Congress passed a bill recently signed into law that made significant changes to trademark law, and in this article I highlight some parts of this bill and their significance. The usual caveat that nothing in this article constitutes legal advice applies!
Near the end of 2020, the Trademark Modernization Act of 2020 (“TMA”) became law, amending the Lanham Act, which governs federal trademarks, significantly. A strong motivation for the law was to protect new market entrants and legitimate trademark holders from improper trademark use claims generally and to clean up the trademark register. The law streamlines the trademark application process (in part to support the first aim) and promotes better remedies for consumers in trademark cases. I will touch on each of these points below.
CLEANING UP THE TRADEMARK REGISTER
Anybody who has applied for a trademark in recent years knows that nearly all desirable marks now have a high potential for conflict based on existing marks on the database. This problem has been exacerbated by the recent flood of fraudulent trademark registrations originating from other countries (especially China), which rely on doctored photos to demonstrate use of a mark to fraudulently obtain a trademark registration. This issue is in turn exacerbated by benefits conferred by Amazon in connection with having a registered trademark associated with listing products (and less frequently, services), which raises the stakes for many brands that sell on Amazon and incentivizes them to secure a federal trademark.
Section 5 of the TMA adds two new ex parte cancellation procedures to the Trademark Act. Current law provides that a third party can only request cancellation of a trademark registration through an inter partes procedure before the Trademark Trial and Appeal Board or in a lawsuit in district court. The new procedures provide an expedited process by which a third party can request cancellation (or expungement) of a registration when proper use of a trademark was never made by the registrant. This, of course, should result in more efficient expungement of fraudulent marks that do not meet the USPTO use requirements via policing by vigilant third parties of interest, since it doesn’t require that third parties challenge applicants directly (which is more time consuming and expensive).
Section 7 of the TMA provides for a Government Accountability Office (“GAO”) study and report on efforts to declutter the trademark register which will help new market entrants, including the new procedures provided by the TMA as well as other efforts undertaken by the United States Patent and Trademark Office (“USPTO”). In addition to this study, the law provides the USPTO Director with new authority to reconsider, modify, or set aside certain decisions made by the Trademark Trial and Appeal Board. Filing a petition to the Director will cost $250 in 2021.
STREAMLINING THE TRADEMARK APPLICATION PROCESS
Section 3 of the TMA codifies the existing “letter of protest” procedure, which permits the submission of evidence by other parties during the trademark examination process that bears on the registrability of an applied-for mark. The existing procedure is informal, does not require a fee, and does not provide a timeline for when the evidence must reach an examiner. Under the TMA, the Director of the USPTO will have two months in which to review the evidence submitted with a letter of protest. In addition, the law requires the USPTO to 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 2021, a letter of protest will cost $50 per application.
Section 4 of the TMA amends section 12(b) of the Trademark Act (15 U.S.C. 1062(b)) to provide the USPTO flexibility in setting times for response to office actions (an office action is a determination from the trademark examining attorney that the application does not meet all necessary requirements) issued during examination. Currently, the statute requires that the USPTO allow six months to respond in all cases. The new provision would allow the office to set response periods, by regulation, for a time period between 60 days and six months, with the option for an applicant to request extensions to a full six-month period. This is interesting because it will increase the efficiency of the examination process by making it harder for dubious application “deadwood” to harm other legitimate trademarks by remaining on the register for longer periods and benefitting from unnecessary long deadlines.
PROMOTING REMEDIES FOR CONSUMERS IN TRADEMARK LITIGATION
Section 6 of the TMA codifies the rule that a plaintiff seeking an injunction to remedy a trademark violation is entitled to a rebuttable presumption of irreparable harm. Historically, if a trademark owner prevailed in an infringement lawsuit, the owner would be entitled to a presumption that the court would find irreparable harm supportive of an injunction against the competitor’s continued use of a confusingly similar trademark so that consumers would not be misled about the source of a good or service. However, following the Supreme Court’s ruling in a patent infringement lawsuit holding that irreparable harm could not be presumed in that context, eBay, Inc. v. MercExchange LLC, 547 U.S. 388 (2006), a circuit split has developed as to whether irreparable harm can be presumed when a trademark violation has been proven. The Act clarifies that for trademark violations, a rebuttable presumption of irreparable harm exists given the consumer protection concerns that would occur otherwise.
CONCLUSION AND OTHER THINGS TO NOTE ABOUT THE LAW
This law adopts a number of reforms that better protect trademark owners, new market entrants and consumers in a world where legitimate trademark rights are continually more difficult to secure. The new post-registration reexamination and expungement procedures provide faster and more cost-effective means to challenge trademark claims grounded in merely false (and not necessarily fraudulent) assertions of use than the existing opposition and cancellation mechanisms.
It’s worth noting that the TMA will officially become effective in one year, so toward the end of 2021.
The text of the full bill can be found here and a section-by-section analysis of the bill can be found here.
Separately, the USPTO raised a few fees significantly for 2021, including the cost of a standard trademark application to $350 per class, and I will cover this briefly in a companion article.