What is the Trademark Modernization Act?
Author: Karen Y. Kim
On December 27, 2020, the Trademark Modernization Act (TMA) of 2020 was signed into law. It will go into effect one year from its signing into law. The TMA provides for a number of significant changes to the Lanham (Trademark) Act, including:
- Authorization for the USPTO to shorten response times
- Codification of the letter of protest procedure
- Providing new procedures for cancelling fraudulent registrations
- Clarifying the required element of irreparable harm to obtain injunctive relief in trademark infringement and unfair competition litigation
Section 1 of the Trademark Act requires a trademark applicant to respond to an Office Action within six months. The TMA amends Section 1 to give the USPTO more flexibility in setting deadlines. Specifically, the TMA allows trademark examiners to set deadlines of as short as sixty days up to six months so long as the applicant has the option of extensions, up to six months in the aggregate.
The TMA also codifies a procedure through which third parties can submit evidence against registration for consideration by the examining attorney during the examination of any application. This procedure, called a letter of protest, is informal and requires a fee, but will allow third parties to oppose registration while avoiding costly litigation in opposition and cancellation proceedings.
The USPTO has seen a dramatic increase in applications from foreign applicants which use digitally altered images as evidence of use in commerce or other fraudulent practices. Further, United States trademark law requires applications to be supported by a sworn statement that the applied-for mark is being used in commerce for all the goods or services identified in the application. In contrast, under Sections 44(e) and 66(a) of the Trademark Act, an applicant from a country other than the United States may claim either a foreign trademark registration or an International Registration as a basis for its U.S. application instead of the sworn statement of use in commerce. By filing applications under Sections 44(e) and 66(a), foreign applicants find a loophole by which they can avoid fulfilling their obligation to file accurately and in good faith, particularly with respect to claims of use in commerce. This has led to a need to “cleanse” the trademark register of marks that are not actually in use.
The TMA provides two new procedures targeting these kinds of marks. The first outlines new ex parte expungement procedures under which a registration can be challenged on the basis that the mark was never used in commerce. Ex parte expungement targets registrations issued under Section 44(e) or Section 66(a). Any person may submit a petition challenging a registration and specifying the goods or services for which the mark has never been used. The petitioner must provide evidence of a “reasonable investigation.” Upon finding a prima facie case, the Director will then initiate expungement proceedings and notify the registrant. This process can be an expedited and lower-cost alternative to a cancellation action and must be brought between three to ten years after the registration date.
The second procedure, ex parte reexamination, permits a person to challenge a Section 1(a), or use-based, registration. The owners of these registrations provided sworn statements of use in commerce during the application process. Any person can petition for reexamination of a registration so long as it can supply evidence of a reasonable investigation that would create a prima facie case. Reexamination petitions must be filed within the first five years that a trademark is registered.
The TMA also provides for a new ground for a cancellation proceeding before the Trademark Trial and Appeal Board (TTAB). This new ground is substantively equivalent to the expungement claim that a registered mark has never been used in commerce and may be brought at any time following three years from registration. This new ground is an alternative to the much more difficult to prove fraud claim.
Finally, the TMA clarifies that, in requests for injunctive relief, there is a presumption of irreparable harm where trademark infringement is established, or a likelihood of liability is shown. This resolves the circuit court split and inconsistencies in addressing the presumption of irreparable harm that have existed since the U.S. Supreme Court’s decision in eBay Inc. v. MercExchange, 547 U.S. 388 (2006). With the implementation of the TMA, a plaintiff no longer has to prove there is irreparable harm in order to secure an injunction.
The TMA adopts a number of reforms that provide trademark owners with more tools to challenge problematic applications and registrations and resolves the inconsistencies regarding the award of an injunction.