On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law. This massive 5660 page bill consolidated Covid-19 economic assistance to America with an omnibus 2021 bill that covers everything from pipelines to Asian carp. It also resolves a decades-long discussion in U.S. copyright circles by enacting a small claims adjudication body, makes it a felony to run an internet business the purpose of which is to stream infringing content, and makes the most significant changes to the U.S. trademark law since 1946. I’ll talk about the trademark changes this time, and we’ll cover the new copyright laws separately.
Cleaning up the Register
The Trademark Modernization Act was first introduced in March of this year. It makes substantial changes to trademark practice that are largely designed to do two things – allow for speedier examinations, and get rid of or prevent bad registrations. By “bad registrations,” I’m referring to two kinds of registrations for now. There are those that do nothing to further consumer protection and are in fact likely to confuse consumers because they are too similar to another prior registration to sufficiently distinguish the source of goods. There are also those that have never been used in commerce and therefore never should have been granted. Later, after a decluttering study is conducted by the trademark office, we may also be able to include straight-up fraudulent registrations with fake specimens in the definition of “bad.”
The law attempts to accomplish these goals with the following provisions.
Formalizing Letters of Protest
The US Trademark Office has long supported an informal process for brand owners to try to stop an application from reaching publication by submitting a “Letter of Protest” via a petition to the Director. The petitioner includes evidence in a Letter of Protest demonstrating why the petitioner believes that the pending application should be refused. The Director considers the evidence and determines whether it should be passed to the examining attorney for consideration. The process has always been loose and timelines were undefined. The Act formalizes this process and sets a 2 month time frame for the Director to make the decision to pass the evidence to the examining attorney or not.
Shortening Office Action Response Times
Currently, any Office Action that an applicant receives refusing registration for any reason comes with a 6-month timeline to respond. Sometimes the Office Action is nothing more than a request for a disclaimer of exclusive rights to the word “Association,” for example, and yet the applicant has six months to respond. Under the Act, the Director can determine of certain types of Office Actions should have a response deadline of 60 days (or more) instead of 6 months. Of course, an applicant will always be able to pay a fee for the privilege of extending her response time to the six months she was entitled to before the effective date of the Act.
Expungement and Re-examination of Never-Used Marks
This is one of the most significant changes coming to U.S. trademark practice as a result of the Act. This creates an entirely new ground to deal with registrations of marks that “have never been used” in commerce. There are two primary differences between this new expungement option and a traditional cancellation proceeding. First, “any person” may file a petition to expunge a registration, as opposed to “any person who believes he is or will be damaged.” Petitioners for expungement will evidently not need to show that they are harmed by the continued presence of this mark on the register in its current form.
The second primary difference is that the expungement proceeding is ex parte, meaning that the Trademark Trial and Appeal Board is not involved. The petitioner for expungement in fact has to do very little past the initial complaint.
A whole new ground for removal
The Act creates a new section of the Lanham Act, 15 USC 1067, under which a petition is filed to the Director for expungement of a mark “that has never been used in commerce.” The Director determines if there is sufficient evidence in the petition to send it forward. If the Director determines there is enough evidence, the mark will be subject to the same examination process as if it were in the initial application stages for registration. This process will include the same response times for Office Action responses as in the initial ex parte examination of a new application.
One significant difference from the initial application process, however, is that the owner of the mark that is the subject of the expungement proceeding does not have to meet the more stringent requirements regarding specimens of use – the registration owner has more flexibility in the defense of his registration.
Finer points about Expungement and Re-examination
Excusable non-use is a defense to an expungement proceeding, although a registrant may have a hard time showing excusable non-use when he wasn’t using the mark at the time he declared that he was may prove difficult. Expungement petitions can be filed any time after the registration is 3 years old until it is 10 years old. There is one exception – for two years after the Effective Date, a petition may be filed against a registration of any age over 3 years. If the proceeding finds that the mark has never been used for some or all of the goods and services claimed under the mark, then those goods and services will be removed from the registration.
Re-examination petitions will follow the same process as expungement petitions, and are the option when a party doesn’t wait until the registration ages 3 years. If a party can show that the mark was not in use on the goods and service on the relevant date – either the application date of a 1(a) in-use application or the Statement of Use date on a 1(b) application, then the party can ask that the registration be re-examined. This option will be open for the first 5 years of the life of the registration.
Since the expungement and re-examination proceedings are relatively inexpensive and painless for the petitioner and the USPTO shoulders much of the burden, the Act also allows the Director to put a cap on how many petitions a particular party can file. The goal here is to cut down on trolls and abuse of the process.
The Director may institute expungement or re-examination proceedings on his own initiative.
The Decluttering Study
The Act calls for the Trademark Office to produce, within 30 months of the enactment, a study on addressing “innacurate and false claims of use.” This is the latest effort to address the increasing use of fake and fraudulent specimens in order to obtain a trademark registration.
Resolving a Circuit Split on Presumption of Harm in Injunctions
The Act resolves a circuit split as to the standard for issuing an injunction in trademark infringement, cybersquatting, and false advertising cases brought under the Lanham Act. In 2006, a patent case at the Supreme Court, eBay v. MercExchange, LLC, 547 U.S. 388 (2006), found that the patent owner was not automatically entitled to an injunction even if infringement was found or likely to be found. Instead, the plaintiff also had to satisfy the traditional four-factor test for granting an injunction. The Third, Ninth and Eleventh Circuits had similarly raised the bar for obtaining injunctions in trademark cases. The Act confirms that the eBay case does not apply in trademark cases. It provides that a trademark owner is entitled to a rebuttable presumption of irreparable harm when either (i) a Lanham Act violation is found, or (ii) it has shown a likelihood of success of prevailing on its claims in either a motion for a preliminary injunction or temporary restraining order.
Focus On Use
The Trademark Office has given a lot more scrutiny to use claims in the last few years, first with the Post-Registration Audit Program and through other pilot programs to stream cancellations for non-use and to allow for reporting of fake and fraudulent specimens. As the Trademark Modernization Act takes effect on December 27, 2021, we will wait to see if it is an effective check against bad registrations, or a frustrating obstacle to good ones, or both. How these revisions act in practice will depend on the rules put forward by the Trademark Office. We will be waiting for those proposed rules and will report back as these new practices start to take shape.
