Last week, the U.S. Food and Drug Administration (“FDA”) announced that it will be conducting research in conjunction with a new rule they plan to roll out. The FDA update is located here. This proposed rule would update the definition of “healthy” and create a symbol for the “healthy” nutrient content claim. These updates are a part of the FDA’s Nutrition Innovation Strategy (NIS), which is intended to reduce the burden of chronic diseases related to nutrition. Nutrition-based chronic diseases impact communities of color at disproportionately higher rates than other communities. Nutrient content claims serve as quick signals to consumers about the health benefits of the food or drink they choose. Updated claims and symbols will help consumers get a better understanding of nutrition information and can also encourage companies to reevaluate the nutritional value of their products. If you have an idea on how the FDA can enhance the quality, usefulness, and clarity of the information they’re collecting, submit a comment here.
In case you missed it, Maryland became the first state back in February to pass a digital advertising services tax into law (and over the governor’s veto no less). The law, titled Digital Advertising Gross Revenues Tax, is designed to tax annual gross revenues derived from “digital advertising services” (meaning advertisements on a digital interface like a website or app) in the state. But it only applies to large-scale businesses (annual revenues from digital advertising services in Maryland of at least $1 million and global annual gross revenues of at least $100 million), with a sliding-scale tax rate, from 2.5% to 10%, based upon each business’s global annual gross revenues. The law was passed to be retroactive to January 1, 2021, meaning it would apply to the entirety of the 2021 tax year. Legal challenges came quickly thereafter, but none resulted in immediate overturning of the law.
Instead, in April, the Maryland legislature passed an emergency bill to amend the law (with no anticipated governor veto this time). The amendment provides exceptions such as disallowing the direct passing of the tax onto the consumer and exempting broadcast and news media entities. The amendment also delays the effective start date of the tax until January 1, 2022. The amendment is set to go into effect later this month and be retroactive to the date of the amendment. However, legal challenges continue to mount and will be monitored closely by those affected on both sides.
Critics of the legislation say that it will push the tax back onto consumers through higher prices. Proponents point to estimates that the law will create millions in tax revenue for the State of Maryland. Others comment, either positively or negatively, that the law appears to target businesses based outside of the state that provide digital advertising services within the state. Regardless of your viewpoint, it will be interesting to see if other states jump on this bandwagon — at least a few are considering it but may be waiting to see how Maryland’s legal challenges play out.
Every day we are inundated with countless advertisements. TV ads, radio ads, internet ads, billboard ads. But have you stopped to think, what exactly qualifies as an advertisement? Luckily for us, the National Advertising Division (“NAD”) recently issued a decision that sheds some light on exactly how broad agencies monitoring the advertising industry view “advertising.”
As a result of the COVID-19 pandemic, the ACT standardized testing organization published, on its website, that test centers may “occasionally” cancel tests due to unforeseen circumstances. Of course, due to the pandemic, ACT testing would likely, and presumably has been, cancelled far more than just “occasionally.” As a result, the NAD recommended that ACT update its website to provide more specifics on the possibility of cancellations, provide information on what a test taker should do if the test is cancelled, and provide specifics on what test centers may or may not be open during the pandemic.
But what does information regarding how often a test may be cancelled have to do with advertising? According to the NAD, advertising can be as broad to include any messaging that is meant to obtain a sale or some other form of commercial transaction. Because the messages pertaining to how often tests are administered are meant to induce a consumer to register for a test, the NAD determined that such communications do, indeed, fall into the category of advertisements. So, next time you are publishing a message, on a website or otherwise, give some thought as to whether it could be interpreted to be done for the purpose of obtaining a sale. If it is, do your best to include sufficient, clear information, especially in this time of COVID-19 uncertainty.
Yesterday, the USPTO issued an alert regarding emails that U.S. attorneys have been receiving from unlicensed persons offering to pay attorneys in exchange for use of the attorneys’ bar credentials in trademark filings. The USPTO views such communications as a tool intended to circumvent the U.S. counsel rule.
The USPTO cautioned U.S. attorneys that, by agreeing to such an arrangement, an attorney is aiding the unauthorized practice of law and violating the Federal Rules, including the USPTO’s Rules of Professional Conduct, 37 C.F.R. Part 11.
