United States: The Trademark Modernization Act Of 2020 – Observations From One Year In

The Trademark Modernization Act of 2020 (TMA) became law on December 27, 2020, and many of its provisions took effect in December 2021. A few remaining provisions became effective in December 2022. Now that the law has been in effect for over a year, and the final new provisions have now come into force, it is an opportune time to recap some of the key changes introduced by the law and examine how those have played out at the USPTO.

Expungement and Reexamination Proceedings for Non-Use of a Registered Trademark

The TMA introduced two new ex parte proceedings to allow for cancellation of a trademark registration on the basis of nonuse. Additionally, the TMA codified a nonuse cause of action for cancellation actions before the TTAB. Nonuse was already a cognizable basis for cancellation at the TTAB, but the TMA created a new, clearer statutory basis for it at 15 U.S.C. § 1064(6).

Expungement Proceedings. The new ex parte expungement proceeding is codified at 15 U.S.C. § 1066a and provides a basis for cancellation of a trademark registration when the mark was never used in United States commerce for some or all of the goods and/or services listed in the registration. This proceeding is applicable to all U.S. trademark registrations, regardless of their initial filing basis. Expungement proceedings can be filed between 3 – 10 years following the date of registration of the challenged registration. Note, however, that there is a grace period in effect through December 27, 2023, during which the ten-year limitations period does not apply and registrations older than ten years can be challenged through that date.

Reexamination Proceedings. The reexamination proceeding applies where the basis for cancellation is that the registered mark was not used in U.S. commerce on or before the relevant date for all or some of the goods or services listed in the registration. For use-based applications, the relevant date is the date of application; for intent-to-use applications, the relevant date is the expiration of the deadline for filing a statement of use. Due to the "relevant date" element, this proceeding applies only to applications that were filed under Section 1 of the Trademark Act, and does not apply to either applications that were based on a foreign application or registration under Section 44 of the Trademark Act, or Madrid-based applications under Section 66. Reexamination petitions can be filed during the first five years following registration.

Neither the expungement or reexamination actions require that the petitioner have standing or any particular interest in the proceeding, as opposed to cancellation actions in the TTAB. As a result, a petitioner may be a representative or law firm.

In the first year of these new TMA proceedings being available, over two hundred petitions were filed. These represent a nearly even split between expungement and reexamination petitions. So far, over 30 instituted petitions have been terminated, and around 50 were not instituted. In twelve cases, the USPTO Director initiated petitions. A successful petition for expungement or reexamination must substantiate an in-depth, reasonable investigation into whether the challenged mark was in use at the relevant time. The petition must be supported by an itemized index of all evidence in support of the petition. The supporting evidence can be in the nature of internet search results showing a lack of search results for the owner name and/or mark; Wayback Machine results to show nonuse as of a particular relevant date or date range; printouts of the registrant's websites, showing that products under the mark are not available; and corporate and/or regulatory records supporting an inference of nonuse of a mark. For reexamination proceedings in particular, evidence showing that a specimen of use was likely digitally altered or emanated from a "specimen farm"—an illegitimate e-commerce site that lists various products for sale in a disorganized fashion for purposes of creating a website product listing specimen that would typically meet USPTO requirements—can be persuasive. Petitioners should reverse-image search specimens of use to see if there is evidence of the photo being available on stock photo sites or for identical products bearing a different trademark. A registrant may respond to an instituted petition with similar documentary evidence showing that the mark was in fact in use as of the relevant dates, or may claim excusable nonuse in expungement proceedings for Section 44- and 66-based registrations. If the registrant does not respond or does not provide evidence of use for the challenged goods, the registration will be cancelled as to the challenged goods for which use was not proven. In general, sales invoices will not be sufficient evidence of use.

In contrast to TTAB cancellation proceedings, once a TMA petition has been instituted, the petitioner has no further involvement in the matter. Upon institution, an office action is issued to the registrant, requiring proof of use of the challenged goods or services. Thus, while the up-front effort to reasonably investigate nonuse to support a sufficient petition for expungement or reexamination may be greater than the investigation needed to meet the pleading requirements of a petition for cancellation before the TTAB, the costs of a contested TTAB proceeding that goes into discovery, motion practice, and trial will be far more significant to a petitioner than the minimal costs of following an ex parte proceeding following institution.

Another aspect in which the new ex parte proceedings differ from TTAB cancellations is the lack of preclusive effect in subsequent litigation. The determination of the USPTO Director to institute, not institute, sustain, or dismiss a petition is not preclusive, except to the extent that, in cases where a registrant produces sufficient evidence of use as to certain challenged goods, subsequent petitioners may no longer challenge the registration as to those goods. There is no prohibition against successive filings where a petition was not instituted and a petitioner wants to take another bite at the apple. In contrast, TTAB decisions in cancellations can have preclusive effect where the elements of res judicata are otherwise met. In terms of time to a final decision, the new TMA proceedings are similar to TTAB cancellations where the registrant defaults, with a default judgment taking approximately four months from date of filing to cancellation. Where a registrant contests an ex parte expungement or reexamination, the process takes around ten months. A contested TTAB cancellation, by contrast, can take several years and substantial expense to resolve.

Shorter Office Action Response Periods

Effective as of December 1, 2022, office actions are now being issued by the USPTO with a three-month response deadline instead of six months for Section 1- and 44-based applications. (Madrid-based applications will continue to receive a six-month response period for office actions.) The three-month deadline is extendible by three months upon payment of a $125 filing fee prior to the expiration of the three-month period. The USPTO anticipates implementing the three-month response period for post-registration office actions in October 2023. It is important for trademark practitioners to communicate these changes to clients in reporting office actions issued since December 1, and additionally it is critical to inform docketing departments of the change to ensure that deadlines are docketed accurately going forward. For intent-to-use applications in particular, it may make sense for applicants to take advantage of the three-month extensions to respond.

Letter of Protest Procedure Codified

The TMA codified the Letter of Protest procedure. A Letter of Protest allows any party to submit evidence for consideration and entry in the record of a trademark application that is relevant to a reasonable ground for refusal of the application. The filing fee is $50, and the Letter of Protest must include an itemized index of evidence, similar to that required for the expungement and reexamination petitions, that identifies the documents being submitted. Letters of Protest may be disregarded if they raise an issue already considered by the examining attorney, so it is important for practitioners to carefully review the application file history before preparing and submitting a Letter of Protest. Appropriate issues to raise as subjects of Letters of Protest include the applied-for term being generic or merely descriptive; a likelihood of confusion with a prior registration, or a prior-pending application or later-filed application with an earlier priority claim (but not prior common law rights); or issues with the identification of the goods, description of the mark, or veracity of a specimen. Practitioners can expert to receive notification within 60 days whether a Letter of Protest was accepted or not, but the TSDR record for the protested application should also be monitored following such a submission.

Conclusion

The TMA provides important new mechanisms for clearing the federal register of trademarks that never should have been registered, and streamlining prosecution activities. Practitioners and brand owners should keep the new ex parte procedures for clearing blocking registrations in mind, as well as the letter of protest. At the same time, practitioners and applicants should anticipate a new, faster cadence to trademark prosecution once an examiner has reviewed an application.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.