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.

Two of our colleagues, Patricia Flanagan and and Alex Braunstein, recently wrote an alert on trademark and copyright changes that have been included in the most recent stimulus package. The Consolidated Appropriations Act of 2021, which was signed into law on December 28th, makes significant changes to American intellectual property laws via its inclusion of the Trademark Modernization Act of 2020 (TM Act); the Copyright Alternative in Small-Claims Enforcement Act of 2020 (CASE Act); and an amendment to Title 18 of the United States Code that adds Section 2319C titled “Illicit digital transmission services.”

As the alert points out, a few highlights of these new laws include:

  • Clarifying that a reputable presumption of irreparable harm exists for trademark violations, making it easier for trademark owners to obtain injunctive relief
  • Implementing new procedures for addressing false use claim problems
  • Establishing a new voluntary alternative dispute resolution process for copyright infringement disputes before the U.S. Copyright Office
  • Making illegal streaming of copyright material a felony

For a full summary of the changes included in the Consolidated Appropriations Act of 2021, you can read Patricia and Alex’s alert here.

FTC

The Federal Trade Commission (FTC) recently released its analysis showing that the number one way scammers have extracted money from defrauded consumers is through gift cards.  In its press release, found here, the FTC stated that that consumers have spent almost $245 million since 2018 on gift cards that went to scammers.  The FTC’s data analysis is located here. Scammers will convince consumers that they need to pay the scammer (for example, by claiming to be a government agency that needs to be paid off to avoid penalties, or by claiming to be a business offering special promotional pricing for a service) and that the payment needs to be made in gift cards.  They will then have the consumer go to an outlet to purchase a gift card and provide the scammer with the PIN on the cards.  Reports to the FTC indicate that eBay is the gift card of choice for scammers.

To try to combat this, the FTC has rolled out new materials that retailers can place at their front counters, which can be found here.  The FTC’s advice to consumers, though, is straightforward: “Whenever someone demands to be paid with a gift card, that’s a scam. Gift cards are for gifts, not for payment. If you paid someone with a gift card by giving them the numbers on the card, keep the card and your receipt, and report it to the card issuer immediately.”

Can landlords, whose tenants infringe on others’ trademarks, be held liable for trademark infringement? According to the 11th Circuit, the answer is yes. In Luxottica Group v. Airport Mini Mall, LLC, the 11th Circuit determined that a landlord whose tenants sell counterfeit goods can be liable for contributory trademark infringement if the landlord either stayed willfully blind to or had knowledge of the tenant’s infringing actions.

In its decision, the 11th Circuit assessed whether Airport Mini Mall’s (“AMM”) actions constituted contributory trademark infringement. Under the Lanham Act, a defendant may be liable for contributory infringement if (1) another entity commits direct trademark infringement, and (2) the defendant either intentionally induces the infringement, has actual knowledge of the infringement, or has constructive knowledge of the infringement. To support a showing of constructive knowledge, a plaintiff can demonstrate that a defendant remained “willfully blind” to the infringing actor’s unlawful conduct, which takes place when a defendant suspects wrongdoing but fails to investigate it. Importantly, the 11th Circuit determined that “a landlord may be contributorially liable for its (sub)tenants’ direct trademark infringement if the landlord intentionally induces the infringement or knows or has reason to know of the infringement while supplying a service (such as space, utilities, or maintenance) that facilitates it.”

During AMM’s time as landlord of the shopping center in question, the mall experienced three law enforcement raids that seized alleged counterfeits of Luxottica’s products. Even more, during AMM’s tenure, Luxottica sent two letters notifying AMM that its subtenants may be selling counterfeit products. Despite those events, however, AMM failed to determine whether their tenants’ products were in fact counterfeits, did not terminate their leases, and even renewed the leases of multiple potentially infringing tenants. As a result of these actions, the 11th Circuit determined that AMM was willfully blind and responsible for contributory infringement: “even if liability for contributory trademark infringement requires the defendant to have knowledge of specific acts of direct infringement, the evidence in this case was sufficient for a reasonable jury to find that the defendants had at least constructive knowledge of (or were willfully blind to) specific acts of direct infringement by their subtenants.”

If you are a landlord, it is likely best to avoid renting commercial space to tenants undertaking infringing behavior, and if you’re notified of such behavior, it is likely best to avoid staying “willfully” blind to that infringement. Otherwise, you could ultimately find yourself liable to those businesses enforcing their trademarks or other intellectual property rights.