U.S. practitioners should be on the look out for these types of solicitations. If you receive a solicitation requesting use of your bar credentials, the USPTO has requested that you report it to TMScams@uspto.gov.
On March 17, 2021, in a matter of first impression, the United States Court of Appeals for the Fourth Circuit held a party appealing a decision of the United States Trademark Trial and Appeal Board (“TTAB”) may seek review of the decision in either the United States Court of Appeals for the Federal Circuit or a district court—even if the party had previously appealed an earlier TTAB decision in the same case to the Federal Circuit. See Snyder’s-Lance, Inc. v. Frito-Lay N. Am., Inc., Case No. 19-2316 (4th Cir. Mar. 17, 2021).
In 2004, Princeton Vanguard, LLC (later acquired by Snyder’s-Lance in 2012) (collectively, “Plaintiffs”) obtained a supplemental registration for the mark PRETZEL CRISPS for use with flat pretzel crackers. In 2009, Plaintiffs reapplied to register the PRETZEL CRISPS mark on the Principal Register in connection with the same goods based on a claim of acquired distinctiveness. Frito-Lay opposed the application and sought to cancel the supplemental registration, arguing the PRETZEL CRIPS mark is generic or, alternatively, the mark is highly descriptive of the product and has not acquired distinctiveness.
The TTAB ruled in Frito-Lay’s favor, holding the PRETZEL CRISPS mark is generic. The TTAB cancelled Plaintiffs’ supplemental registration and refused the application for registration on the Principal Register. The TTAB did not reach the question of acquired distinctiveness.
The Lanham Act provides that a party can seek review of an adverse TTAB decision through either the Federal Circuit or a district court. 15 U.S.C. §§ 1071(a), (b). Appealing to the Federal Circuit generally provides a quicker resolution of the appeal, but restricts the record to that developed before the TTAB. Conversely, filing a civil action in a district court allows for additional development of the factual record and de novo review of the TTAB decision. The district court path, however, is not without risks as it opens the appellant up to counterclaims by the other party.
If the appellant choses to seek Federal Circuit review, it waives the right to seek review of the TTAB decision in the district court. However, the appellee can force the case to proceed before a district court. 15 U.S.C. § 1071(a)(1). The reverse is not true. Neither party can force the other party to proceed before the Federal Circuit.
Plaintiffs appealed the adverse TTAB decision to the Federal Circuit because they sought review of a legal question and believed this to be the quicker route. The Federal Circuit held that the TTAB had applied the incorrect legal standard in determining whether the mark was generic, vacated the TTAB’s judgment, and remanded the case to the TTAB for further proceedings.
On remand, the TTAB again concluded that the PRETZEL CRISPS mark is generic. This time, however, it also concluded that, in the alternative, the mark had not acquired distinctiveness.
The second time around, Plaintiffs elected to seek review of the adverse decision in federal district court so they could expand the record to include additional evidence of acquired distinctiveness that had arisen during the intervening years—something they could not do in the Federal Circuit.
The parties litigated the case for two years before it was reassigned to a new district judge who, sua sponte, raised, for the first time, the question of whether the district court had jurisdiction to review the TTAB’s second decision given Plaintiffs had appealed the TTAB’s first decision to the Federal Circuit. The court ultimately concluded Plaintiffs’ initial election to proceed before the Federal Circuit meant they could appeal subsequent TTAB decision in the same case only to the Federal Circuit. Thus, the court dismissed the case for lack of subject matter jurisdiction. Plaintiffs appealed the district court’s decision to the Fourth Circuit.
The Fourth Circuit held the district court erred in dismissing the case for lack of subject matter jurisdiction. In reaching its decision, the Court noted that the Section 1071 waiver language relates only to the choice of review options for the decision from which a party appeals. More specifically, each unique decision the TTAB issues gives the losing party a new chance to choose between the two Section 1071 review options.
The Court found the statutory text ambiguous, yet ruled that the text favored Plaintiffs because the statute’s specification that, if a party elects Federal Circuit review, the Federal Circuit’s decision governs future proceedings in a case supports the notion that not all subsequent appeals would proceed before the Federal Circuit. If all future appeals had to return to the Federal Circuit, such language would be unnecessary.
