The Lanham Act's makeover – Congress gives new clarity and tools to trademark owners and applicants

The first major update to US trademark law is now law. The Trademark Modernization Act of 2020 (TMA) amends federal trademark law – the Lanham Act – in several meaningful ways, especially for current trademark owners, giving new certainty for litigants and new tools for challenging current registrations. 

Rebuttable presumption of irreparable harm

If a trademark owner proves likelihood of confusion in litigation, it is now entitled to a rebuttable presumption of irreparable harm for seeking injunctive relief.  In fact, the law used to work this way.  But after eBay, Inc. v. MercExchange, 547 U.S. 388 (2006), a patent case in which the Supreme Court held that a plaintiff must prove irreparable harm to obtain an injunction, circuit courts split on whether the rebuttable presumption of harm still applied in trademark cases.

The TMA restores litigants to a pre-eBay landscape by clarifying that a rebuttable presumption of harm automatically applies where a likelihood of confusion is found.  The TMA amends Section 34(a) of the Lanham Act, and as such, the rebuttable presumption of irreparable harm also applies to other Lanham Act claims, such as dilution, false advertising and unfair competition.

Tools to challenge “dead wood”

The TMA provides trademark owners or applicants two new tools for challenging “dead weight” on the register – ex parte expungement and reexamination. These procedures will not be available until December 28, 2021 at the earliest, but trademark owners – especially the owners of applicants facing Section 2(d) refusals – should start considering their potential usefulness now.

Ex parte expungement

The new “ex parte expungement” procedure allows a party to request removal of some or all of the goods and services from a registration because the registrant never used the mark in commerce in connection with such goods. 

Most notably, the expungement proceeding is ex parte.  It is instituted by filing a petition to the Director of Trademarks, setting forth a prima facie case that the mark was never used in commerce for all or some of the goods/services in the registration.  Notably, that is a different standard than mere cancellation based on non-use.  The TMA provides that the petition be filed with evidence undertaking by a “reasonable investigation.” 

After the petition is filed, the Director will decide whether to institute a proceeding. The TMA instructs the USPTO to set standards and deadlines to govern this procedure, and specifies that the “procedures” are the same as those for examination of a mark during the application process under Section 12(b) of the Lanham Act. 

In addition, the Director may sua sponte institute an ex parte expungement proceeding.  It remains to be seen how often this will occur, although it could leave open the ability for such proceedings in a similar manner as the USPTO’s recent use of post registration audits upon renewal. 

A petition for expungement must be filed between three and ten years after registration.  

Reexamination

The second tool to challenge registrations is “reexamination,” an ex parte proceeding which enables a party to petition for reexamination on the grounds the mark was never used in commerce at all prior to registration.  Like the expungement proceeding, a petition for reexamination is submitted to the director and must be supported by evidence following a “reasonable investigation.” 

The timeline for reexamination is tighter than for expungement; the law requires reexamination petitions to be filed before the five-year anniversary of a registration.

Cancellation based on non-use

The TMA adds non-use as a ground for cancellation of a registration.  A petition to cancel based on non-use can be filed after the three-year anniversary of a registration on the ground that the mark has never been used in commerce, though a foreign or Madrid Protocol registration under Sections 44(e) or 66 cannot be cancelled on this new ground if the registrant can demonstrate that any nonuse is due to special circumstances that excuse such non-use.

Overall, once the TMA’s new provisions are active, each new procedure will be useful for different purposes, such as:

• Expungement: Useful to challenge registrations which cover a large volume of goods or services that may not have all been used in commerce.  It appears to provide a potential shorter route to cancellation based on non-use than an inter partes proceeding.
• Reexamination: Useful to challenge potentially applications with suspicious specimens or applications which cover a wide variety of goods/services. 
• Cancellation based on non-use: Useful to cancel registrations in a dispute when placing pressure on the counterparty would be valuable.

More to come

Finally, an underreported element of the TMA is a requirement that the Comptroller General of the United States consult with the Director “to conduct a study on the efforts of the Director to address inaccurate and false claims of use in trademark applications and registrations.”  This section essentially will require the USPTO to track how often the TMA’s new provisions are used and how they are working.  It suggests that Congress may remain interested in the prospect of ridding the register of marks that are not actually in use. 

Learn more about the implications of the Trademark Modernization Act of 2020 by contacting either of the authors or your usual DLA Piper relationship attorney.