The Situation: Changes to the Trademark Act were called for due to a Circuit split regarding the standard for injunctive relief in trademark infringement cases and an increase in fraudulent trademark applications and registrations.
The Result: The Trademark Modernization Act of 2020 became law on December 27, 2020, as part of a bipartisan effort. The Act restores the rebuttable presumption of irreparable harm to obtain injunctive relief for a trademark violation. The Act also establishes new procedures for third parties to challenge fraudulent applications and registrations.
Looking Ahead: Trademark owners will have new options in their brand protection arsenal but should also be aware that these procedures could open their trademark applications and registrations to new types of challenges from competitors.
The Trademark Modernization Act of 2020 was signed into law on December 27, 2020. The Act was passed by the United States House of Representatives and Senate as part of the coronavirus relief bill.
The Act amends the Trademark (Lanham) Act in several important ways, including:
- Clarifying the evidentiary burden to obtain injunctive relief in trademark infringement litigation;
- Changing certain procedures in trademark prosecution before the U.S. Patent and Trademark Office ("USPTO"), and
- Providing new procedures for cancelling fraudulent registrations. The new procedures for prosecution and cancellation are intended to help fight against fraudulent foreign trademark registrations.
First, the Act clarifies that irreparable harm can be presumed in requests for injunctive relief upon a finding of trademark infringement (or a showing of likelihood of success on the merits for preliminary injunctions). Since the U.S. Supreme Court's decision in eBay Inc. v. MercExchange, 547 U.S. 388 (2006), U.S. appellate courts have been divided on whether harm could be presumed or if the strict four equitable factors needed to be weighed in each instance. The Act amends Section 34 of the Trademark Act of 1946 (15 U.S.C. § 1116) to explicitly allow for such a presumption of irreparable harm in trademark actions.
Second, the Act formalizes several processes in trademark prosecution before the USPTO. Third parties may now formally submit evidence into the record of an application if the evidence is tied to a particular ground for refusal. It also provides Examining Attorneys with flexibility in setting response times to Office actions. Such deadlines may be shorter than six months, provided that any requested extensions will be granted up to six months in the aggregate.
Third, the Act establishes two new procedures to review and cancel existing registrations for unused marks. The USPTO has seen a dramatic increase in foreign applications using doctored photos as evidence of use in commerce or other fraudulent practices.
The first of the two new sections, Section 16A, outlines new expungement procedures, under which a registration can be challenged on the basis that a mark was never properly used in commerce, as typically required for registration. Any person may submit a petition identifying a registration and the specific goods or services for which the petitioner alleges that the trademark has never been used. The petitioner is required to supply evidence of a "reasonable investigation" along with his or her petition. The Director will then, upon finding of a prima facie case, initiate expungement proceedings and provide notice to the registrant. This expedited process provides an alternative to a cancellation action before the Trademark Trial and Appeal Board or district court action. A petition can be filed three years after registration.
The other new section, Section 16B, establishes similar reexamination proceedings, but registrations are challenged on the basis that the trademark was not used in commerce prior to the relevant registration date. Just as under Section 16A, any person can petition for reexamination under Section 16B, provided that it can supply evidence of a reasonable investigation such as to create a prima facie case. Petitions under Section 16B must be filed within the first five years that a trademark is registered based on use in commerce.
Under both Section 16A and Section 16B, the Director may initiate expungement or reexamination proceedings within the appropriate time window independent of a third-party filing, if information creating a prima facie case comes to the Director's attention. Both sections contain estoppel language barring subsequent challenges under the same goods and services against a trademark once the registration has survived a challenge under the given section, regardless of the identity of the later challenger.
While the elements of a reasonable investigation under the Act are currently unspecified, the Act charges the Director with creating regulations outlining what constitutes a reasonable investigation and providing the general types of evidence that lead to a prima facie case.
These changes to the Lanham Act will provide trademark owners with an expanded tool chest to challenge problematic applications and registrations. The Act also resolves a circuit split for awarding an injunction, easing the burden on trademark owners to show harm to their brand to obtain injunctive relief.
Two Key Takeaways
- Trademark owners will now have expedited procedures to address fraudulent or "deadwood" registrations that block their trademark applications.
- Clarification of the Circuit split surrounding the presumption of irreparable harm in trademark infringement cases will reduce the evidentiary burden on trademark owners for receiving injunctive relief.