Just before Christmas, Congress passed the Consolidated Appropriations Act of 2021, which included a second round of Coronavirus relief as well as several important changes to federal copyright and trademark law. In a pair of articles, our team addresses these legislative changes so you can understand their potential impact. Below Gloria Tsui-Yip explores the Trademark Modernization Act (the “TMA”). In a companion article, Shane Wax discusses both the Copyright Alternative in Small-Claims Enforcement Act (the “CASE Act”) and the Protecting Lawful Streaming Act (the “PLSA”).
The TMA was officially signed into law on December 27, 2020 and will take effect one year later on December 27, 2021.[1] In the meantime, additional details on its implementation will be resolved by the USPTO. The following is a summary of the changes under the TMA for practice and planning purposes.
The goal of the TMA is to improve and protect both consumers and trademark owners by effectively decluttering the U.S. trademark register with more streamlined procedures to cancel trademark registrations due to nonuse. The TMA also improves the examination of pending trademark applications by codifying third party submissions currently known as Letters of Protest. The TMA also codifies the rebuttable presumption of irreparable harm when a trademark owner prevails in an infringement lawsuit.
A primary concern of the TMA was to address the increase in inaccurate and false claims of use in trademark applications.[2] In recent years, the USPTO has addressed the submissions of suspicious specimens of use that may not have been actually used in commerce with additional guidance on the examination of specimens.[3] The TMA goes a step further by providing frameworks to deal with this ongoing and problematic issue.
Ex Parte Expungement (Section 16A) and Reexamination (Section 16B)
Currently, cancellation of a trademark registration due to nonuse or abandonment is done by way of an inter partes cancellation action. This process will be simplified, for certain situations, under the TMA and allow a third party or the USPTO (sua sponte) to petition to: (A) expunge a registered trademark that has never been used in commerce with some or all of the goods or services; or (B) reexamine a registered trademark that was not in use in commerce when the application was filed (for an application based on use) or when a statement of use was filed (for an intent-to-use application) with some or all of the goods or services. In effect, situations where an inaccurate or false claim of use was submitted and previously accepted by the USPTO. A petition for expungement (Section 16A) or reexamination (Section 16B) requires a verified supporting statement and evidence, along with fees. Upon a showing of a prima facie case, the USPTO will institute the ex parte expungement or reexamination proceeding and notify the trademark owner. The trademark owner’s documentary evidence of use to counter the petition is not limited in form to that of specimen of use submitted during examination. Trademark registrations based on a foreign registration (§44(e) basis) or an international registration (§66 basis) that do not require evidence of use to secure a trademark registration, will be subject to a petition to expunge, but the trademark owner may offer evidence showing excusable nonuse if there has been no use.
A petition to expunge can be filed after the trademark has been registered for three (3) years, but before the tenth (10th) year.[4] A petition to reexamine must be filed within five (5) years of registration.
The basis for expungement will also form a basis for a notice of cancellation that may be filed against a trademark registration that has been registered for 3 years (and not limited to the ten year for a petition to expunge).
Third Party Submission
During examination of a trademark application, the USPTO currently has an informal mechanism for a third party to submit evidence bearing on the registrability of a trademark by way of a Letter of Protest.[5] If the USPTO determines that a Letter of Protest includes factual, objective, evidence that is relevant and support reasonable ground for refusal, such evidence will be forwarded to the examiner for consideration. As of January 2, 2021, the USPTO charges a $50 fee to file a Letter of Protest. The TMA codifies this existing Letter of Protest procedure.
Rebuttable Presumption of Irreparable Harm
Currently, there is a circuit split in federal courts on whether irreparable harm can be presumed when a trademark owner prevails in an infringement action to support an injunction. In some courts, even if a trademark owner can establish trademark violation, it still needs to show irreparable harm to be entitled to an injunction. The TMA resolves the circuit split and codifies that a trademark owner is entitled to a presumption of irreparable harm to support an injunction upon establishing trademark violation.
Other Changes to the Trademark Act
The TMA also amends the Trademark Act to allow a flexible response period to an office action. Currently, responses to office action must be filed within 6 months, which is a statutory deadline. The TMA allows setting a response period between 60 days and 6 months, with extensions available and the USPTO may prescribe a fee for the extensions. This would bring trademark prosecution in line with patent prosecution, where a shortened response period is provided and extensions with payment of fees are available. Under current U.S. patent practice, an office action provides a shortened 1 to 3 months response period and monthly extensions (up to the statutory 6 month period) are available with increasinly higher fee.
Conclusion
The USPTO will be formulating regulations to implement the new proceedings before the TMA takes effect on December 27, 2021. Therefore, trademark owners should take steps to keep track of and maintain documentary evidence of use of their trademark. For trademark owners that secure U.S. trademark registration based on a foreign trademark registration or an extension of an international registration, efforts should be made to use the mark before the third year of registration or maintain evidence to support excusable nonuse. Until the TMA takes effect later this year, petition to cancel a registered trademark remains available.
We will provide additional updates on the TMA and relevant USPTO regulations as they become available.
[1] Trademark Modernization Act of 2020, H.R. 6196, 116th Cong. (Dec. 27, 2020), amending 15 U.S.C. 1051, et seq., available at https://hankjohnson.house.gov/sites/hankjohnson.house.gov/files/documents/TM%20Act%20House%20-%20Bill%20Text.pdf (last accessed Jan. 4, 2021).
[2] Rep. Hank Johnson, the original sponsor of the bill, provided a summary of the TMA, available at https://hankjohnson.house.gov/sites/hankjohnson.house.gov/files/documents/TM%20Act%20-%20One%20Pager.pdf
[3] USPTO Examination Guide 3-19: “Examination of Specimens for Use in Commerce: Digitally Created/Altered or Mockup Specimens,” July 2019 (revised October 2020), available at https://www.uspto.gov/sites/default/files/documents/TM-ExamGuide-3-19.pdf.
[4] However, for 3 years after the TMA, a petition can be filed against a trademark that has been registered for more than 10 years.
[5] Trademark Manual of Examination Procedure §1715.