The Trademark Modernization Act of 2020 (TMA)1 took effect on December 18, 2021, creating additional avenues for enforcement and updating rules pertaining to trademark prosecution and maintenance. The most significant changes include new ex parte expungement and re-examination proceedings before the United States Patent and Trademark Office (USPTO), new rules pertaining to Letters of Protest and deadlines for office action responses, and the resolution of a circuit split by establishing a rebuttable presumption of irreparable harm in cases where infringement is found, making it easier for brand owners to secure injunctive relief. The TMA also includes the Copyright Alternative in Small-Claims Enforcement Act of 2019 (CASE Act),2 which implements a new Copyright Claims Board (CCB) charged with hearing disputes valued under $30,000, providing an alternative and lower cost avenue for copyright owners seeking to enforce their rights. These changes give rise to new strategy considerations for brand owners seeking to protect, maintain and enforce their trademarks and copyrights, which are discussed in this Legal Update.
Ex Parte Expungement and Re-Examination Proceedings, and New Grounds for Cancellation, to Remove “Deadwood” Trademarks
“Deadwood” registrations are trademarks that are registered but not in use. Once a mark registers, the registrant only needs to submit proof of use at six years, 10 years and every 10 years thereafter. As a result, marks can remain on the Trademark Register for years even though they are not in use. These “deadwood” marks can block parties from registering similar marks for similar goods or services and can present hurdles to launching new brands.
To address this issue and help clear the Trademark Register of zombie marks, the TMA enacted ex parte re-examination and expungement proceedings, which can be filed with the USPTO either by third-party petitioners or by the Director of the USPTO (Director) on their own initiative.3 Re-examination proceedings can be used to remove or limit trademark registrations where a registrant inaccurately claimed it was using the trademark in commerce as of a certain relevant date (i.e., the application filing date for marks applied for on a 1(a) “use” basis or the Statement of Use date for marks applied for on a 1(b) “intent-to-use” basis). Such proceedings must be filed within five years after a mark’s registration.
An expungement proceeding can be used to remove trademarks from the Trademark Register that have never been used in US commerce in connection with some or all of the registered goods and services. These proceedings can currently be filed after a trademark has been registered for three years. After December 27, 2023, expungement proceedings will be available for trademarks that have been registered between three and 10 years. Although expungement proceedings were aimed at addressing trademarks filed by foreign entities using the Madrid Protocol or Paris Convention, under which a use showing was not required to secure registration, these proceedings can be instituted against any registration that meets the relevant criteria.
Once a re-examination or expungement proceeding has been instituted and is pending, no similar proceeding may be instituted for that registration with respect to the same goods or services. If a subsequent proceeding identifies additional goods or services, it may proceed only with respect to the additional goods or services.
Both proceedings provide an alternative to a contested inter partes cancellation proceeding before the Trademark Trial and Appeal Board (TTAB), which can be costly to pursue. To initiate re-examination or expungement proceedings, a petitioner must:
- Pay a filing fee ($400 per class of goods or services challenged);
- Submit a verified statement that establishes that a reasonable investigation was conducted into whether the trademark has been used in commerce with specified goods or services as of a certain relevant date (re-examination) or that the mark was never used (expungement) and that includes a concise factual statement explaining the basis for the petition; and
- Submit evidence supporting a prima facie case for non-use as of a certain relevant date (re-examination) or that the mark was never used (expungement).
The Director will consider the petitioner’s evidence as well as the prosecution history for the registered mark, and if the Director finds that the petitioner established a prima facie case, the Director will institute a proceeding. The Director will send notice of the decision whether to institute a proceeding to both the petitioner and registrant, and the determination is final and non-reviewable. However, the petitioner can file a subsequent cancellation proceeding before the TTAB (as discussed below).
If the Director institutes the proceeding, the USPTO will issue an office action to the registrant, giving the registrant three months to respond with a one-month extension available.4 The registrant can respond by deleting the challenged goods or services or by proving use. Deleting goods or services in response to an expungement or reexamination proceeding costs $250 per class. If the registrant deletes the challenged goods or services, this terminates the proceeding. If the registrant chooses to prove use, they can provide information, exhibits or declarations showing use. The response must also identify who is representing the registrant, the registrant’s domicile address and an email address for electronic correspondence.
