## Facts

- Zazu Designs operated a single hair salon in Hinsdale, Illinois, and used “Zazú” as a trade name for salon services, registered with the State of Illinois in 1980.
- Cosmair, Inc., L’Oréal’s U.S. licensee, developed a wash-out hair-coloring line targeted to young consumers and selected the mark “ZAZU” after a naming and availability review.
- L’Oréal’s investigation identified Zazu’s Illinois service-mark registration for salon services and a separate federal registration of “ZAZU” for clothing.
- L’Oréal contacted the salon to ask whether it sold products under “Zazú” and was told no products were available, though the salon indicated it was “working on” products.
- L’Oréal obtained a covenant not to sue from the federal clothing registrant, began shipping “ZAZU” hair cosmetics nationwide, and applied for federal registration for cosmetics.
- Around the launch period, Zazu began selling small quantities of shampoo labeled “ZAZU” over the salon counter, with limited distribution and little or no broader advertising.
- After a bench trial, the district court found Zazu had exclusive national rights to “Zazú” for hair products, enjoined L’Oréal’s use, and awarded lost profits and corrective-advertising damages.

## Issues

1. Whether Zazu’s limited, local sales of labeled hair products constituted sufficient trademark “use in commerce” to establish priority and nationwide rights in the mark for hair products.
2. Whether a state service-mark registration for salon services, combined with an intent to expand into product sales, could prevent L’Oréal’s nationwide use and registration for hair cosmetics.
3. What geographic scope of protection, if any, was supported by Zazu’s actual product-market activity at the time of L’Oréal’s rollout.

## Decision

- The Seventh Circuit reversed the district court’s finding of nationwide trademark rights for Zazu in connection with hair products.
- The court held that Zazu’s product activity was too slight and localized to create national priority against L’Oréal’s later, large-scale national commercialization.
- The court rejected the view that intent to enter the product market or “naked” registration could substitute for commercially meaningful use on goods.
- The court vacated the nationwide injunction and damages award and remanded for relief, if any, limited to the narrow area where Zazu could prove actual product trade and reputation.

## Legal Principles

- Trademark priority for goods arises from bona fide, commercially meaningful use that identifies the source of specific goods in the marketplace.
- “Active use” is required because it both creates consumer association between mark and goods and provides notice to competitors; minimal, token, or embryonic sales may be insufficient to support broad rights.
- Intent to use a mark on goods, without substantial market use, creates no enforceable trademark rights in those goods.
- State registration and service-mark rights for services do not automatically confer rights in a separate category of goods; rights are tied to the particular goods or services actually offered under the mark.
- Common-law trademark rights are geographically limited to the area of actual market penetration and reputation; nationwide exclusivity generally requires corresponding nationwide use or a valid federal registration regime not satisfied by de minimis sales.

## Conclusion

The Seventh Circuit limited trademark protection to what Zazu could prove it had actually established in the product marketplace, holding that small, local sales and plans to expand could not justify nationwide priority over L’Oréal’s national launch of “ZAZU” hair cosmetics.


Zazu Designs v. L’Oreal, S.A., 979 F.2d 499 (7th Cir. 1992)