The Consolidated Appropriations Act, 2021, Pub. L. No. 116-260 (2020) (full text here) contains the Trademark Modernization Act of 2020 at 1019 – 1029 (full bill text here) (the “TMA”) This bill had been floating around Congress for most of the last year and contains key changes to injunctive relief in Lanham Act lawsuits, trademark enforcement at the United States Patent & Trademark Office (“USPTO”), and trademark prosecution practice at the agency by amending the Lanham Act in multiple areas.

Access to injunctive relief in Lanham Act cases

The Lanham Act covers trademark infringement, unfair competition, false advertising, and cybersquatting cases. To receive preliminary (or permanent) injunctive relief, courts typically balance various factors, most critical among them (a) the likelihood of success on the merits and/or a finding of a Lanham Act violation and (b) whether the movant has suffered and will suffer irreparable harm in the absence of injunctive relief. Historically, there was a rebuttable presumption of irreparable harm in Lanham Act cases once a movant demonstrated a likelihood of success on the merits (at the preliminary relief stage) or proved a Lanham Act violation (at the permanent relief stage). However, the U.S. Supreme Court ruled in eBay v. MercExchange, LLC, 547 U.S. 388 (2006), that there could be no presumption of irreparable harm in patent infringement cases arising under the Patent Act. Various appellate circuits (notably the Third, Ninth, and Eleventh Circuits) then began interpreting the eBay ruling to apply to Lanham Act (i.e., non-patent) cases and preventing Lanham Act litigants in these circuits from relying upon the rebuttable presumption of irreparable harm.

The TMA resolves this circuit split and reaffirms that plaintiffs in Lanham Act cases may rely upon a rebuttable presumption of irreparable harm when they have demonstrated a likelihood of success on the merits (for preliminary injunctive relief) or proven a Lanham Act violation (for permanent injunctive relief), effective immediately.

New trademark enforcement challenges at the USPTO

The TMA creates two new “ex parte” avenues for enforcement proceedings before the USPTO to clear unused and “deadwood” registrations from the trademark registry outside the traditional opposition and cancellation inter partes proceedings at the USPTO:

• Expungement Proceedings – Parties may petition to purge the trademark register of marks that have never been used in commerce or never used in connection with some or all of the goods & services recited in the registration. This proceeding is available for registrations that are at least 3 years old and not older than 10 years old. But the law has a notable exception – for the first 3 years after its enactment, even 10+ years old registrations can be challenged, meaning that no registration will be immune to expungement based solely on older age.
• Re-examination Requests – Parties may petition to re-examine registrations that were allegedly not used in commerce or not used in connection with some or all of the goods & services recited in the registration as of the filing date (for use-based applications) or the allegation of use date (for intent-to-use registrations). This proceeding must be initiated no later than 5 years after registration.

Unlike traditional opposition and cancellation proceedings, standing is not required to initiate an expungement or re-examination – petitioners only need to provide prima facie evidence of non-use – or the USPTO may initiate such proceedings sua sponte. Further, despite the TMA’s description of these proceedings as “ex parte,” registrants have the opportunity to respond to a petition and provide evidence of use for the challenged goods & services. Decisions are appealable to the Trademark Trial and Appeal Board at the USPTO and federal courts in certain circumstances. If it is ultimately determined that the registrant’s evidence of use is sufficient to support registration for the challenged goods & services, that determination has a preclusive effect and bars later expungement or re-examination challenges for the specific goods & services challenged and decided upon.

The TMA also expressly adds expungement as a ground for an inter partes cancellation proceeding, meaning that parties may initiate cancellation actions at the USPTO any time after the third anniversary of registration if a registered mark has never been used in commerce or in connection with some or all of the goods & services in a registration. However, the TMA notes that registrations based on foreign registrations or designations of an international registration cannot be cancelled under this new provision if the registrant demonstrates that any non-use is excusable.

These new provisions take effect on December 27, 2021 (one year after the TMA was signed into law) and the TMA directs the USPTO to promulgate regulations in the meantime to implement these provisions.

Changes to trademark prosecution practice & procedures

The TMA codifies the existing informal “letter of protest” procedure – whereby third-parties may submit arguments and evidence to the USPTO to support or prompt a refusal to register from an examining attorney during the examination of an application – and directs the USPTO to promulgate regulations implementing these procedures before their effective date of December 27, 2021. As this process already exists at the USPTO, and was recently formalized in TMEP § 1715, it is unlikely to cause a major change in prosecution practice in the short term.

Effective immediately, however, the TMA grants the USPTO discretion to shorten the response time to office action letters. Until now, applicants and registrants usually have 6 months to respond to an office action. The TMA authorizes the USPTO to mandate a response within as little as 60 days, provided that the USPTO permits respondents to request extensions of time back up to the full 6 month period (for additional fees). The USPTO has stated that it plans to issue additional guidance regarding the boundaries of its discretion before requiring shorter response periods.

For fans of administrative law – affirming the authority of the USPTO Director

The patent bar was thrown into disarray last year when the U.S. Court of Appeals for the Federal Circuit released the Arthrex decision, in which it found that the administrative law judges who constitute the Patent Trial and Appeal Board (“PTAB”) were unconstitutionally appointed under the Appointments Clause of the Constitution because, given their apparent lack of oversight by the USPTO director, they should be considered “principal officers” that require nomination by the president and confirmation by the Senate; they were not “inferior officers” who may be appointed by the heads of departments without Senate confirmation (because of the oversight such heads of departments, who are confirmed by the Senate, provide). The decision threatens to invalidate scores of PTAB decisions for being improperly issued and an appeal is now pending before the U.S. Supreme Court.

It was unclear whether the Arthrex decision would similarly impact the decisions of the Trademark Trial and Appeal Board (“TTAB”). To avoid any extension of the Arthrex decision to the TTAB, the TMA expressly affirms the USPTO Director’s control and authority over the decisions of the TTAB to shore up the constitutionality of TTAB judges’ appointments.

Next steps

These amendments to the Lanham Act have the potential to profoundly impact the rights of trademark owners and those seeking to secure and enforce their valuable intellectual property. The reaffirmance of the rebuttable presumption of irreparable harm is sure to help brand owner plaintiffs in the near term, making it easier to obtain injunctive relief to keep infringing products and services out of the marketplace. The additional enforcement avenues at the USPTO will on one hand support brand owners in their efforts to clear marks that are not being used or were filed in bad faith to “trademark squat.” But on the other hand, these mechanisms will also complicate the strategy for foreign brand owners seeking to obtain – and maintain – registrations in the US unless they are already using their marks in the US or have imminent, concrete plans to do so. These new procedures may also encourage all brand owners to limit the length of their identifications of goods & services, even if relying upon foreign or international registrations with lengthy identifications as a basis for registration in the US.

The TMA requires the USPTO to promulgate regulations in response to most of the Act’s provisions, so brand owners should stay tuned for further developments as there will likely be an opportunity for public comment on these draft regulations. The USPTO will be posting all information on its TMA-dedicated website available here.

If you have additional questions concerning the intellectual property implications of the Consolidated Appropriations Act, 2021, please contact Anna Kurian Shaw and Brendan C. Quinn.

Authored by Anna Kurian Shaw and Brendan C. Quinn.