In trademark, reach and federal registration matter.
Gene and Betty Hoots opened a restaurant called “Burger King” in Matoon, Illinois in 1957. Then, in 1959, Gene got a trademark registration – but just in Illinois. Meanwhile, Burger King (“Big BK”), a much bigger company, got federal registration and opened its first fast food store in Illinois, both in 1961. By 1967, Big BK had 50 stores in Illinois. That’s when Gene and Betty sued Big BK for trademark infringement.
Big BK won, because its federal registration entitled them to nationwide protection except for the parts of Illinois where Gene and Betty operated their restaurant. Since Gene and Betty only had one restaurant in Matoon, Big BK has exclusive right to use BURGER KING all over Illinois except for the 40 mile radius around Matoon. And Matoon has no Big BK.
MORAL OF THE STORY
This rule remains a whopper (cue groans). You only get exclusive trademark rights where you actually do business unless you get federal registration. But, federal registration may not empower you to get a prior user to stop using the mark completely.
Burger King v. Hoots, 403 f.2d 904 (7th 1968).