A Look at the Trademark Modernization Act - Part 2

• Jurisdiction: United States,Federal
• Citation: Vol. 46 No. 4
• Publication year: 2021
• Author: Jane Shay Wald and Michael Tezyan
• topic: Trademark,Intellectual Property

A LOOK AT THE TRADEMARK MODERNIZATION ACT - PART 2

AUTHORS

Jane Shay Wald
Irell & Manella LLP

Michael Tezyan
Irell & Manella LLP

In the first article of this three-part series on the Trademark Modernization Act of 2020 ("TMA")¹ we shared an overview of this landmark new law and some of the issues the United States Patent and Trademark Office ("USPTO") was to resolve through the rulemaking process before the TMA is fully implemented. With several provisions already in effect, and others set to be in effect at year's end, we now take a look at the USPTO's progress in the rulemaking process. Early district court decisions considering the TMA can also shed light on things to come.

To review some highlights from Part 1 of this series: The TMA introduces substantial changes affecting prosecution practice before the USPTO. The key changes are the expungement and reexamination procedures—both being methods for challenging a trademark registration based on evidence of nonuse. Ex parte expungement is designed to remove registrations for marks that have never been used at all.² Ex parte reexamination targets registrations for marks that were "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."³ These provisions of the TMA are set to go into effect on December 27, 2021.

The TMA also authorizes the USPTO to shorten the period of time for a trademark applicant to respond to an office action from the six-month timeline under the Lanham Act to as little as 60 days.⁴ These provisions will go into effect on June 27, 2022 to allow practitioners and the USPTO sufficient time to update their technology systems in order to meet the new docketing challenges.⁵

Significantly, the TMA restored the rebuttable presumption of irreparable harm for a plaintiff showing trademark infringement or likelihood of succeeding on the merits when seeking preliminary and permanent injunctive relief. These provisions were effective at the time the TMA was enacted on December 27, 2020. Since then, some nine district courts have already seized on this change in weighing whether to grant trademark injunctive relief. California and Texas have reported multiple cases discussing the TMA.

New Matter will follow this article with information on the USPTO implementing rules once they are enacted on December 27, 2021, as well as an analysis of any further trends that develop as courts continue to apply the rebuttable presumption of irreparable harm under 15 U.S.C. § 1116 (a). Please look for our forthcoming article in the Spring 2022 edition of New Matter.

IMPLEMENTATION STATUS

The USPTO is in the process of finalizing the rule in response to public feedback and commentary.⁶ On May 18, 2021, the USPTO published the Notice of Proposed Rulemaking ("NPRM") regarding Changes to Implement Provisions of the TMA and began soliciting feedback on its proposed rules.⁷ The USPTO held two roundtable discussions in June seeking informal feedback from the public, and solicited formal comments on the NPRM.⁸ The comment period ended on July 19, 2021.⁹ Key issues in the NPRM and feedback received on those issues potentially shed some light as to what trademark practitioners are concerned about in the lead up to the TMA's implementation.

EX PARTE EXPUNGEMENT AND REEXAMINATION PROCEEDINGS

Ex parte expungement and reexamination are mechanisms introduced by the TMA to remove marks from the federal register or to cancel registrations as to particular goods/services when the registrant has not met the requirement for demonstrating use in commerce as of the appropriate date. Expungement targets registrations for marks that have never been used at all.¹⁰ Reexamination, on the other hand, targets registrations for marks that were "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."¹¹ For an application filed under section 1(a), the "relevant date" is the date the application was initially filed. If the filing basis was section 1(b), the "relevant date" is the date an amendment to allege use was filed, or the date on which the period for filing a statement of use expired (including all extensions).¹²

Both ex parte expungement and ex parte reexamination follow the same procedures under the TMA. There is no standing requirement to file a petition. A petition must include a verified statement putting forth the "reasonable investigation" the petitioner conducted to demonstrate nonuse. An ex parte expungement or reexamination will be instituted only if the Petitioner demonstrates a "prima facie" case of the relevant type of nonuse.¹³

