A Look at the Trademark Modernization Act: Early Observations of a Bold New Law

• Jurisdiction: United States,Federal
• Citation: Vol. 46 No. 2
• Publication year: 2021
• topic: Trademark,Intellectual Property

A Look at the Trademark Modernization Act: Early Observations of a Bold New Law

Jane Shay Wald

Irell & Manella LLP

Michael Tezyan

Irell & Manella LLP

The Trademark Modernization Act of 2020 (TMA), tucked within the Consolidated Appropriations Act of 2021,¹ caught many in the trademark community by surprise. The TMA amends the Lanham Act. The TMA provides significant, and in some cases dramatic, amendments to the Lanham Act impacting prosecution before the US Patent and Trademark Office (USPTO) and litigation in the district courts.

With the TMA changes in prosecution set to go into effect on December 27, 2021, the USPTO is working on rules to implement the provisions of the TMA. As part of this rule-making effort, the USPTO has been collecting public comments emailed to TMfeedback@uspto.gov. The official Notice of Proposed Rulemaking (NPRM) is expected to be published in the Federal Register this May, and the public will have the opportunity to submit formal comments by visiting the Federal Register web site.

It is premature to predict exactly how counsel and paralegals might best restructure their practice and tasks in anticipation of these new rules, however, New Matter provides this overview and practice tips to consider.

In addition to amendments to practice before the USPTO, the TMA also restored the presumption of irreparable harm for a plaintiff that successfully shows trademark infringement in an action for injunctive relief or likelihood of succeeding on the merits when seeking preliminary relief. The TMA amendments now provide statutory protection to these presumptive rights. These amendments went into effect on December 27, 2020 along with the TMA.

New Matter will follow this article with analysis of forthcoming decisions regarding the presumption of irreparable harm, as well as information and practice tips on the USPTO implementing rules once they are enacted on December 27, 2021. Please look for our next article in the Spring 2022 edition of New Matter.

ADDRESSING DEADWOOD ON THE TRADEMARK REGISTER—EX PARTE PROCEEDINGS

The TMA introduces the ex parte expungement procedure to request expungement of a registration where the trademark has never been used in commerce. The ex parte reexamination procedure is introduced to request reexamination of a trademark registration based on a claim that registered goods or services were not in use on the date claimed in the underlying trademark application.

Ex Parte Expungement

Ex parte expungement, Sec. 16A of the Lanham Act,² is designed to remove registrations for marks that have never been used at all. It is primarily directed at registrations under Sec. 44(e) (foreign registration basis) or 66(a) (international registrations). While neither filing basis requires use to obtain registration, the ex parte expungement proceeding will allow expungement where the mark still is not in use in commerce within three years of registration. However, the ex parte expungement proceeding also addresses marks with fraudulent or inaccurate specimens of use. A petition for expungement can only be filed against a registered mark beginning three years after its registration date, and no later than ten years after the registration date.³ Notably, the TMA provides an exception to the ten-year limitation until Dec. 28, 2023.⁴ This gives the public the opportunity to seek expungement of registered marks that are beyond their ten-year registration date for the first two years of the TMA's implementation.

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To use the ex parte expungement procedure, any person may file a petition to expunge some or all goods or services in a registration on the basis that the registrant never used the mark on or in connection with those goods or services.⁵ A petitioner must include a verified statement that sets forth the "elements of the reasonable investigation the petitioner conducted," and any other facts in support of the allegations.⁶ The Director then determines whether the petition sets forth a prima facie case of nonuse. If it does, a proceeding is instituted; the Director's decision whether or not to institute an expungement is non-reviewable.⁷ The registrant is entitled to submit evidence rebutting the prima facie case.⁸ The House Committee Report suggests that "use in commerce" as defined under the Lanham Act will be the test, including the case law interpreting the term use in commerce.⁹ If no prima facie case was made showing that the mark was never used for the challenged goods or services, the registration remains on the Principal (or Supplemental) Register and no further challenges to such goods or services by anyone will be permitted.¹⁰

Practice Tips

With the relatively recent U.S. counsel requirement,¹¹ U.S. practitioners may be representing foreign clients with whom they have had no prior course of dealings. The clients themselves may be unaccustomed to working in a transparent way with U.S. counsel. Language barriers may impact mutual understanding of "use in commerce." Some U.S. counsel may find themselves inadvertently being used as a "mail drop." As in any new client relationship, if you are not confident that your client understands (or is adhering to) the USPTO's unique use requirements, follow your instincts in conducting your due diligence and adhering to your professional standards. Do not take instructions and specimens at face value.

Ex Parte Reexamination

An ex parte reexamination proceeding, under 16B of the Lanham Act,¹² 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."¹³ This is different from the ex parte expungement claim, whose gravamen is that the mark was never used for some or all of the goods and services claimed. The "relevant date" depends on the registrant's initial filing basis. If the filing basis was 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).¹⁴

There is no requirement under either of these procedures that the petitioner have standing to challenge the mark: the TMA provides that "any person may file a petition" for expungement or reexamination.¹⁵ This is a dramatic departure from current Board practice.

However, for both proceedings there is a threshold requirement that the Petitioner include a verified statement describing the "reasonable investigation" the petitioner undertook to determine nonuse of the challenged registration, and any supporting evidence of nonuse.¹⁶ If the petition raises a "prima facie case" of nonuse, the Director will institute the expungement or...