Further, the Court determined that Congress’s use of the language “further proceedings in the case” makes clear that Congress knows how to refer to the whole case when it wants. Congress’s conscious use of the language “the decision” reinforces that the statute refers to each TTAB decision and that the wavier applies only to that decision, not to the full proceedings.
Moreover, applying the initial appellate venue choice to all later TTAB decisions would unfairly bind the initial winning party to the decision not to force district court review.
The Court also ruled that the legislative history for parallel patent provisions supported the Court’s decision, as did prior decisions issued by the Seventh and Ninth Circuit Courts of Appeal.
Finally, the Court evaluated policy considerations and concluded judicial economy favored Plaintiffs’ interpretation because, if a party could choose its appellate venue only once, it would likely to opt for district court review so as not to be precluded from further developing the record where necessary. This would result in more appellants seeking the drawn-out proceedings in district court rather than a quicker review by the Federal Circuit.
In view of the above, the Fourth Circuit reversed the district court’s decision and remanded the case to the district court for further proceedings.
On March 5, 2021, the U.S. Trademark Trial and Appeal Board (“TTAB”) issued a precedential decision affirming refusal of SolarWindow Technologies, Inc.’s application to register the word mark POWERCOATINGS. The decision is a cautionary tale, for counsel and applicants alike, of the potential future ramifications of allowing an application to go abandoned following a TTAB decision if the applicant intends to continue using the mark and may consider filing a future trademark application for the mark in connection with the same goods or services.
In 2014, SolarWindow filed an application to register the POWERCOATINGS mark in connection with the same goods at issue in the current proceeding (the “Prior Application”). In 2016, the TTAB affirmed the examining attorney’s refusal to register the subject mark on grounds of descriptiveness. SolarWindow failed to appeal the TTAB’s decision and the TTAB deemed the Prior Application abandoned (the “Prior Decision”).
Less than two years after the Prior Decision, SolarWindow filed the subject application seeking to register the same mark in connection with the same goods at issue in the Prior Application. This time, the examining attorney refused registration of the subject mark on two grounds: (1) the subject mark is merely descriptive under Section 2(e)(1) of the Trademark Act; and (2) the doctrine of res judicata precluded relitigation of the descriptiveness issue based on the TTAB’s Prior Decision. SolarWindows appealed the refusal and the TTAB ultimately ruled that the Prior Decision was a final judgment on the merits of the question of descriptiveness and that the prerequisites for res judicata had been satisfied.
Under the doctrine of res judicata (or claim preclusion), “a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action.” In re Bose Corp., 476 F.3d 1331 (Fed. Cir. 2007). Res judicata is not applicable if not all of the questions of fact involved in the latter proceeding were determined in the prior proceeding. [Decision, at p. 6]. Relying on its prior decision in In re Honeywell Inc., 8 USPQ2d 1600 (TTAB 1988), the TTAB concluded that, to excuse application of the doctrine of res judicata to the Subject Application, SolarWindow needed to demonstrate “a material change in the relevant conditions or circumstances.” [Id., at p. 8].
The TTAB held that SolarWindow failed to satisfy this burden because (1) only 20 months had passed since abandonment of the Prior Application, and (1) SolarWindow did not identify any new facts arising after the Prior Decision showing a “material change of circumstances or conditions.” [Id., at pp. 8-9]. The TTAB acknowledged that SolarWindow had attached evidence to its response to the examining attorney’s refusal on grounds of descriptiveness. However, SolarWindow failed to specify how these “additional facts” presented new circumstances or “whether the evidence [SolarWindow] relied] upon was unavailable when the [TTAB] previously adjudicated the question of descriptiveness of the subject mark in the Prior Decision. Instead, SolarWindow merely raised a “new argument” it could have presented during the prosecution of the Prior Application. [Id., at p. 9]. The TTAB found this argument insufficient to avoid the doctrine of res judicata, stating, “It was incumbent upon [SolarWindow] to put its best foot forward by presenting during prosecution of the Prior Application all arguments that it believe could overcome the descriptiveness refusal.” [Id., at pp. 9-10]. As a result, the TTAB affirmed the examining attorney’s refusal of registration.