The NPRM provides additional details as to these procedural requirements. In the first instance, the USPTO has indicated that it "does not anticipate requiring real party in interest information from the petitioner,"¹⁴ a point of consternation to some commenters. The USPTO also proposes a $600 fee, per class, for filing a petition for expungement and/or reexamination. The NPRM also provides some color on the "reasonable investigation" requirement, describing a "reasonable investigation" as "an appropriately comprehensive search."¹⁵ Under proposed § 2.92(d)(2), appropriate sources for a reasonable investigation may include:

• State and Federal trademark records;
• Internet websites and other media likely to or believed to be owned or controlled by the registrant;
• Internet websites, other online media, and publications where the relevant goods and/or services likely would be advertised or offered for sale;
• Print sources and web pages likely to contain reviews or discussion of the relevant goods and/or services;
• [Page 13]
• Records of filings made with or of actions taken by any State or Federal business registration or regulatory agency;
• The registrant's marketplace activities, including, for example, any attempts to contact the registrant or purchase the relevant goods and/or services;
• Records of litigation or administrative proceedings reasonably likely to contain evidence bearing on the registrant's use or nonuse of the registered mark; and
• Any other reasonably accessible source with information establishing that the mark was never in use in commerce (expungement), or was not in use in commerce as of the relevant date (reexamination), on or in connection with the relevant goods and/or services.¹⁶

Just how expansive a petitioner's search must be to meet the "reasonable investigation requirement" is as yet uncertain, with the NPRM noting that: "[a] petitioner need not check all possible appropriate sources for its investigation to be considered reasonable."¹⁷

As for the "prima facie" case requirement, the NPRM provides that for purposes of proposed rule § 2.92 a "'prima facie case' requires only that a reasonable predicate concerning nonuse be established," consistent with the House Report for the TMA. The NPRM further provides that "a prima facie case includes sufficient notice of the claimed nonuse to allow the registrant to respond to and potentially rebut the claim with competent evidence."¹⁸

Should a proceeding be instituted, an office action will issue to the registrant requiring the registrant to provide such evidence of use as necessary to rebut the prima facie case. Proposed § 2.93(b) gives the registrant a two-month deadline to respond to this office action.¹⁹

Public Comments

Most comments are focused on the proposed procedural rules concerning the ex parte expungement and reexamination procedures. Commenters have mixed feelings about the real party in interest requirement. On the one hand, some believe that in the absence of a standing requirement, abusive filings will become even more likely without a real party in interest requirement.²⁰ However, others observe that not requiring the identification of a real party in interest is consistent with the overall intent of the TMA to declutter the Federal Register: it would encourage filings of such petitions, even where the Petitioner chooses to remain anonymous.²¹

Some commenters take issue with the two-month response period to the initial office action issued after a determination has been made to institute an expungement or reexamination, proposing that the USPTO adopt instead a three month or six month deadline to respond to the initial office action.²² Reasons include, among others, the challenge of marshaling evidence of use in the two-month time period and delay from time spent communicating between U.S. and foreign counsel for foreign applicants.

Commenters also implored the USPTO to give teeth to the threshold requirements a petitioner must establish for an expungement or reexamination proceeding to be instituted in the first instance.

FLEXIBLE RESPONSE PERIODS

Under current USPTO regulations, applicants have six months to respond to an office action during examination under § 2.62(a). The TMA authorized the USPTO to set shorter time periods for response between sixty days and six months.²³ In the NPRM, the USPTO has proposed amending § 2.62 to shorten the current response period from six months to three months, with an option to extend the time period for response to six months for a $125 fee.²⁴ This is consistent with the USPTO's finding that "42% of represented applicants and 66% of unrepresented applicants responded to an Office Action with a single substantive ground of refusal within three months from the issuance of a non-final Office Action."²⁵ Notably, this change would only impact applications under sections 1 and/or 44 of the Lanham Act; the deadline for applications under section 66(a) will remain at six months, in recognition of the time constraints involved with such applications.²⁶

[Page 14]

The NPRM also proposes two alternative options for shortening the time period for response. The first alternative is a two-phase approach, where each phase has a separate but extendable response period. As an example, the NPRM proposes that an...