A PRACTICAL INTRODUCTION TO THE TRADEMARK MODERNIZATION ACT OF 2020: KEY CHANGES, NEW PROCEDURES, AND INNOVATIVE TOOLS FOR TRADEMARK PRACTITIONERS.

The Trademark Act (also known as the Lanham Act) is the primary U.S. federal trademark statute. It was enacted back in 1946 and aged considerably by the end of the 20th century. There had been a need for the Lanham Act’s modernization for quite some time until Congress finally took action in December of 2020 and enacted the Trademark Modernization Act of 2020 (“TMA”). The full text of the new law can be viewed here.

The TMA modified the rules of practice of the United States Patent and Trademark Office (“USPTO”) in several important areas and introduced other significant updates to the Lanham Act. The TMA also tasked the USPTO with adopting regulations to properly implement the updates, and on November 17, 2021 the USPTO issued a final rule amending the rules of practice in trademark cases in compliance with the TMA’s provisions (the final rule can be accessed here). Except for several provisions that will become operative on December 1, 2022, the changes to the USPTO’s rules of practice went into full effect on December 18, 2021.

The most consequential changes introduced by the Trademark Modernization Act revolve around the following key points:

1. Clarification of the evidentiary burdens related to obtaining injunctions in trademark infringement cases and revival of the rebuttable presumption of irreparable harm.

2. Modernization of the USPTO’s trademark examination procedures by:

a. establishing flexible periods for responding to USPTO Office actions; and

b. changing and expanding the letter of protest procedure to make it more in line with similar procedures in place for patent applications.

3. Establishment of two new ex parte examination proceedings: expungement and reexamination; and

4. Introduction of a new “nonuse” ground for bringing cancellation petitions before the USPTO’s Trademark Trial and Appeal Board (“TTAB”).

These changes significantly affect trademark prosecution, protection and enforcement strategies and must be thoroughly understood. We will therefore review each of these points in detail and will discuss their practical value and significance.

1. Revival of Presumption of Irreparable Harm for Injunctions in Trademark Infringement Cases.

An injunction is of course a judicial remedy designed to enjoin or restrain a party from doing certain acts and is generally available only when there is no other remedy at law and irreparable harm will result if the relief is not granted. In a trademark infringement case, a trademark owner seeking an injunction must therefore prove in court that it will be irreparably harmed by the infringement unless the infringer is enjoined from any further infringing acts.

Historically, trademark owners seeking injunctive relief were generally afforded a presumption of irreparable harm whenever they were able to show that the infringing mark was likely to cause consumer confusion. The Supreme Court negatively affected the presumption in 2006, however, when it held in a patent infringement case, eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), that a plaintiff must actually prove irreparable harm to get injunctive relief.

Following the Supreme Court’s eBay decision, the circuits were split on whether the historical presumption of irreparable harm was still applicable in trademark cases, with some courts holding that the presumption still applied while others demanding that the equitable factors for obtaining an injunction be weighed in each specific case. The circuit split led to uncertainty in trademark infringement cases and was thought by some commentators to undermine the Lanham Act’s consumer protection purposes. The uncertainties also led to numerous instances of forum shopping by plaintiffs.

The TMA finally resolved this uncertainty by amending the Lanham Act to specifically make a rebuttable presumption of irreparable harm available to each plaintiff seeking injunctive relief against a trademark infringer:

AMENDMENT.—Section 34(a) of the Trademark Act of 1946 (15 U.S.C. 1116(a)) is amended by inserting after the first sentence the following: ‘‘A plaintiff seeking any such injunction shall be entitled to a rebuttable presumption of irreparable harm upon a finding of a violation identified in this subsection in the case of a motion for a permanent injunction or upon a finding of likelihood of success on the merits for a violation identified in this subsection in the case of a motion for a preliminary injunction or temporary restraining order.

Now that the presumption has been codified, plaintiffs in trademark cases nationwide will be able to get injunctive relief in a more uniform and predictable fashion.

2. Updates to the USPTO’s Trademark Examining Procedures.

The TMA introduced flexible time periods for responding to USPTO Office actions and expanded the “letter of protest” practice.

a) Flexible Response Periods.