On December 1, 2020, the TTAB continued its recent trend of decisions refusing to register marks on the ground of failure-to-function. In another precedential decision, the TTAB refused Applicant Lee Greenwood’s (“Greenwood”) application to register the phrase GOD BLESS THE USA for use in connection with “accent pillows; decorative centerpieces of wood” and “decorative wall hangings, not of textile,” finding that the applied-for phrase failed to function as a trademark. In a double-blow, the TTAB refused to enter Greenwood’s proposed amendment of the mark to THE LEE GREENWOOD GOD BLESS THE USA, ruling that such an amendment constitutes a material alteration of the proposed mark.

Failure-to-Function

On the issue of failure-to-function, the examining attorney argued that Greenwood’s original proposed mark fails to function as a trademark because GOD BLESS THE USA is “a common patriotic message, analogous to and synonymous with ‘God Bless America.’” [Decision, at p. 6]. In support of this position, the examining attorney presented evidence from more than 36 third-party websites showing that the phrase GOD BLESS THE USA is commonly used on a wide array of goods. [Id.].

The TTAB noted that the critical inquiry in determining whether a proposed mark functions as trademark is how the relevant public would receive the proposed mark. [Id., at p. 4]. In considering this inquiry, the TTAB found Greenwood’s case “reminiscent of” the case of D.C. One Wholesaler v. Chien. [Id., at p. 8].

D.C. One Wholesaler involved common use of the phrase “I ♥ DC” on a wide range of goods, including apparel, keychains, and commuter cups. [Id.]. In that case, the TTAB found that the “‘widespread ornamental use of the phrase by third parties “is part of the environment in which the [proposed mark] is perceived by the public and … may influence how the [proposed mark] is perceived.’” [Id., at p. 9 (quoting D.C. One Wholesaler, 120 USPQ2d 1710, 1716 (TTAB 2016)].

Relying on precedent, the TTAB ruled, “the phrase GOD BLESS THE USA is displayed, not as a source indicator, but as an expression of patriotism, affection, or affiliation with the United States of America.” [Id.]. In so ruling, the TTAB expressly rejected Greenwood’s argument that the public would commonly recognize the phrase GOD BLESS THE USA as referring to his signature song—a country song that has been downloaded no less than 2.5 million times. [Id.]. Despite Greenwood’s talent and fame as a country singer, the TTAB cautioned that, because there are no limitations to the channels of trade or classes of consumer of the goods identified in the subject application, the relevant consumers are members of the general public, who may, or may not, be music aficionados. [Id., at p. 10]. Thus, the TTAB held that Greenwood’s proposed mark GOD BLESS THE USA is “devoid of source-identifying significance and therefore fails to function as a trademark.” [Id.].

Materially Altering the Proposed Mark

As an alternative argument, Greenwood proposed amending his application to include his registered mark THE LEE GREENWOOD COLLECTION. Greenwood argued that his registered mark appears close to his applied-for mark GOD BLESS THE USA on the specimens of use he provided to the USPTO. [Decision, at p. 11]. The examining attorney rejected Greenwood’s proposal, noting that Trademark Rule 2.72 allows an applicant to amend the description or drawing of the mark only if “the proposed amendment does not material alter the mark.” [Id., at p. 12].

In further support of his position, Greenwood relied on ownership of a registration for the mark THE LEE GREENWOOD COLLECTION for use with the same goods recited in the subject application, and maintained that he is allowed to amend the proposed mark to include his previously registered mark because the TMEP states, “An amendment adding an element that the applicant has previously registered for the same goods or services may be permitted.” [Id. (quoting TMEP § 807.14(b))].

The TTAB considered various precedents regarding this issue and concluded that, under current law, “the key comparison is between the proposed amendment and the drawing of the mark in the original application.” [Id., at p. 21]. More specifically, the crucial question is whether the old and new forms of the mark create “essentially the same commercial impression.” [Id.].

A person must answer this question of fact regarding commercial impression from the viewpoint of the ordinary consumer. [Id., at p. 22 (citing, inter alia, DuoProSS Meditech Corp. v. Inviro Medical Devices, Ltd., 695 F.3d 1247, 103 USPQ2d 1753, 1757 (Fed. Cir. 2012)]. The TTAB noted that ordinary consumers, unfamiliar with registrations on the Principal Register, could conceivably view the addition of an applicant’s previously registered matter as a significant change from the mark as originally filed. [Id., at p. 22].

