The Trademark Modernization Act of 2020 — some thoughts

We took advantage of the holiday week to sit down and do some not-directly-work reading: the Trademark Modernization Act of 2020. It’s incredibly dumb that it had to be a part of the broader coronavirus relief act to get passed, but oh well.

The big focus is on providing new tools to keep the trademark registry narrower and more reflective of the actual US marketplace. There are a whole bunch of goodies in the grab-bag legislation.

I. Expungement Proceedings

Cribbing from Canada’s trademark law, the Act adds an ex parte expungement proceeding. It kicks off with a petition claiming that the mark has never been used in commerce or in connection with some or all of the goods or services in the registration. The petitioner has to provide “the elements of a reasonable investigation” to support the non-use claim and a tbd fee. There is a separate “proceeding” for each good or service for which there is a prima facie case; presumably, those get consolidated into a single actual proceeding; the registrant provides evidence of use or excusable non-use evidence, and the director makes a decision. The Act does not change or further define excusable non-use, so it may end up being a big loophole.

Intriguingly, the Director may institute an ex parte expungement proceeding of the Office’s own accord. This could be a big deal, if the Office is aggressive in clearing away some of the dubious registrations that have been on the upswing recently.

A few small technical details: co-pending proceedings aren’t allowed — wait your turn! — and successfully defending on expungement proceeding prevents future expungement proceedings forever for the goods/services at issue. I get the need for certainty, but this feels like it could be easily gamed — a company could have a friendly party institute a proceeding three years after registration, easily show use for all goods/services, and be immune from those challenges forever. I suppose non-use cancellation actions always remain, so it’s a limited form of immunity — hopefully it doesn’t develop into an issue.

In all, this should be a great change. The Canadian expungement mechanism works well, and it should be a solid addition to the US practitioners’ toolbox. It should be a nice boon to your favorite IP investigator, too.

II. Re-Examination

The Act adds a Section 16(b), a new mechanism to petition for re-examination on the grounds that the mark was not in use as of the use claim. The petitioner must provide similar evidence as an expungement petitioner. Presumably, petitioners will use this process to take a whack at improper-looking 1(a) registrations prior to the three-year “challenge period” date, and just use expungement otherwise — except in exceptional circumstances, where the applicant didn’t have use at registration but started thereafter. Similar limitations on later ex parte proceedings apply; as with expungement, there is no estoppel as to future inter partes proceedings.

III. Third-Party Submission of Evidence

Section 223 of the Act allows third parties to submit additional types of evidence — basically, it broadens the types of evidence permitted under Letters of Protest to be more or less anything, at the Director’s discretion. I’m sure the Director is thrilled at the opportunity to sift through all the garbage that would have been inadmissible via Letter of Protest! But, if there are some meaningful filing fees that go along with it, this probably ends up being a change that doesn’t have too much impact.

IV. Cancellation Grounds

The Act adds a new ground for cancellation: if the mark “has never been used” for some or all of the goods/services. This should be an easier burden to carry than proving “abandonment,” which the TTAB has always been weirdly hesitant about. This should be a fantastic change.

V. Litigation Changes

Congress responded to some case law that made preliminary injunctions more difficult for plaintiffs to get. After a Supreme Court case changed the injunction landscape for patents, eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), the Third, Ninth, and Eleventh Circuits also made trademark injunctions much more difficult to get, emphasizing the need for proof that irreparable harm is likely. Other courts got hopelessly muddled about what standard to apply and why. The Act has addressed this issue by essentially restoring the old, more plaintiff-friendly standard.

Section 226(a) changes/clarifies the standards for injunctions. Now, for permanent injunctions, irreparable harm no longer needs to be proven — a plaintiff that wins on the merits basically gets a permanent injunction automatically. For preliminary injunctions, the plaintiff needs only to show a likelihood of success on the merits, not that plus proof of irreparable harm.

This is good change. If a plaintiff has succeeded in proving (or being likely to prove) that confusion is likely, it’s dumb to have to then prove that it deserves an injunction, too. This should reduce litigation costs a bit and encourage quicker settlement after the PI decision basically decides the case in one party’s favor or the other.

VI. Flexible Deadlines

The Act provides that the Office can request an Office Action Response in as few as 60 days instead of the default 6 months, and provides for an extension process.

The impact of this depends on what the Office decides to do. Perhaps it will have shorter deadlines for Office Actions that raise only certain simple, defined issues, like ID amendments and specimen issues? If so, this could be a good change to reduce application pendency. The key is doing this is a way that is simple and communicates (via status code or document name) what the deadline will be. If all it does is create uncertainty in docketing deadlines, this could be an annoying change that negatively impacts practitioners.

We’re now past the important changes, but not through all the changes.

VII. Probably Pointless Paperwork

The Office needs to provide a report on these various “decluttering” initiatives for members of Congress to not-bother-reading in three years. Section 227. The Office will probably just add the various tracking data Congress is requiring to a dashboard, print it to a PDF when the report is due, and tack on a few additional recommendations that the Trademark Advisory Committee is nagging it about in the months prior to the report deadline.

VIII. Weird Amendments

Section 228 clarifies that the Director has authority “to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board.” Um, OK? It’s not clear why this needed to be clarified or what it changes, or what weird lobbying path resulted in this getting thrown into the Act. Stay tuned to

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