Trademark Modernization Act of 2020: Increasing Protective Measures

The COVID-19 pandemic has brought about significant changes across our lives, including—believe it or not—in the realm of trademark law. On December 27, 2020, the “Trademark Modernization Act of 2020” (the “Act”) became law, as part of a COVID-19 relief and spending bill. If you are thinking about embarking on the journey to owning a trademark or are currently a trademark owner, here are some of the most important aspects you need to know about the recently passed bill.

First and foremost, there has been an increasing amount of applications and registrations, a decent number of them originating from China, for trademarks that are not actually currently in use in the United States—which is required for a valid registration. Currently, processes allowing to challenge such contrived applications are limited in scope and are actually quite costly. The Act ultimately calls upon the United States Patent and Trademark Office (“USPTO”) to implement new procedures that will allow third parties to more readily challenge these pending applications and issued registrations that may be spurious. The Act has essentially created new procedures to improve examination and effectiveness as well as efficiency in allowing third parties to request ex parte cancellation of trademark registrations for marks that have not been used. The new procedures provide an expedited process by which a third party may request cancellation of a registration when proper use of a trademark was never made by the registrant. Additionally, section 7 of the Act provides that a GAO study and report will implement efforts to declutter the trademark register in combatting this issue.

More specifically on the mechanisms addressing these spurious applications, the ex parte expungement cancellation procedures addressing the fraudulently filed and unused marks allow a third party to seek cancellation of a registration on the grounds that the mark was never used in commerce or in connection with the goods or services provided in the registration. In doing this, the petitioner will be allowed to submit evidence of non-use; this expungement process will be available beginning three years after the mark has been registered.

The second means in addressing the recent influx of fraudulent trademark applications set forth in the Act allows any person to file a petition to reexamine a use-based registration on the ground that the subject mark was not used in commerce on or in connection with the recited goods or services on or before the relevant date. This petition may be filed at any time before the expiration of the five-year anniversary of the statement of use (an official form that you file used by the USPTO indicating that you are using a mark to sell goods and/or services).

The Act also has strengthened the legitimate trademark holder’s ability to police and enforce its rights by making injunctive relief more attainable. In eBay Inc. v. MercExchang, L.L.C, 547 U.S. 388 (2006), the Supreme Court rejected a judicially created presumption of irreparable injury in the context of the Patent Act. However, given the recent consumer protection concerns, the Act has addressed a circuit split as to whether irreparable harm can be presumed when a trademark violation has been proven and the Act has clarified that “a rebuttable presumption of irreparable harm exists given the consumer protection concerns that would occur otherwise” and now indeed applies to trademark violations.

The Act has also codified the existing letter of protest procedure which permits the submission of evidence by other parties during the trademark examination process that bears on the registrability of an applied for mark. Currently, the procedure is informal and without a timeline for when the evidence must be submitted to the examiner and does not require a filing fee. Under the Act, the director of the USPTO will have two months to review the evidence submitted with a letter of protest and will also have discretion as to whether it will be included in the record of that application for consideration by the examining attorney. The USPTO intends to establish more specified procedures for the consideration of the evidence submitted with a letter of protest and as for the year 2021, a letter of protest will cost $50 per application.

Lastly and on a more technical standpoint, the Act has additionally given the USPTO greater flexibility in shortening response deadlines between 60 days and six months in replacement of the usual six months. Moreover, an applicant now has the option to request extensions to a full six-month period.

The Act ultimately adopts a number of reforms that better protect trademark owners and new market entrants. Should you have any questions or are curious about how the Act impacts your business and/or brand, feel free to reach out. We are your Orange County trademark attorneys here to help.