The TTAB ultimately held that “previous registration of matter added in a proposed amendment is not an exception to the rule against material alteration; it is a factor to be considered in determining whether the alteration is material.” [Id.]. Reviewing the proposed alteration in this case, the TTAB agreed with the examining attorney that the addition of THE LEE GREENWOOD COLLECTION to GOD BLESS THE USA would materially alter the original mark. [Id., at p. 23]. Thus, the TTAB rejected Greenwood’s proposed amendment to the subject application.

The decision is In re Lee Greenwood, Serial No. 87168719 (TTAB December 1, 2020) (precedential).

Today I attended the United States Patent and Trademark Office’s (USPTO) virtual webinar on trademark trends and current developments in the United States and in Israel.  Among the speakers were Andrei Iancu, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, and David Gooder, the Commissioner for Trademarks at the USPTO.

Mr. Iancu provided opening remarks about the importance of intellectual property to world economics – for job creation, growth of existing companies, new business formation, and improving economies around the world. He noted that September 2020 was the biggest filing month in the USPTO’s history and that the fiscal year ending in September 2020 was the highest filing year in the USPTO’s history. He sees this growth continuing, due in part to the Covid-19 pandemic motivating people to create new companies, brands, and products, and he also referenced the growth of ecommerce and the shift to online retail. He explained that bad faith filings continue to plague the USPTO, in response to which the USPTO has taken a number of steps including requiring foreign filers to have US counsel (see our prior blog post here). He said, among other things, that intellectual property must be predictable, reliable, and enforceable – something with which companies and practitioners likely agree.

Mr. Gooder provided some tips for trademark applicants and common mistakes to avoid in trademark applications. He mentioned the need to use real specimens for showing use in commerce (see our prior blog post here) and proposed using more than one specimen when filing a use-based application. He suggested really knowing what the goods/services at issue are and volunteering a disclaimer when appropriate.  With respect to the Acceptable Identification of Goods and Services Manual (ID Manual), he advised using IDs only from the manual and making sure the ID reflects the end product (not the format of the specimen). He also explained that examiners truly try to help applicants get their marks approved and that picking up the phone is an easy way to connect with them.

Overall, the United States portion of the webinar was informative and interesting. It would be nice if the USPTO did them more often, whether in tandem with other countries or individually.

Most people, attorneys and non-attorneys alike, have heard of consumer protection agencies like the Federal Trade Commission, or FTC. Likely fewer, however, have heard of the National Advertising Division, or NAD. In short, the NAD operates as the advertising industry’s internal regulatory agency. The NAD monitors truthfulness and accuracy in advertising, and even foresees a voluntary dispute resolution process between advertisers.

Recently, two high profile entities brought their dispute in front of the NAD. The maker of Gatorade, Stokely-Van Camp, Inc., challenged statements in advertising made by the maker of BodyArmor SuperDrink and BodyArmor Lyte sports drinks, BodyArmor Nutrition, LLC. In Particular, Gatorade challenged the truthfulness of BodyArmor’s advertising statements that it is “The Only Sports Drink.” Additionally, Gatorade challenged two videos BodyArmor posted on social media and certain press kits created by BodyArmor that compared certain of its products to Gatorarde’s.

As to the phrase “The Only Sports Drink,” the NAD determined that, although in different contexts such a statement may be considered puffery (i.e. “sales talk”), the way in which the phrase was placed—preceding descriptions of the drinks as containing no artificial sweeteners or being low calorie—implied that no other sports drink was low in calories or contained no artificial sweeteners. As a result, the NAD recommended that BodyArmor discontinue using the advertising term in such a way.

As to the comparison posts and press kits, however, the NAD determined that such comparisons constituted fair advertising. Of particular concern with the comparisons, which compared only select drinks, was whether a consumer would see those comparisons and broadly extrapolate them to all Gatorade products. The NAD determined that a consumer viewing these advertisements would likely not view them in a broad context, but would limit the comparison to the products put forth in the advertisements.

To read more about the National Advertising Division and the tasks it undertakes, visit https://bbbprograms.org/programs/all-programs/national-advertising-division.