If the registrant proves use in connection with all or some of the challenged goods or services, the Director will terminate the proceeding, and the same proceeding cannot be filed by anyone in the future with respect to those same goods or services, alleviating the registrant from the burden of responding to duplicative challenges.
If the registrant does not respond or fails to show use, the USPTO will issue a final office action recommending the registration be cancelled in whole or in part, as appropriate. If the registrant did not identify its representative, domicile and email address, the final office action will recommend the entire registration be cancelled. The registrant has three months to request reconsideration or appeal to the TTAB.
Given these new avenues for challenging registrations, it is increasingly important for registrants to keep their registrations updated and reflective of only the goods and services for which the marks are in use. To encourage this practice, the TMA allows registrants to delete goods or services from their registrations free of charge (except during a proceeding or a maintenance period).
Cancellation Proceedings Can Be Instituted Before the TTAB Against Marks That Are at Least Three Years Old but Have Never Been Used
Before the TMA, the only ground to cancel a registered mark based on non-use was to establish abandonment.5 This required petitioners to demonstrate that the registrant abandoned the trademark without intention to resume use. Under the TMA, a Petition to Cancel can be filed for non-use after a mark has been registered for at least three years on grounds the mark has never been used in US commerce in connection with all or some of the goods or services covered by the registration.6
Cancellation proceedings are inter partes proceedings that require parties to make responsive filings and the petitioner to engage in discovery and submit evidence in support of its case. As a result, in most instances (with some exceptions for cases that settle early on in the proceedings), it will be more costly for a petitioner to undertake cancellation proceedings than to petition for expungement or re-examination. However, cancellation proceedings can give petitioners “two bites at the apple” in instances where the Director refuses to institute re-examination or expungement proceedings because cancellation proceedings may be commenced even in cases where a petition for re-examination or expungement has been denied.
Streamlining the Process for Letters of Protest
When a trademark application is filed, during the prosecution process or no later than 30 days after the date an application is published for opposition, third parties can submit evidence to the USPTO challenging the application on certain grounds by way of a Letter of Protest. Relevant grounds for a Letter of Protest include that the filed trademark is generic or descriptive or creates a likelihood of confusion or that the specimen proving use is improper.
While a useful and relatively inexpensive means to attempt to block a mark from registering (as compared to opposition or cancellation proceedings before the TTAB), Letters of Protest historically provided some uncertainties in that there was no established deadline by which the USPTO Deputy Commissioner was required to decide whether to act. The TMA has eliminated this uncertainty, requiring the Director (through the Deputy Commissioner) to consider Letters of Protest and decide whether to act within two months of the filing date. The Deputy Commissioner’s decision on a Letter of Protest is final and non-reviewable, and Letters of Protest do not prejudice a party’s right to raise any issue, rely on evidence or institute any other proceeding.
The TMA Makes It Easier for Brand Owners Who Establish Infringement to Obtain Injunctive Relief
To win an injunction, brand owners need to demonstrate trademark infringement (or, in the case of a preliminary injunction, a likelihood of success on the merits) and irreparable harm.7 Prior to the TMA, courts were split regarding whether proof of trademark infringement (or likelihood of success on the merits) creates a presumption of irreparable harm. Some courts held that, once a party proves infringement, irreparable harm is presumed.8 Other courts held that proof of trademark infringement does not create a presumption of irreparable harm.9 In those courts, it was necessary for a brand owner to also prove that: (1) it has suffered irreparable harm, (2) remedies available at law (monetary damages) are inadequate to compensate for the harm, (3) the balance of hardships to the parties favor the plaintiff and (4) the public interest would not be disserved by injunction.10 This made it more difficult to win an injunction in certain forums.
The TMA resolves the split, providing that infringement creates a presumption of irreparable harm. Specifically, the TMA amends Section 34(a) of the Lanham Act (15 U.S.C. § 1116(a)) to clarify that a rebuttable presumption of irreparable harm applies 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. This makes it easier for brand owners to secure injunctive relief against infringers regardless of forum.
