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January 07, 2022

Implementing the Trademark Modernization Act: New USPTO Regulations

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On December 27, 2020, the Trademark Modernization Act of 2020 ("TMA") was signed into law by President Trump, primarily to combat the rise in fraudulent trademark filings emanating from foreign applicants, many of which reside in China. As part of what many consider the most significant trademark legislation in decades, the TMA amended the Lanham Act by, inter alia, providing for the third-party submission of evidence relating to a trademark application, establishing expungement and ex parte proceedings relating to the validity of trademarks, and restoring the rebuttable presumption of irreparable harm for trademark owners seeking injunctions.[1]

On November 17, 2021, the USPTO issued its regulations implementing the provisions of the TMA, which will largely go into effect as of December 18, 2021. According to the USPTO, "[i]ndividuals, businesses, and the USPTO will now have new tools to clear away unused registered trademarks from the federal trademark register, and the USPTO will have the ability to move applications through the registration process more efficiently." [2] These "tools" include:

  • Two new ex parte proceedings to cancel unused registered trademarks, namely, an expungement proceeding and a reexamination proceeding;
  • A new ground of expungement for cancellation proceedings before the TTAB;
  • Flexible office action response periods of 90 days with an optional 90-day extension of time; and
  • Updated procedures for Letters of Protest.

According to the USPTO, "the new ex parte expungement and reexamination proceedings provide a faster, more efficient, and less expensive alternative to a contested inter partes cancellation proceeding at the TTAB." [3] In theory, these new procedures should do just that. Specifically, the expungement proceeding will allow any party to request the cancellation of all or some of the goods/services identified in a registration based on a claim that the registrant never used the mark in commerce in connection with such goods/services. Until December 27, 2023, this proceeding can be requested for any registration over three years old. However, after that date, expungement is limited to registrations between three and ten years old.

As for the reexamination proceeding, this proceeding allows any party to request the cancellation of all or some of the goods/services identified in a use-based registration based on a claim that the trademark had not been used in commerce in connection with such goods/services on or before the filing date, in the case of use-based applications, and, in the case of applications filed on an intent-to-use basis, had not been used in commerce by either the date that an amendment to allege use was filed or the date that the deadline to file a statement of use expired, whichever is later. A reexamination proceeding must be requested within five years of the registration date.

Petitions for both expungement and reexamination come with a fee of $400 per class of goods/services. In addition, the Director of the USPTO may institute these proceedings on their own initiative. The rules allow foreign registrants to assert arguments of "excusable nonuse" of the trademark for the first five years of registrations obtained under Section 44(E) or Section 66(a). However, proof of an intent to use in commerce will not be sufficient to overcome a reexamination or expungement proceeding. Furthermore, proving excusable nonuse is a high bar, and foreign registrants should consider this when filing on Section 44(E) or 66(a) bases.

Regarding the new ground of expungement for cancellation proceedings before the TTAB, a party may institute a cancellation proceeding three years after the registration of a mark based on a claim that the registered trademark has never been used in commerce. This new cancellation ground differs from the existing abandonment ground, which is used as a basis to cancel registrations that were in use at one point but are no longer in use and should provide third parties with a greater ability to clear the register of unused trademark registrations.

As it pertains to office action responses, applicants and registrants must now respond to office actions issued during the examination or after registration within three months of issuance.[4] Further, applicants and registrants can request a single three-month extension of time to respond to an office action for a fee of $125. Suppose the USPTO does not receive an office action response or a request for an extension of time to respond within the three months. In that case, the applications will be considered abandoned, or the registration will expire or be canceled. This new procedure will not be implemented until December 1, 2022. While the reduction in time to respond to office actions may pose an initial challenge to applicants and practitioners, this new rule should increase the efficiency of the process overall and aid in the reduction and prevention of fraudulent registrations.

Furthermore, the TMA provides that Letter of Protest ("LOP") decisions rendered by the Director are final and non-reviewable. As many practitioners already know, the USPTO accepts LOPs against pending trademark applications based on grounds such as, inter alia, a likelihood of confusion, existence of pending litigation, or based on an inappropriate specimen of use. The TMA has significantly modified the procedural rules for LOPs and refined the requirements for an acceptable LOP.[5]  In particular, in addition to the established appropriate grounds and standard of review based on when a LOP is filed, the USPTO has cracked down on many of the formalistic elements of LOPs. Specifically, practitioners should be sure to limit a LOP to a maximum of 75 total pages of evidence, which includes no more than ten individual items of evidence for each specified ground of the LOP and an itemized index categorically identifying all evidence.[6] For third-party registration evidence, registration certificates, and the pages from the TSDR printout which evidence the registration status should be included. However, the full prosecution history of the registration is unnecessary.  Furthermore, to establish that an applicant has submitted an inappropriate or digitally-altered specimen of use, the LOP must include third-party evidence showing the same image used without the mark in question or other proof that the specimen was digitally created. While not an exhaustive list, these changes have been strictly enforced over at least the last six months, baffling many practitioners who submitted evidence that the USPTO had previously accepted.

Finally, while the past 15 years saw a circuit split regarding whether harm could be presumed in trademark infringement cases, the TMA establishes that a court can presume irreparable harm upon showing a likelihood of success on the merits. The TMA amendment also applies to injunctive relief with respect to unfair competition, false advertising, dilution, and cyberpiracy claims brought under Section 43 of the Lanham Act. Overall, this amendment and reversion back to historical norms make it easier for trademark owners to achieve injunctive relief in federal courts nationwide.

Stakeholders should welcome the TMA and the USPTO's regulations implementing the TMA. Still, practitioners and trademark owners/applicants alike should familiarize themselves with the new tools at their disposal and the new requirements that may apply moving forward, especially those regarding LOPs. That said, only time will tell if the TMA successfully fulfills its intended purpose to combat fraudulent filings and clean up the Principal Register.

###

The above legal update was authored by Pryor Cashman Executive Committee Member and Chair of the firm's Intellectual Property Group partner Brad D. Rose, Co-Chair of the firm's Trademark Group partner Dyan Finguerra-DuCharme, and member of the Intellectual Property Group Jesse Roth.

Pryor Cashman's Intellectual Property Group brings together a broad-based team of attorneys experienced in all aspects of intellectual property. Whether defending a major Hollywood film studio against a copyright infringement claim or securing patents for a start-up technology firm, our IP Group has the knowledge and experience to optimize and protect our clients' valuable intellectual property.

Pryor Cashman's Trademark Practice manages large-scale trademark maintenance and enforcement programs for some of the world's most recognizable brands, such as Honda and Piaget, and scores of celebrities. We advise on every aspect of trademark law, from establishing vigilance programs to litigating disputes. Many of the cases we have won have become the gold standard for addressing conflicts between intellectual property rights and the First Amendment.


[3] Id.

[4] This does not pertain to Section 66(a) applicants, which will continue to have a six-month response deadline.

[6] An item of evidence is typically a third-party registration or a piece of third-party internet evidence.

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

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