In view of the TTAB’s decision, it is critical that, when applying to register a mark that the USPTO previously refused in connection with the same goods or services, counsel and applicants identify new facts, postdating the prior refusal, that demonstrate a “material change of circumstances or conditions.” Failure to do so will likely result in the application of res judicata and refusal of the latter application. New arguments that the applicant could have raised during the prosecution of the earlier application will not fly.
The United States Government is the largest single purchaser of goods and services in the world, spending over $550 Billion dollars a year. It has long been the policy of the United States to purchase buy American. Indeed, the Buy American Act, which promotes domestic purchasing of goods and services, was signed into law in 1933.
Yet, there has been a lot of recent Presidential Executive Orders directed to this same goal. For example, between January 31, 2019 and January 14, 2021, President Trump signed Executive Orders related to strengthening buy-American preferences for infrastructure projects, maximizing use of American-made goods, products, and materials, and encouraging buy American policies for the U.S. Postal Service. Within the first week of President Biden’s administration, he too signed an Executive Order on “ensuring the future is made in all of America by all of America’s workers.”
The problem these orders are trying to fix is that while the law and preference is to buy American, the Buy American Act allows for various exceptions, including when domestic items are not available at a reasonable cost or where trade agreements waive this requirement. There are also several loopholes, like what it even means to buy American. For example, in an effort to prevent companies from importing largely foreign-made goods and selling them as American made after minor assembly or making minor tweaks, Biden’s executive order orders federal agencies to reevaluate the thresholds used to determine U.S. content. Regardless of what impact this has on trade and the Government’s spending, the Government’s decision could impact what “made in America” means. If your company uses “made in America” or similar slogans on their products or in their advertising campaigns, it may be wise to pay attention. A legal statement today may by the subject of a false advertising claim tomorrow.
The pandemic relief and economic stimulus legislation that hurriedly passed Congress at the tail end of 2020, named the Consolidated Appropriations Act of 2021 (“the Act”), resulted in major changes to American trademark and copyright law. Specifically, the Act included three intellectual property bills: the Trademark Modernization Act of 2020, the Copyright Alternative in Small-Claims Enforcement Act of 2020 (the “CASE Act”), and the Protecting Lawful Streaming Act (the “PLSA”). As summarized in a recent client alert written by two of our colleagues, the new laws will make it easier for brand owners to obtain injunctive relief, create new procedures to challenge trademark registrations, establish a copyright small claims procedure, and make illegal streaming of copyrighted material a felony.
On the trademark front, our colleague and frequent blog contributor, Melissa Scott, has already posted a detailed summary of the Trademark Modernization Act, which can be found here.
On the copyright front, the Act includes two relevant changes. First, the CASE Act establishes a new voluntary alternative dispute resolution process for copyright infringement disputes before the U.S. Copyright Office. Parties will be able to bring certain claims before a new Copyright Claims Board, which will operate somewhat like a federal court and will have the power to facilitate settlement or resolution on the merits. Second, the PLSA amends the main federal criminal code to cover “Illicit digital transmission services.” It is intended to close a loophole and impose a felony on digital transmission services that make copyrighted works available via “streaming” (rather than “downloading” a copy), which is now the primary method audiences consume entertainment.
Overall, businesses should be prepared to understand these changes and how they may affect their trademarks and copyrighted works.
The Biden administration brings with it a changing of the guard at the United Stated Patent and Trademark Office (USPTO). As is customary for at least the last several decades, the USPTO’s leaders have resigned at or near the end of each presidential term. President Trump’s appointees have followed this custom. Indeed, both the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, Andrei Iancu, and his Deputy Secretary and Director, Laura Peter, announced last week that they would be stepping down. Peter acknowledged that such resignations are “customary upon a change of administration” in her announcement.
Iancu and Peter implemented new policies that many patent owners appreciated. For example, under their leadership the USPTO issued new guidelines on patent eligibility and adopted a new claim construction standard in post-grant proceedings (mirroring the standard used by District Courts). In addition, the rate at which the USPTO instituted post-grant proceedings—usually challenges to the validity of patents brought by third-parties—began to drop under their leadership.
