The Trademark Modernization Act (TMA) will have significant impacts on brand owners and might offer new tools and procedures for challenging blocking trademarks and problematic registrations for those willing to take advantage of the new law. The TMA was passed by Congress in December 2019 before the USPTO announced the final Rules for implementation on November 17, 2021. Most aspects of the final Rules will take effect on December 18, 2021, and December 27, 2021, and could affect the ways brand owners challenge other registrations—including in the clearance process, as well as the way brand owners might have to document, support, and defend the legitimacy of their own claims of “use in commerce.” In addition to these new procedures, the TMA will also affect deadlines for responding to Office Actions and will implement other changes. The key provisions in the TMA are highlighted below.
The TMA might allow some opportunities for brand owners to remove blocking trademark registrations during the clearance process but brand owners will also want to take steps now to document legitimate use and archive specimens and proof of use in commerce to help ensure the TMA will not be weaponized in unforeseen ways to cancel registrations.
Compared to most other countries, the United States is somewhat unique in its stringent requirements to prove “use in commerce” with acceptable specimens and Declarations of Use, with the risk of mistakes and inaccurate statements resulting in claims of fraud and invalidation of trademark registrations. In recent years, the USPTO has observed an influx of suspicious claims of use in commerce and what it believes are improper claims of use, including claims of use for extensive “laundry lists” of goods and services that are unsupported with additional specimens of use during the post-registration “audit” program. To address these issues, and allow for third parties to initiate an expedited and inexpensive challenge to questionable registrations, Congress and the USPTO will now allow new procedures to challenge improper claims of use in U.S. commerce, namely, through expungement and reexamination proceedings.
Expungement will allow for the expedited challenge of a registration on the basis the mark “has never been used in commerce on or in connection with some or all of the goods or services recited in the registration” (or, for Madrid Protocol registrations or registrations based on a home country registration, there is no excusable non-use). An expungement Petition can be filed against a registration between the third and 10th year after issuance of the registration and, significantly, up until December 27, 2023, the 10-year limit will not apply, so older registrations can also be challenged.
The new law also provides for reexamining a registration based on a specific claim that the mark “was 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.” The “relevant date” is the filing date of use-based application or the date an Amendment to Allege Use was filed (or the expiration date of the deadline for filing the Statement of Use). A reexamination Petition may be filed during the first five years.
If the Petition is successful, the challenged goods and services will be deleted from the registration. If unsuccessful, a further challenge under the TMA cannot be raised again.
Requirements for the Petition
It is significant that Petitions may be filed anonymously, for example, using a law firm, although the USPTO Director may require identification of the real party in interest (e.g., in cases of abusive filings). Foreign petitioners will have to designate U.S. counsel to handle the Petition. Petitions can be filed beginning on December 27, 2021.
The fee for either Petition is $400 for each class of goods/services. The Petition for Expungement must identify the goods/services that were never used in commerce under the mark, along with any supporting evidence and a verified statement setting forth “the elements of the reasonable investigation the petitioner conducted to determine that the mark has never been used in commerce.” The Petition for Reexamination must identify the goods/services that were not in use in commerce as of the relevant date, along with supporting evidence and a verified statement setting forth the elements of the investigation conducted.
The nature of the investigation that is sufficient will vary under the circumstances and will consider relevant trade channels in deciding whether to institute the proceeding. The Final Rule and the Legislative History clarify that an internet search alone is unlikely to be sufficient. It remains to be seen if the USPTO will appreciate the business nuances and trade channels for particular industries or if they will be more inclined to allow challenges in the hopes of clearing “deadwood” from the register.
The Expungement/Reexamination Proceeding
The Petition and the evidence will be entered in the Trademark Status and Document Retrieval (TSDR) system for the subject registration record and will be public record. The USPTO will also send a courtesy email notice to the registrant or its attorney, if an email address is of record. If a prima facie case of non-use is established, the Director will institute a proceeding. At that point, the Petitioner’s role in the proceeding is finished. The Respondent will be allowed three months to reply with evidence of use (with a one-month extension available for a fee). The Respondent may respond by providing appropriate evidence and/or deleting from the registration some or all of the goods or services at issue. Appropriate evidence will generally consist of acceptable “specimens” of use but, at a minimum, must be consistent with the U.S. definition of “use in commerce” (which is linked to the USPTO’s view of acceptable specimens). Considering the proceeding can occur years later and records might no longer be in existence, the USPTO might also consider corroborating evidence to explain the historic use in commerce (although what will be acceptable remains to be seen).
The Director of the USPTO is also allowed to initiate either proceeding, presumably if a bogus specimen or claim of use is brought to the USPTO’s attention.
If the Respondent does not offer acceptable evidence or does not reply, the goods/services will be canceled. An appeal to the Trademark Trial and Appeal Board or Petition to the Director can be made within three months of the decision.
Uses for the New Proceedings, Other Implications, and Strategy
Offensively, it is clear the new proceedings could assist in removing potentially blocking trademarks during the clearance and application process. For the time being, the USPTO will allow the Petitions to be filed anonymously, and thus companies can allow private lawyers/firms to file on their behalf to keep their identity and business plans to use the mark secret from public knowledge. This will be useful particularly when companies expand into new product areas or do not want to publicly reveal their business plans.
Proceedings challenging use on a certain date can be commenced many years later, meaning that to defend a proceeding could require specimens and other proof of use as of a certain date many years later. Because record-keeping years later can be less reliable, particularly considering document retention policies at many organizations, brand owners would be wise to retain some archival copies of specimens, or at least ensure their counsel is maintaining additional examples of use.
Because these proceedings are new and there is a potential for “weaponization” of these challenges, it’s possible the USPTO could modify these rules to add new safeguards or impose other requirements but, for the time being, brand owners should be able to take advantage of the new proceedings.
New Office Action Deadlines
Beginning on December 1, 2022, Office Actions issuing during examination of the application and post-registration will now have a shorter response time of three months, as compared to six months. A three-month extension will be available for a fee. The three-month time period does not apply to Madrid applicants. The USPTO also hopes the new deadlines will remove blocking trademark applications and registrations.