As reported earlier this year, Congress enacted an amendment to the Lanham Act as part of its December 2020 COVID-19 relief bill, known as the Trademark Modernization Act (TMA), which creates new tools for clearing unused trademarks from the federal trademark register. Following the U.S. Patent and Trademark Office’s (PTO) recent announcement, the TMA has been implemented and will become effective as of December 18, 2021.
Key Points for U.S. Trademark Registration Owners
- The TMA creates two new mechanisms for trademark registrations to be more easily cancelled in whole or in part on the basis of nonuse: ex parte reexamination and ex parte expungement.
- The TMA also establishes a new ground for cancellation in inter partes proceedings based on nonuse.
- The TMA shortens the time to respond to office actions from six months to three months, with the option to seek a single three-month extension. The new rule disincentivizes extensions by charging a fee.
New Ex Parte Proceedings
To review, the TMA creates two new ex parte proceedings that can be instituted by any party, including the PTO Director, to remove trademarks based on nonuse. The PTO will begin accepting petitions requesting cancellation under either proceeding starting December 27, 2021.
The first, known as a “reexamination proceeding,” allows any party to request cancellation of a registered trademark on the basis that the mark was not in use in commerce in connection with all or some of the claimed goods and services when the application was filed, or for intent-to-use applications, when the application was amended to allege use or the time to file a statement of use expired. A reexamination proceeding may be initiated within the first five years following registration.
The second ex parte proceeding, known as an “expungement proceeding,” allows any party to request cancellation of a registered trademark on the basis that the mark was never used in commerce in connection with all or some of the claimed goods or services. Until December 27, 2023, an expungement proceeding may be initiated for any mark that is over three years old. After that date, expungement proceedings will be limited to marks that are between three and 10 years old.
Initiating a Proceeding
A party seeking to initiate either ex parte proceeding must file a petition with the PTO, which must include a verified statement that a reasonable investigation was conducted into whether the mark has been used in commerce in connection with the specified goods or services, as well as a factual basis for the petition. The PTO Director may also initiate an ex parte reexamination or expungement proceeding on its own, irrespective of whether a party has filed a petition to commence such a proceeding. A petition seeking to initiate an ex parte proceeding will be uploaded to the Trademark Status and Document Retrieval system and publicly viewable. In response to comments, the PTO has clarified that the petition is not required to identify the “real party in interest,” though the Director retains the discretion to require the identity of the real party in interest in order to discourage and prevent abusive filings.
If the Director determines that the petition sets out a prima facie case, or discovers information that supports a prima facie case on its own (in a case where no petition has been filed), the Director will institute a proceeding. The registrant will then have the opportunity to demonstrate use in commerce, or in the case of a mark that registered under Sections 44(e) or 66(a), excusable nonuse.
In its recent announcement, the PTO also made several changes to existing procedures and provided additional points of clarification regarding the new rules.
With respect to existing procedures, the PTO established a new avenue to seek cancellation of a mark in an inter partes proceeding before the Trademark Trial and Appeal Board, by which parties may request cancellation on the ground that the mark has never been used in commerce, similar to the ex parte expungement proceeding discussed above. This basis for cancellation is available at any time after the three-year anniversary of registration. To avoid cancellation, a registrant must demonstrate use in commerce, or in the case of a foreign-based registration under Sections 44(e) or 66(a), excusable nonuse. This change will be effective as of December 18, 2021.
In addition, the PTO shortened the time to respond to office actions from six months to three months, while allowing a party to seek an additional three-month extension for a fee of $125. The new response time will not take effect until December 1, 2022. This change will not apply to applications based on the Madrid Protocol (Section 66(a)), which will still have a six-month response period without the option to seek a further extension.
With respect to the new ex parte proceedings, the final rule also implemented changes regarding filing fees as well as the applicable response times. Under the final rule, a petition for ex parte expungement or reexamination now requires a filing fee of $400 per class. In addition, a registrant has three months to respond to an office action, with the option to request a further extension of one month for a fee of $125.
The PTO has also made available its responses to comments received since the new rules were enacted, as well as other points of clarification.
Trademark registration owners that claim expansive goods and services in their registrations, including in particular, foreign-based applications, will be the most vulnerable to a challenge under the new rules. In light of these developments, registrants may wish to review their own trademark portfolios to proactively remove any unused claims and to ensure continuing protection of those marks that are in use.
For a more fulsome discussion of the TMA and clarifications regarding its implementation, please refer to the final rule.