While a big shake-up at the USPTO is not anticipated, Biden has yet to announce his pick to replace either Iancu or Peter. As is common with these positions, appointments are not expected for several months and a confirmation will not likely occur until mid-2021. Until new appointees are confirmed by the Senate, the Commissioner for Patents, Drew Hirshfeld, will step into Iancu’s role in leading the USPTO and senior counsel Coke Stewart will temporarily cover Peter’s role. For now, we wait to see who Biden nominates and what this signals for the future of the USPTO.
On December 27, 2020, Congress signed the Trademark Modernization Act of 2020 (the “Act”), which had rare bipartisan support, into law.
The Act makes substantive changes to the Lanham (Trademark) Act that will better protect the relevant consuming public from confusion regarding the source of goods and services, and implement procedures that the United States Patent and Trademark Office (“USPTO”), and trademark owners and applicants, can use to address fraudulent trademark filings in a more expeditious and less expensive manner. Additionally, the Act resolves the circuit split surrounding the presumption of irreparable harm in trademark infringement cases, which will reduce the evidentiary burden on trademark owners for obtaining injunctive relief.
Authority to Shorten Office Action Response Times
The Lanham Act previously required a trademark applicant to respond to an office action issued during examination within 6 months. See 15 U.S.C. § 1062(b). Under the Act, however, trademark examiners will have greater flexibility in setting response deadlines for office actions. The Act has amended the Lanham Act to authorize the USPTO to shorten response deadlines to between 60 days and 6 months, so long as applicants can obtain extensions of time to respond, up to the traditional 6-month period. The USPTO will require applicants to support requests for an extension of time with payment of a filing fee.
Third Party Submission of Evidence During the Examination Process
The Act also codifies the existing letter of protest procedure, which allows third parties to submit evidence during the examination of a trademark application that bears on the registrability of the subject mark, including, without limitation, evidence that the applicant’s claims of use of the subject mark are false and/or inaccurate. Under the earlier, informal procedure, there was no filing fee and there was no specific deadline for submission of the evidence to the trademark examiner.
Under the Act, the Director of the USPTO will have 2 months to review evidence submitted with a letter of protest. Further, the USPTO will establish, by regulation, appropriate procedures for the consideration of evidence submitted with a letter of protest, and may choose to institute a filing fee for the letter of protest.
Ex Parte Challenges to Registrations
With some limited exceptions, a trademark owner must use a mark in interstate commerce in the United States before the mark can qualify for registration. One of the Act’s primary goals is to reduce the issuance of registrations falsely claiming use of a mark that the registrant has not used in the requisite manner.
In recent years, the USPTO has seen a significant uptick in the number of registrations issued and/or maintained for marks that registrants either never used or no longer use, as required under U.S. trademark law. The issuance and maintenance of such registrations is, in many instances, the product of doctored photos or marketing materials that trademark applicants or owners have submitted to the USPTO falsely claiming that the subject mark is currently in use. The USPTO has noticed a higher rate of incidence of this problem in connection with applications and registrations owned by persons or entities located in China.
The existence of these “unused” marks on the federal trademark registers is particularly damaging to new market participants, who want to develop a brand for their products and services, and obtain protection for viable marks, but find their path to registration blocked by unused marks. Under the prior system, proving that a party fraudulently secured registration of a mark, such that the USPTO can cancel the registration, required a person to commence a trademark cancellation proceeding—a lengthy and expensive proposition.
To address this issue, the Act establishes two new procedures to review and cancel existing registrations for marks that registrants never used in interstate commerce or marks that registrants no longer use in interstate commerce.
Ex Parte Expungement
The Act has amended the Lanham Act to allow any person to file a petition to expunge a registration on the ground that the registrant has never used the subject mark in commerce or in connection with some, or all, of the goods or services recited in the registration. If the petition sets forth a prima facie case of nonuse, the Director of the USPTO will forward the petition to the registrant and an expungement proceeding would commence.