As of now, there is a strictly set 6-month deadline to respond to USPTO Office actions related to examination of trademarks (see Section 12(b) of the Lanham Act, 15 U.S.C. 1062(b)). The TMA amended said section by authorizing the USPTO to issue regulations to put in place flexible Office action response deadlines, ranging from 60 days to 6 months, with an option for applicants to extend the deadline up to a maximum of 6 months from the Office action issue date:

[T]he applicant shall have a period of 6 months in which to reply or amend the application, or such shorter time that is not less than 60 days, as prescribed by the Director by regulation.

The USPTO’s final rule implemented the flexible response periods by:

(i) amending the Rules of Practice in Trademark Cases (37 CFR § 2.62) to set a response period of three (3) months for responses to Office actions in trademark applications under sections 1 and/or 44 of the Lanham Act; and

(ii) providing an option for applicants in trademark cases to request a single three-month extension of the initial three-month deadline (for the total of 6 months), subject to payment of the PTO’s filing fee ($125 for an extension request filed electronically through the USPTO’s TEAS system or $225 for a paper-filed request).

The new flexible deadlines do not apply to international applications filed under section 66(a) of the Lanham Act (Madrid Protocol applications). Madrid applicants will continue to enjoy the traditional fixed 6-month deadline for responding to USPTO Office actions.

The new flexible response periods will go into effect only on December 1, 2022, however. Until that time, the fixed 6-month response deadline will remain effective for all trademark applicants, regardless of the filing basis.

b) Changes to the Letter-of-Protest Practice.

Letters of protest have been part of USPTO practice for quite some time and allow a private party to bring to the USPTO’s attention evidence that would show that a trademark is not entitled to registration. Letters of protest have been routinely used by various private parties to block their competitors’ trademark applications, for example. Before the TMA, however, the USPTO’s rules only allowed a letter of protest to raise a limited range of issues, such as descriptiveness (or genericness), likelihood of confusion with another mark, pending infringement litigation, improper use of another’s trademark within the protested application, certain irregularities with specimens, as well as certain issues related to claims of priority in international trademark applications.

The TMA expanded the letter-of-protest practice to essentially allow any party to introduce evidence related to any legal ground that would allow an examiner to refuse to register a trademark. The letter-of-protest practice for trademark applications has therefore been expanded to more closely align with similar procedures in place for patent applications and to provide private parties with much more leverage for blocking trademark applications filed by others:

A third party may submit for consideration for inclusion in the record of an application evidence relevant to a ground for refusal of registration. The third-party submission shall identify the ground for refusal and include a concise description of each piece of evidence submitted in support of each identified ground for refusal. Not later than 2 months after the date on which the submission is filed, the Director shall determine whether the evidence should be included in the record of the application. The Director shall establish by regulation appropriate procedures for the consideration of evidence submitted by a third party under this subsection and may prescribe a fee to accompany the submission. If the Director determines that the third-party evidence should be included in the record of the application, only the evidence and the ground for refusal to which the evidence relates may be so included. Any determination by the Director whether or not to include evidence in the record of an application shall be final and non-reviewable, and a determination to include or to not include evidence in the record shall not prejudice any party’s right to raise any issue and rely on any evidence in any other proceeding.

A private party filing a letter of protest will not receive any communication from the USPTO relating to the submission other than acknowledgement that the petition has been received by the Office and notification of whether the submission is found to be compliant or non-compliant. Letter-of-protest determinations are final and cannot be appealed.

The updated letter-of-protest procedure applies to pending trademark applications only and involves a filing fee (currently set at $50).

3. New Ex Parte Procedures for Canceling Trademark Registrations.

Historically, anyone who wanted to cancel someone else’s trademark registration would have to initiate an inter partes cancelation proceeding with the TTAB. But inter partes proceedings obviously require the active participation of both the petitioner (plaintiff) and the registrant (defendant) and are very similar to civil litigation with many of the same procedural steps (pleadings, motion practice, discovery, depositions, briefs, etc.) and corresponding costs. Consequently, inter partes proceedings can get very contentious and can quickly turn into expensive, time-consuming, and utterly tiresome endeavors, thus often preventing many less than deep-pocketed trademark owners from effectively protecting their rights in such proceedings.

