April 1, 2021
By: Brandan Ray
Congress Passes Trademark Modernization Act
Here’s What That Means for You, Your Business and Your Business’ Trademarks
At the tail-end of 2020, the Trademark Modernization Act (“TMA”) was signed into law. The TMA, which received broad bi-partisan support in Congress, was passed to curb a substantial volume of improperly registered trademark registrations from so-called “bad actors”. In a year marked by so much breaking news, perhaps it is fittingly ironic that one of the final acts of the 116th Congress received so little attention.
This post will focus on the changes the TMA is expected to make to the federal trademark registration process with the United States Patent and Trademark Office (“PTO”). For additional information on how trademarks are classified and distinguished, as well as recent Supreme Court precedent involving trademark distinctiveness, please refer to my post from this past July: https://www.mackenziehughes.com/blog/can-i-trademark-com-the-supreme-court-says-maybe/.
Additionally, the TMA will implement changes related to trademark litigation and the organization of the Trademark Trial and Appeal Board (“TTAB”), but these will not be discussed.
To begin, while registering your trademark with the PTO is not necessary to acquire specific rights in a trademark, federal registration does afford such trademarks substantial rights and protections, especially against alleged infringement. All trademark registrations with the PTO require a “filing basis”, which is the statutory basis in the federal Trademark Act required for filing a trademark application with the PTO.
The most common filing bases and their corresponding Trademark Act sections are as follows:
Use in Commerce (1(a)) – The applicant’s mark is currently being used in commerce with its goods and/or services.
Intent-to-Use (1(b)) – The applicant has a bona fide intent to use their mark in commerce with its goods and/or services in the near future.
Foreign Registration (44(e)) – The applicant owns a foreign registration of the same mark, for the same goods and/or services, from its country of origin.
Regardless of the filing basis, an applicant is required to demonstrate to the PTO that the applicant is using the mark in commerce, or the applicant genuinely intends to begin using the mark within a short period of time usually within six months of filing, prior to the mark receiving an official registration. This is done by providing a use “specimen” in a trademark application which shows how the mark is used to identify goods/services on an applicant’s website, in its advertising materials, or as a product label to name a few examples.
Unfortunately, according to a recent study conducted by the PTO, this step in the application process has been subject to frequent abuse, whereby applications will contain fraudulent specimens or statements of use, but still receive a federal trademark registration. As a result, bad actors have been able to obtain rights to certain marks in connection with goods and services without using such marks in commerce.
Over the past few years, the PTO has implemented certain policies and rules to curtail this kind of behavior, such as requiring applicants and their attorneys to log in to the PTO’s application database and refusing certain use specimens that do not accurately show the mark identifying goods/services. The TMA is the latest tool the PTO will use to identify bad-faith trademark applications and prevent bad actors from registering trademarks earlier in the registration process, or cancel so-called “deadwood” registrations whose use in commerce has expired or never was never used at all.
The most significant tools the TMA affords are two new “non-use cancellation” mechanisms: a petition for reexamination, which targets a registered mark that was not used by a specified date, or a petition for expungement which targets a registered mark that was not used in commerce at all. These enable the office of the PTO Director, or any private person or entity able to pay a filing fee, may cancel or petition to cancel a particular mark’s registration if suspected of non-use.
These petitions are intended to be much faster and cheaper than filing an adjudicatory proceeding before TTAB, though a petition for expungement may be also used in TTAB petitions.
Reexamination petitions may only be initiated within 0-5 years of the mark’s registration, and only for marks registered under Section 1(a) or 1(b).
Expungement petitions may only be initiated within 3-10 years of the mark’s registration, but may be used for marks registered under any filing basis.
In responding to a petition, registrants will need to sufficiently demonstrate they are and have been using their mark for the times alleged by the petitioner. A successful petition for reexamination or expungement will cancel a trademark’s registration in whole, or in part if the mark is only cancelled with respect to certain goods and services, however, trademark registrants are free to appeal the decision to TTAB following the PTO Director’s decision.
It should be noted, these petitions will not be fully implemented until December 27, 2021, a year after the TMA was signed into law. Further, the PTO is also expected to promulgate certain rules and regulations, such as the prescribed filing fees and other necessary elements for the petitions, later this spring. The PTO is now preparing to accept public comments on how the rules should be drafted, particularly with respect to what constitutes acceptable types of evidence in a reexamination/expungement proceeding, the times for responding or requesting an extensions, and limits on the number of petitions that can be filed.
Because petitions for reexamination/expungement do not require standing, meaning anyone willing to pay the filing fee may file one, this has raised several concerns that different kinds of bad actors may try to abuse this new process. Bad actors may decide to petition a particular mark’s use in commerce in bad faith, knowing full well a registrant is using a mark in commerce, but still forcing a registrant to respond to a bad actor’s petition.
However, there are several safeguards already in place that may deter a substantial number of bad actors. The first is an estoppel protection, meaning a successful demonstration of use will prevent subsequent petitions from being filed against the same mark. There is also the filing fee, which, if it is set high enough, may deter more bad actors unwilling to pay the fee. Further, there is some discussion that the rules the PTO will put in place will include a sworn statement, made under penalty of perjury, that the petitioner is making the petition in good faith, or limiting the number of active petitions a petitioner may file at a given time.
It remains to be seen how successful the TMA will be in removing the clutter of bad actor or deadwood trademarks from the register, or how the PTO’s new rules will curb bad actors from attempting to invalidate registered marks in bad faith.
This is a watershed moment for trademark holders who, unless stricter rules are imposed by the PTO, may be subject to a flurry of petitions for non-use following the end of 2021. Trademark holders ought to, if they haven’t been already, conduct a thorough review of how their marks have been and are being used in commerce. If there is a mark a holder still wants to maintain that has either never been in use, or has been inactive for a period of time, they should take very deliberate steps to see its use restored and to develop an action plan if and when it is challenged under either of these new types of petitions.
(Sources: <https://www.uspto.gov/trademarks/apply/basis>; <https://www.uspto.gov/learning-and-resources/uspto-videos/roundtable-implementation-trademark-modernization-act>)
For a full briefing on the TMA, its purposes, and its upcoming rule-making session, please refer to the PTO’s roundtable discussion, recorded on March 1, 2021.
If you or your organization have a trademark you are thinking of filing with the USPTO, or have additional questions on the TMA, trademarks or other intellectual property, feel free to email: firstname.lastname@example.org.