The Trademark Modernization Act of 2020 (TMA) provides new procedures for third parties to challenge fraudulent trademark applications and registrations. The law also clarifies what trademark owners must show to obtain an injunction to stop another party’s trademark infringement. Though Congress passed the TMA on December 27, 2020, these provisions don’t go into effect until December 27, 2021. Even so, trademark owners can start learning about the potential benefits and risks in the new rules.
When the TMA goes into effect, third parties will be able to file a petition with the United States Patent and Trademark Office (USPTO). The petition initiates a proceeding to potentially expunge (remove) or reexamine a trademark registration on the grounds that either the mark has never been used in commerce or it was not used in commerce before a particular date. This process provides an expedited method of challenging fraudulent trademark applications and registrations.
In both cases, petitioners must provide evidence of a “reasonable investigation” that the trademark has not been used in commerce with specified goods or services. If there is sufficient evidence of a “prima facie” case, the USPTO Director will begin an expungement or reexamination proceeding, giving the trademark registrant notice and an opportunity to challenge the loss of its trademark registration. This process is meant to be a faster and less expensive alternative to a cancellation action before the Trademark Trial and Appeal Board or a lawsuit in federal district court.
An expungement proceeding must show that the mark was never used in connection with one or more of the goods or services listed in the registration. It must be brought between three to ten years after the registration date.
A reexamination proceeding is similar but determines whether the mark was used in commerce as of a particular relevant date. The date could be the date of the use-based application or the date an amendment was filed for an additional use. Such an action must be brought within the first five years after the trademark registration.
The TMA offers flexibility for USPTO’s examining attorneys in setting response times to Office Actions. Deadlines may be between 60 days and six months. If less than six months, applicants may request extensions to have the full six months.
Third parties may file a letter of protest with the USPTO challenging a trademark’s registrability. The filing must state a specific, relevant legal ground for the challenge and provide objective evidence. The USPTO must act on such challenges within two months of submission and has final authority to determine whether to include third party evidence in the application record.
To obtain injunctive relief, trademark owners must show that monetary damages are not sufficient. Additionally, trademark owners must show that irreparable harm will result from the infringing activity without an injunction. Before passing the TMA, there was a split among federal circuits over who has the burden of proof. Some courts held that once trademark infringement was established, there was a rebuttable presumption of irreparable harm. That meant the burden fell to the defendant to prove that there was no irreparable harm, to avoid an injunction. Other courts required the plaintiffs to establish certain equitable factors for the courts to weigh in granting an injunction. The TMA expressly states that there is a presumption of irreparable harm in trademark actions.
The TMA benefits trademark owners by making it easier to obtain an injunction. In addition, they can challenge fraudulent trademark filings that may be interfering with their own applications using the expedited proceedings. However, owners may also face more challenges to their own applications. It is important for owners to maintain evidence of their use of their marks in commerce to minimize the risks of losing their trademark.
Notably, the USPTO will be enacting rules over the course of 2021 to implement the changes in the TMA. As a result, trademark owners should regularly consult with legal counsel for updates on how they may be affected.