To remedy the situation, The TMA introduced two new proceedings for cancelling trademarks: “expungement” and “reexamination.” Unlike the traditional inter partes cancellation proceedings, the two newly introduced proceedings are “ex parte,” meaning they do not involve any adversarial interactions between private parties. An interested party simply needs to file a petition with the USPTO and, assuming the petition complies with certain requirements, the USPTO will assume all further responsibility for interacting with the challenged trademark’s owner and will issue its decision in due course. These newly introduced proceedings are therefore intended to provide more efficient and budget-friendly alternatives to the often tedious and prohibitively expensive traditional inter partes proceedings.

As mentioned above, the TMA introduced two separate ex parte proceedings: “expungement” and “reexamination.” The procedures are very similar overall, but they do have some important differences.

a) Reexamination Proceeding

PETITION FOR REEXAMINATION. — Any person may file a petition to reexamine a registration of a mark on the basis that the mark was not in use in commerce on or in connection with some or all of the goods or services recited in the registration on or before the relevant date.

The newly established reexamination proceeding allows anyone to petition the USPTO to cancel a trademark that was not in use in U.S. commerce on or before a relevant date. That relevant date can be either the filing date of the initial application (if filed under Section 1(a) of the Lanham Act, claiming use in commerce) or else the last allowed day for filing a Statement of Use (for Section 1(b) applications that were initially filed alleging intent to use). Each petition must be accompanied by a filing fee, which is currently $400 per class of goods.

A reexamination proceeding must be filed within the first five years from the date of a trademark’s registration, and a petitioner must conduct a “reasonable” investigation and obtain evidence that would sufficiently establish a prima facie case of non-use of the objected trademark during the relevant time frames. The USPTO’s final rule clarifies that “reasonable investigation” means “an appropriately comprehensive search likely to reveal use of the mark in commerce on or in connection with the relevant goods and/or services, if such use was, in fact, made.” For the purposes of filing a reexamination petition, a prima facie case only requires that a reasonable predicate concerning nonuse be established.

A reexamination proceeding must be filed within the first five years from the date of a trademark’s registration, and a petitioner must conduct a “reasonable” investigation and obtain evidence that would sufficiently establish a prima facie case of non-use of the objected trademark during the relevant time frames. The USPTO’s final rule clarifies that “reasonable investigation” means “an appropriately comprehensive search likely to reveal use of the mark in commerce on or in connection with the relevant goods and/or services, if such use was, in fact, made.” For the purposes of filing a reexamination petition, a prima facie case only requires that a reasonable predicate concerning nonuse be established.

Since a petition to reexamine a trademark must specifically allege that the mark was not used in U.S. commerce as of the relevant date (as discussed above), the reexamination proceeding is clearly limited to U.S. domestic trademarks that were registered under Section 1 of the Lanham Act and does not extend to trademarks registered by foreign owners through international treaties, such as the Madrid Protocol and the Paris Convention (but such international registrations can be targeted through the expungement proceeding, as will be discussed below).

Once the USPTO has decided to reexamine a mark based on a petition, the petitioner and the registrant will be notified accordingly, and the petitioner will not have any further involvement in the matter. The USPTO will then require the registrant to provide such evidence of use as may be reasonably necessary to rebut the prima facie case of nonuse.

If the USPTO determines that the required use was not made for the goods or services at issue in the proceeding, and the determination is not overturned on appeal, the registration will be canceled in whole or in part, as appropriate. The determination can be appealed to the TTAB.

b) Expungement Proceeding.

PETITION. — Notwithstanding sections 7(b) and 22, and subsections (a) and (b) of section 33, any person may file a petition to expunge a registration of a mark on the basis that the mark has never been used in commerce on or in connection with some or all of the goods or services recited in the registration

The process of filing an expungement petition is very similar to requesting reexamination. In fact, the USPTO adopted a single “Petition for Expungement or Reexamination” form that needs to be filled out by a petitioner when instituting either proceeding (proper checkboxes will still need to be checked and applicable fields will have to be filled out in that form to indicate which exactly proceeding is being instituted).

A petition for expungement must allege that the objected trademark has never been used in commerce on some or all of the goods or services listed in the registration. The filing fee for an expungement proceeding is $400, the same as for reexamination.

The expungement of a trademark can be requested once it has been registered for at least three years but before the registration’s ten-year anniversary. Within the initial three years from the TMA's enactment date, however (until December 27, 2023) any petitioner may request an expungement proceeding for any registration that is at least 3 years old, regardless of the 10-year limit.

