts may ultimately require actual sales in a state or region before granting a business priority in that area. Given these uncertainties, nationwide priority probably remains one of the greatest advantages to registration in this author's opinion.