Shortened Timeline to Respond to Office Actions
Currently, applicants or registrants have six months to respond to office actions as a matter of course, which can result in a years-long path to registration in some instances. The TMA provided the Director flexibility to shorten office action response times,11 and after December 1, 2022, the standard response time will be three months, except for applicants using the Madrid Protocol. Applicants can request a single three-month extension of time to respond for a fee of $125. The shorter response times are likely to expedite the registration timeline, which may prove useful to applicants seeking to establish nationwide brands or enforce their rights against infringers.
The CASE Act established the new Copyright Claims Board (CCB) within the US Copyright Office, which provides a cost-efficient means of resolving “low value” copyright claims up to $30,000 in actual or statutory damages.12 The CCB is composed of a tribunal of three “Copyright Claims Officers” appointed by the librarian of Congress and has jurisdiction over copyright infringement claims, claims seeking a declaration of non-infringement, certain claims arising under the notice and takedown provisions of the Digital Millennium Copyright Act (DMCA), and related defenses and counterclaims.13
Litigating before the CCB is voluntary.14 A party can opt out within 60 days of receiving the complaint and choose to resolve the dispute in federal court.15 If a party fails to timely file an opt-out notice, the party consents to the CCB proceeding, forfeits the right to litigate in court and waives the right to a jury trial.16
The proceeding is streamlined in several ways. There is no formal motion practice, there is limited discovery, and the CCB can ask the parties to address specific questions.17 Given the cost-efficiency and ease of bringing an action, there may be an increase in copyright enforcement, especially among copyright owners who may not have otherwise enforced their rights due to limited resources.
(For more information about the CASE Act, see https://www.mayerbrown.com/en/perspectives-events/publications/2020/12/ip-gets-modernization-stimulus-in-new-consolidated-appropriations-act-2021)
• Consider initiating expungement or re-examination proceedings as a measure of first attack in instances where “deadwood” registrations are blocking contemplated marks of interest from registration.
• If expungement or re-examination is denied, consider filing a cancellation proceeding.
• Monitor “deadwood” registrations of interest to ensure the applicable deadlines for initiating proceedings do not pass.
• Consider submitting Letters of Protest against infringing marks as they are now a relatively quick mechanism to potentially block concerning marks from registering.
• Take proactive measures to protect registrations from challenges by periodically reviewing registrations to ensure the covered goods and services accurately reflect how marks are used and updating registrations to omit goods/services for which marks are no longer in use.
• Foreign applicants should review US applications and registrations for vulnerability. Registrants under the Madrid Protocol and Paris Convention may be more likely to be the target of expungement proceedings, particularly those instituted by the USPTO Director.
• Timely respond to office actions issued in response to expungement or re-examination petitions to avoid cancellation of registrations in whole or in part for a failure to respond.
• In enforcement proceedings in federal court, consider whether injunctive relief, including a preliminary injunction, is appropriate given the more liberal standard for securing an injunction established by the TMA.
• Consider the CCB for small copyright infringement claims (up to $30,000) as a cost-efficient alternative to federal court litigation.
8 See CFE Racing Prods. v. BMF Wheels, Inc., 793 F.3d 571, 596 (6th Cir. 2015) (observing that irreparable harm exists in a trademark case where a party shows that it will “lose control” of its reputation)
9 See Ferring Pharm., Inc. v. Watson Pharm., Inc., 765 F.3d 205, 217 (3d Cir. 2014) (“a party seeking a preliminary injunction in a Lanham Act case is not entitled to a presumption of irreparable harm but rather is required to demonstrate that she is likely to suffer irreparable harm if an injunction is not granted.”); Herb Reed Enters., LLC v. Fla. Entm’t Mgmt., Inc., 736 F.3d 1239, 1249 (9th Cir. 2013) (“We now join other circuits in holding that the eBay principle—that a plaintiff must establish irreparable harm—applies to a preliminary injunction in a trademark infringement case.”)