The expungement proceeding clearly places a higher evidentiary burden on the petitioner compared to reexamination because to be “expunged” a mark must be shown to have never been used in U.S. commerce. By contrast, a “reexamined” mark will be cancelled if it was not commercially used on or before certain crucial dates (as discussed above), even if the mark was subsequently introduced into U.S commerce.

Compared with proving nonuse during specific timeframes, establishing that a mark was never used in commerce will probably be more burdensome in most scenarios. Between the two newly introduced ex parte proceedings, expungement therefore appears to be the inferior tool for targeting most registrations issued under Section 1, due the additional evidentiary burdens involved. It therefore appears that the legislature instead created the expungement proceeding for primarily targeting foreign trademark owners who filed their U.S. applications through international agreements (the Madrid Protocol and the Paris Convention) but failed to start using their marks in the United States for three years after registration. Of course, in situations involving Section 1 registrations that are more than five years old, expungement will prove to be of value as well, since such registrations are no longer vulnerable to reexamination.

A registration can be subject to an expungement petition only after the registration’s three-year anniversary, which further points toward international registrations as being the intended primary target of newly established expungement proceeding. The reason being that U.S. trademark registrations procured by foreign owners pursuant to international agreements do not have to be used in U.S. commerce before registration, but such usage is generally required post-registration.

The requirement of nonuse for three years after registration also appears to be a logical extension of Section 45 of the Trademark Act (15 U.S.C. § 112) about abandonment of trademarks: “a mark shall be deemed to be abandoned “[w]hen its use has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of abandonment.”

“Abandonment” has long been a ground for instituting inter partes cancellation proceedings against unused trademarks, including international trademarks not used in the U.S. for more than three years after registration. But the newly established ex parte expungement proceeding offers a seemingly faster, more efficient, simplified and less expensive alternative to the often expensive and hotly contested inter partes cancellation proceeding.

4. Nonuse in Commerce - New Trademark Cancellation Ground.

The previous version of the Lanham Act provided that, within five years from a trademark’s registration, a cancellation petition could be filed alleging any legal ground that would allow the Trademark Office to cancel the registration. After the initial 5-year period, however, a cancellation petition could only be filed on certain limited grounds set forth in Section 14 of the Lanham Act (15 U.S.C. 1064), such as when a mark became the generic name for the underlying goods, if the mark is functional, or has been abandoned, or if the registration was obtained fraudulently.

The TMA amended the Lanham Act’s Section 14 by expanding the list of grounds that can be asserted even after the initial 5 years after registration. Specifically, a new “nonuse” cancellation ground was added to the Lanham Act, allowing a petitioner to file an inter partes cancellation proceeding alleging that a trademark has never been used in commerce. This new ground is available at any time after the first three years from the registration date:

NEW GROUNDS FOR CANCELLATION. — Section 14 of the Trademark Act of 1946 (15 U.S.C. 1064) is amended —
(1) by striking the colon at the end of paragraph (5) and inserting a period;
(2) by inserting after paragraph (5) the following:
‘‘(6) At any time after the 3-year period following the date of registration, if the registered mark has never been used in commerce on or in connection with some or all of the goods or services recited in the registration:’’; and
(3) in the flush text following paragraph (6), as added by paragraph (2) of this subsection, by inserting ‘‘Nothing in paragraph (6) shall be construed to limit the timing applicable to any other ground for cancellation. A registration under section 44(e) or 66 shall not be cancelled pursuant to paragraph (6) if the registrant demonstrates that any nonuse is due to special circumstances that excuse such nonuse.’’ after ‘‘identical certification mark is applied.

The new “nonuse” cancellation ground essentially builds on the already existing “abandonment” ground by providing a more logical way to petition to cancel registrations that did not merely become abandoned but were never used in the first place, as well as by more actively targeting international owners who never introduced their trademarks into U.S. commerce. This new cancellation ground is largely analogous to the ground for filing expungement petitions, with one crucial exception: expungement must be requested within 10 years after a mark’s registration whereas a cancellation proceeding claiming nonuse is not subject to the 10-year limitation.

Overall, these updates to the Lanham Act should play a very positive role in streamlining the USPTO’s examination proceedings and improving efficiency going forward, while at the same time giving trademark owners new efficient tools for protecting their intangible property and making it more affordable and feasible for smaller entities to protect and enforce their rights.

If you have any comments about this piece of writing or have questions, please feel free to email me at sivochek@sivochek.com.