These expungement proceedings will primarily target registrations issued under Section 44(e) or Section 66(a) of the Lanham Act. It will also be available to third parties after the fifth anniversary of a registration’s issuance.
Ex Parte Reexamination Proceedings
The Act has amended the Lanham Act to allow any person to file a petition to reexamine a use-based registration on the ground that the subject mark was not used in commerce on or in connection with some or all of the recited goods or services “on or before the relevant date.” This mechanism will allow the USPTO to reexamine the accuracy of the registrant’s averment of use as of the filing date of that averment. Reexamination proceedings will not be available to challengers once the subject registration passes its fifth year of registration.
Unless the USPTO implements regulations including such a requirement, a party will not need to prove standing to initiate expungement or reexamination proceedings. Instead, any person can initiate expungement or reexamination proceedings by submitting a petition to the Director of the USPTO that sets forth evidence or testimony establishing a prima facie case of nonuse of a mark in commerce as of the “relevant date.” The Act requires that the petitioner supply evidence of a reasonable investigation as part of the petition to the Director. While the Act does not currently specify what constitutes a “reasonable investigation,” the Act charges the Director with creating regulations that (1) define what constitutes a reasonable investigation, and (2) identify the types of evidence that establish a prima facie case.
The Act defines the “relevant date” as:
- The date on which the registrant filed an averment of use to support an application filed with a Section 1(a) basis; and
- The third anniversary of a registration issued under either Section 44(e) or Section 66(a).
Alternatively, the Act allows the Director to initiate reexamination or expungement proceedings, on his or her own initiative, within the appropriate time window, if information creating a prima facie case of nonuse comes to the Director’s attention.
Regardless of how a prima facie case of nonuse as of the relevant date is established, the Director shall initiate the appropriate proceeding and require the registrant to come forward with documentary evidence to the contrary. If the Director deems the registrant’s responsive showing inadequate, the Director will strike the goods or services in connection with which use in commerce did not exist as of the relevant date from the registration, subject to the applicant’s right to appeal to the Trademark Trial and Appeal Board. However, if the Director finds the responsive showing adequate, that determination will have preclusive effect barring all further ex parte challenges to the registration—regardless of the identity of any subsequent challenger.
Clarification of the Presumption of Irreparable Harm in Trademark Infringement Cases
Finally, the Act also amends the Lanham Act to resolve a circuit split that arose following the U.S. Supreme Court’s ruling in eBay, Inc. v. MercExchange LLC, 547 U.S. 388 (2006), and that restores injunctive relief in trademark cases.
Prior to eBay, if a trademark owner prevailed in an infringement lawsuit, the trademark owner was entitled to a presumption that the court would enjoin the competitor’s continued use of confusingly similar marks to avoid causing further consumer confusion. In eBay, the Supreme Court held that no presumption of entitlement to an injunction existed in the patent context. Thereafter, a circuit split developed on whether a presumption of irreparable harm exists if a trademark owner proves a trademark violation.
The Act amends the Lanham Act to clarify that a rebuttable presumption of irreparable harm exists if a trademark owner proves a trademark violation, or shows a likelihood of success on the merits in the context of motions for temporary restraining orders or preliminary injunctions.
The reexamination and expungement procedures should prove invaluable to third parties seeking to invalidate registrations based on false claims of use. The procedures will streamline the cancellation process and result in quicker resolutions than a trademark cancellation proceeding. Further, the procedures would save third parties significant time and expense by requiring the USPTO to take the laboring oar on the issue of cancellation.
Unlike in a cancellation proceeding, once a party submits its initial evidence to the USPTO, the USPTO should handle all work for expungement and reexamination proceedings—i.e., demanding additional evidence from the registrant. If the registrant fails to provide the requested evidence, the USPTO can cancel the registration entirely, or in part for specific goods or services recited in the registration.
Moreover, the expungement and reexamination proceedings could prove effective deterrents to parties seeking to submit fraudulent evidence of use of a mark to secure registration in the USPTO.
Additionally, the Act provides courts and litigants with clarity regarding the showing of irreparable harm necessary to support a request for injunctive relief in litigation under the Lanham Act. This clarification should significantly reduce the incentive for forum shopping under prior law.