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.

Key Takeaways

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.