The United Drug Company v. Theodore Rectanus Co., 1918, was a U.S Supreme Court case that dealt with trademark law and the concept of territoriality. The United Drug Company had registered "Rex" as a trade name for its products in Massachusetts but did not use or register it elsewhere. When they attempted to stop the Theodore Rectanus Co from using "Rex" in Kentucky, where they had been operating under that name without knowledge of United's claim, the court ruled against them. The Supreme Court held that ownership of a trademark is established by use rather than registration and extends only so far as the trade area where it is known and recognized by consumers. Therefore, since United had not used or made their mark known outside Massachusetts at the time when Rectanus began using it in Kentucky, they could not prevent its use there.

In the dissenting opinion for United Drug Company v. Theodore Rectanus Company, it was argued that a trademark's protection should not be limited to its geographical area of operation but should extend nationwide. The dissenting justices believed that the majority ruling undermined the purpose and value of trademarks by allowing another company to use an established brand name in areas where the original company had yet to expand its business operations. They contended this could lead to consumer confusion and damage a brand’s reputation, even if unintentionally so. Furthermore, they expressed concern about potential unfair competition as companies might rush into new markets with borrowed credibility from well-established brands elsewhere in order to gain quick market share before those brands can establish themselves there.