Trademark Modernization Act Becomes Law, Easing the Burden of Trademark Owners to Obtain Injunctive Relief and Curbing Trademark Registrations That Falsely Claim Use of a Mark
As part of the recent COVID-19 relief and government funding bill (“the Consolidated Appropriations Act”), Congress introduced significant changes to U.S. trademark law. The Trademark Modernization Act of 2020 (TMA) was signed into law on December 27, 2020. The Act intends to curb trademark registrations that falsely claim use of a mark, addresses the false-use-claim problem by creating new procedures to improve examination effectiveness and efficiency, and promotes remedies designed to protect consumers in trademark cases.
The TMA, which becomes effective one year after the date of its enactment, amends the Lanham Act by changing certain procedures in trademark prosecution before the United States Patent and Trademark Office (USPTO), providing new avenues for canceling fraudulent registrations, and clarifying the standard for obtaining injunctive relief in trademark litigation. The key takeaways from the Act are discussed below.
- Third-Party Submission of Evidence of Non-Use: Section 3 of the Act provides for third-party submission of evidence during examination of an application for federal registration of a trademark. In particular, codifying the practice of Letters of Protest, Section 3(a) allows third parties to submit to the USPTO certain evidence relevant to the examination of a trademark application for consideration in deciding whether a trademark registration should be issued. Relevant evidence can relate to any ground on which an examiner could refuse registration and now includes allegations that the applied-for mark has not been used in commerce. In other words, the Act further opens the ex parte trademark examination to third parties, which are allowed to dispute false claims of use made by the trademark applicant.
- New Deadlines to Respond to Office Actions: Amending the Lanham Act, Section 4 of the TMA provides flexibility for the USPTO in setting times for response to office actions issued during examination. The provision allows the office to set response periods, by regulation, for a time period between 60 days and six months, with the option for an applicant to request extensions to a full six-month period. Prior to the enactment of the TMA, the deadline to respond to Office Actions was set at six months, and the USPTO had no authority to modulate such timeline.
- New Ex Parte Procedures: Section 5 adds two new ex parte cancellation procedures to the Lanham Act: ex parte expungement and ex parte reexamination. These procedures are in addition to existing inter partes opposition and cancellation proceedings.
- Ex Parte Expungement: Section 5(a) provides procedures for ex parte expungement of trademark registrations for marks that have never been used in commerce.
- Ex Parte Reexamination: Section 5(c) provides procedures for ex parte reexamination of trademark registrations covering marks for which improper use claims were made during the examination process before registration.
- Difference Between Expungement and Reexamination: The substantive difference between ex parte expungement and ex parte reexamination is the time period for relevant use. An action for ex parte reexamination may be commenced at any time before the expiration of the five-year anniversary of the statement of use (i.e., five years from the application filing date in use-based applications AND five years from the date of filing of the Statement/Allegation of Use in intent-to-use applications). That is, reexamination is primarily concerned with false and inaccurate claims of use made during the examination of a trademark application.
In contrast, an action for ex parte expungement can be commenced after the third-year anniversary of registration, but before the tenth-year anniversary of registration. Furthermore, an action for expungement must claim that the registrant never used the mark in commerce.
On the whole, this means that third parties will have up to five years to dispute improper claims of use made in a trademark application, via the new ex parte reexamination procedure. However, third parties will have up to ten years to challenge registration of a mark that was never used, via the ex parte expungement procedure. The Act would still allow third parties to engage in traditional inter partes cancellation proceedings to cancel a registration for abandonment, if necessary, beyond the timeframe established under reexamination and expungement procedures.
- Appeal: Under Subsection (d), a registrant subject to an ex parte expungement proceeding or reexamination may appeal the decision to the Trademark Trial and Appeal Board and then to the Federal Circuit.
- Injunctive Relief and Irreparable Harm: Section 6 of the TMA creates a rebuttable presumption of irreparable harm in trademark infringement litigation. Under the Act, a plaintiff seeking a permanent injunction is “entitled to a rebuttable presumption of irreparable harm upon a finding of [trademark infringement].” Similarly, a plaintiff seeking a preliminary injunction or a temporary restraining order is entitled to the same presumption “upon a finding of likelihood of success on the merits.”
In sum, the TMA adopts a number of reforms that curb abuse of the system by owners of illegitimate marks and better protect owners of legitimate marks. These changes to the Lanham Act will provide parties with more options in challenging trademark applications and registrations. Moreover, the Act protects trademark owners by easing the burden to show irreparable harm for obtaining injunctive relief in federal court.
Gibbons will continue to monitor changes to the Lanham Act and provide updates as applicable.