## Facts

- A corporate predecessor to Peaches Entertainment Corporation (PEC) began using the service mark PEACHES for retail record and tape services in commerce in 1974 and obtained federal registration on July 6, 1976; PEC later acquired the mark through asset acquisition after the predecessor’s bankruptcy.
- Entertainment Repertoire Associates, Inc. (ERA) independently adopted the name and a related graphic mark “PEACHES” in August 1975 when it opened Louisiana music stores; ERA’s owners chose the name based on the Allman Brothers album *Eat a Peach* and obtained permission to use the word/design marks from a record label.
- The parties stipulated that ERA was unaware of the predecessor’s prior use when ERA adopted the mark.
- In December 1975, the predecessor sent ERA a cease-and-desist letter asserting trademark rights; ERA responded that it had been unaware of any prior use, and the predecessor did not pursue further action at that time.
- ERA continued operating and expanded to multiple stores in Orleans and Jefferson Parishes by 1980; by the early 1990s, it operated a single, highly profitable store in Orleans Parish.
- In 1992, PEC sued under the Lanham Act seeking an injunction and damages, asserting that ERA’s continued use infringed PEC’s registered mark; ERA claimed it was entitled to local protection as a good-faith user in its established territory.

## Issues

1. Whether a good-faith user who adopted a mark after the senior user’s first use but before the senior user’s federal registration has protectable, geographically limited rights as an “intermediate junior user.”
2. How to define the geographic scope of the junior user’s protected territory, including whether and where it may advertise and open additional stores.
3. Whether the federal registrant may enjoin the junior user’s use and expansion outside the junior user’s historically established market.

## Decision

- The Fifth Circuit affirmed that PEC’s federal registration conferred presumptive nationwide priority, but subject to equitable limits for pre-registration good-faith local users.
- The court recognized ERA as an intermediate junior user entitled to a limited, exclusive zone of use based on its good-faith adoption and established local goodwill.
- The court affirmed in part but modified the district court’s territorial allocation, narrowing and more precisely defining where ERA could use the mark and where it could advertise.
- The court remanded with directions for entry of judgment consistent with the revised territorial and expansion limitations.

## Legal Principles

- Federal trademark registration provides presumptive nationwide priority, but it does not eliminate the rights of a good-faith junior user that adopted the mark without knowledge of the senior user before registration and built goodwill in a discrete area.
- Under Tea Rose–Rectanus principles as applied through the Lanham Act, a good-faith junior user may hold superior rights within its established territory, while the registrant controls use elsewhere.
- The scope of a junior user’s protected territory is an equitable, fact-specific determination tied to actual market penetration, store presence, consumer association, and advertising reach before the registrant’s assertion of rights.
- A registrant may restrict the junior user from expanding beyond its historically established market where such expansion would conflict with the registrant’s rights and increase the risk of confusion outside the junior user’s enclave.

## Conclusion

The Fifth Circuit balanced a federal registrant’s nationwide rights against a good-faith intermediate junior user’s locally established rights, allowing the junior user continued use only within a narrowly defined Louisiana territory and limiting its advertising and expansion beyond that market.


Peaches Ent. Corp. v. Ent. Repertoire Assocs., Inc., 62 F.3d 690 (5th Cir. 1995)