In a time of challenges, any relief measure goes a long way. The Trademark Modernization Act of 2020 (TMA), which was signed into law at the end of last year, should be fully implemented and effective by December 27, 2021. The TMA provides significant relief to trademark owners and others concerned about brand name protection by providing new procedures to prevent or eliminate bad registrations and protect infringed parties.
Most notably, the TMA introduces amendments to the Lanham Act, which is also known as the Trademark Act of 1946, to combat fraudulent trademark practices in the United States. Key provisions of the TMA are as follows and further discussed below:
Ex Parte Proceedings
As stated by then Commissioner Denison, in recent years, “the USPTO has seen a significant increase in the number of applicants who are not fulfilling their legal and ethical obligations to file accurately and in good faith, particularly with respect to claims that the mark is in use in commerce. The USPTO increasingly has been receiving trademark application and registration maintenance filings involving false or inaccurate use claims and submission of fake or digitally altered specimens that do not actually show use of the mark in U.S. commerce in the ordinary course of trade as required by law”.[1] [2]
The TMA amends the Lanham Act by adding two new post-registration procedures for third parties to challenge existing trademark registrations on the grounds of non-use. Third parties do not need standing, under these procedures, to file petitions to expunge registrations and to reexamine registrations. These procedures, as outlined in new Sections 16A and 16B, address false assertions of use and fake specimens used in fraudulent trademark practices.
Under Section 16A, a third party can petition to expunge some or all goods or services in a trademark registration on the ground that the trademark was never used in the U.S. commerce as required for registration, provided that no ex parte expungement proceeding is pending with respect to the same goods or services. The petition is to include verified statement establishing that a reasonable investigation was conducted, supporting evidence, and required fees. An expungement petition must be brought between three and ten years of registration.
Under Section 16B, a third party can petition to reexamine a trademark registration on the ground that the trademark was not used in the U.S. commerce prior to a relevant date (depending on the basis on which the application was filed) in connection with some or all of the goods or services recited in the registration, provided that no ex parte reexamination proceeding is pending with respect to the same goods or services. Similarly, the petition is to include a verified statement establishing that a reasonable investigation was conducted, supporting evidence, and required fees. A reexamination petition, generally directed at a registration with a questionable specimen, must be brought within five years from when a trademark is registered based on use in commerce.
When a petition is filed by a third party under either procedure, the Director of the United States Patent and Trademark Office (USPTO) will determine whether the petition sets forth a prima facie case of non-use. While the House Committee Report states that generally “it is not expected that the results of a single internet search-engine search would be sufficient to support a prima facie case” in either proceeding[3], there does not appear to be further guidance on any additional showing that may be expected. The Director’s determination whether to institute an ex parte proceeding is final and non-reviewable. The registrant will then be required to present evidence to show use or excusable non-use. The Director can find the trademark invalid with respect to some or all of the goods or services, which finding is subject to appeal, or find the trademark valid and bar all subsequent ex parte challenges under the same goods or services against the trademark. Under both sections, the Director may initiate an ex parte proceeding within the appropriate time window without a third party petition, if the Director discovers information that supports a prima facie case of non-use.
The TMA provides additional procedures for any person to challenge bad-faith filings. The new procedures will not only help alleviate frustrations caused by bad-faith filings but also help improve the integrity of the federal trademark register by removing marks not used in commerce.
Presumption of Irreparable Harm
A requirement for injunctive relief in trademark and unfair competition litigation is a demonstration that a plaintiff will suffer irreparable harm without that relief. The Supreme Court’s 2006 decision in eBay v. MercExchange LLC, 547 U.S. 388 (2006), eliminated a presumption of irreparable harm in patent litigation and held that patent owners must demonstrate entitlement to a permanent injunction. Although eBay was not a trademark case, many federal courts started to depart from the long-standing presumption of irreparable harm in trademark litigation. The courts are divided on whether such harm could be presumed in trademark infringement cases, which encouraged forum shopping and undermined the consumer protection purposes of the Lanham Act. While some courts do not recognize a presumption of irreparable harm, considering the eBay holding all-encompassing, other courts either recognize irreparable harm without addressing eBay or question whether eBay eliminates the presumption of irreparable harm[4].
Under the TMA, a trademark owner is entitled to a rebuttable presumption of irreparable harm upon a finding of infringement in the permanent injunction context, or upon a finding of likelihood of success on the merits in the context of preliminary injunctive relief. To prevent forum shopping and reduce consumer confusion, the TMA establishes an important protection for trademark owners, which significantly reduces their burden to prove harm.
Other Changes
In addition to providing new ex parte proceedings to challenge existing registrations and establishing the presumption of irreparable harm, the TMA provides statutory authority to the existing Letter of Protest procedure for a third party to submit evidence tied to a particular ground of refusal in a pending trademark application for a fee. The Director has two months to review the evidence and the Director’s decision on whether to include the evidence in the application record is final and non-reviewable. The USPTO has issued rules setting out new relevant procedures for the third-party submissions during examination, including the amount of required fee, which went into effect on January 2, 2021.
Furthermore, the TMA permits examining attorneys to shorten response deadlines for office actions from the current six-month period to a period no shorter than 60 days. However, applicants may request extensions to have the full six months, with appropriate fees for time extensions.
These changes under the TMA alter the current examination practices before the USPTO and the courts. We are ready to handle these changes, such as ensuring that flexible deadlines to respond to office actions can be set in our docketing systems. We are also happy to assist trademark owners or branding professionals with taking appropriate defensive or offensive actions under the TMA.
[1] https://www.uspto.gov/about-us/news-updates/statement-commissioner-trademarks-mary-boney-denison-united-states-house.
[2] Also see https://tmep.uspto.gov/RDMS/TMEP/current#/current/TMEP-900d1e7.html.
[3] https://www.govinfo.gov/content/pkg/CRPT-116hrpt645/html/CRPT-116hrpt645.htm.
[4]https://www.judiciary.senate.gov/imo/media/doc/Rettew%20Testimony.pdf.
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