Last month, the U.S. Patent and Trademark Office (PTO) issued a guidance document describing how they plan on following the Supreme Court’s recent decision in U.S. Patent and Trademark Office v. Booking.com. You can read our previous blog post about this decision here. This document serves as a roadmap for how the PTO will address “generic.com” trademarks in the future. In Booking.com, the Court rejected a per se rule allowing such trademarks as automatically non-generic. Thus, the agency notes that if examining attorneys want to establish that a generic.com term is generic, they must show “that the relevant consumers would understand the primary significance of the term, as a whole, to be the name of the class or category of the goods and/or services identified in the application.” The PTO goes on to note that even in the absence of evidence showing generic use of a generic.com term, a mark may still be refused if evidence of the record establishes that the proposed mark “yields no additional meaning to consumers capable of distinguishing the goods or services.”

Consumer perception can be shown in a number of ways, one being consumer surveys. When rejecting a “generic.com” mark, the examining attorney will need to explain how the evidence supports the genericness of the term and that the mark does not create new or “additional significance among consumers capable of indicating source.”

Taking into consideration the holding of Booking.com, the PTO acknowledges that generic.com term applicants will have to overcome a significant evidentiary burden if they want to establish that the proposed mark has acquired distinctiveness under Trademark Act Section 2(f). Once again, consumer surveys can be submitted as evidence in support of a Section 2(f) claim. Surveys can be great evidence to support a Section 2(f) claim, however the Supreme Court cautioned that these surveys need to be designed in a way that ensures they’re an accurate and reliable representation of consumer perception of the proposed mark. In addition to the survey submission, applicants will also need to include specifics about the survey including a report detailed information about how it was conducted.

If you are planning to submit an application for a generic.com mark, be sure to check out to the PTO’s guidance to ensure that you’ve provided enough evidence to overcome the evidentiary burden.

 

To apply for a federally-registered trademark with the United States Patent and Trademark Office (USPTO), an applicant is required under 15 U.S.C. § 1051 to, among other things, submit specimens of the mark and verify that it is being used in commerce (or in the event of a future intent to use, verification as such and future submission of specimens).

Last month, the USPTO revised its Examination Guide 3-19, titled “Examination of Specimens for Use in Commerce: Digitally Created/Altered or Mockup Specimens.”  The guidance speaks to whether digitally created/altered and mockup specimens submitted to the USPTO can constitute examples of use in commerce either of a mark on goods or of a mark associated with services. The USPTO concludes that such specimens do not evidence actual use in commerce.  Accordingly, the USPTO instructs examining attorneys to issue a refusal of registration and request additional information from the applicant (while also empowering examining attorneys to conduct independent research).  In response, the applicant may defend the original specimen or may choose to amend its filing or submit a verified substitute specimen.

The USPTO’s Examination Guide defines digitally created/altered and mockup specimens as follows:

  • A digitally created specimen comprises a digital drawing of the goods or packaging on which the mark appears.
  • A digitally altered specimen includes a digital alteration of an existing image of goods or packaging for goods, a display associated with goods, or an advertisement or website that purports to show the mark used on the goods or in the sale, performance, or rendering of services.
  • A mockup specimen comprises a digital or non-digital rendering of what a mark would look like on a product, display, or website; these may be created solely for submission with the application.

Therefore, as a reminder, when compiling evidence of use to submit with a trademark registration, always make sure to utilize actual evidence of use, and not any digitally created, digitally altered, or mockup specimens.

For the first time in nearly three years, the USPTO will be adjusting its fees for Trademark Registrations and for filing fees related to proceedings involving the Trademark Trial and Appeal Board (TTAB). Some fee increases are minimal (e.g., only about 10% increase to file an ex parte appeal). However, other fee increases are substantial, at least one fee increasing by 250%. In addition, the USPTO has added a variety of new fees for various actions.

Notable increases or new fees include:

  • The TEAS Standard Filing Option (used to file an initial application for a trademark) will increase from $275 to $350.
  • The filing a section 8 or 71 declaration (post registration) will increase from $125 per class to $225 per class.
  • A new fee for deleting goods, services, and/or classes from a registration will be added and cost $250 per class.
  • Petitions to the Director will increase from $100 to $250.
  • A new fee for letters of protest to the Director will be added and cost $50.
  • Petitions to the TTAB to cancel a mark as well as Notices of Opposition will increase from $400 per class to $600 per class.
  • A new fee to file appeal briefs in an ex parte appeal will be added and now cost $200 per class.
  • A new fee to request an oral hearing with the TTAB will be added and now cost $500 per proceeding.

These fee changes and others become effective January 2, 2021. Thus, to save some on your legal fees it is best to address your trademark issues sooner than later. Remember, Hindsight is 2020.