Introduction
On 27 December 2020 Congress enacted the Trademark Modernisation Act (TMA) 2020 as part of the Consolidated Appropriations Act 2021. The TMA amends the Trademark Act 1946 – also known as the ‘Lanham Act’ – and makes significant changes to trademark law by clarifying the burden for trademark owners seeking injunctive relief and providing new mechanisms for challenging applications and registrations on non-use grounds. The notable changes that will come into force in 2021 affect proceedings in the United States Patent and Trademark Office (USPTO) and the Trademark Trial and Appeal Board, as well as federal court litigation. The key highlights of the new law are set out below.
Rebuttable presumption of irreparable harm returns for injunction litigants
Most notably for trademark litigation, the TMA amends Section 34 of the Lanham Act to clarify the standard for demonstrating irreparable harm in trademark cases seeking injunctive relief. The TMA codifies a presumption of irreparable harm that was historically afforded in federal courts until the Supreme Court’s 2006 decision in eBay Inc v MercExchange LLC (547 US 388). In this case, the court held that irreparable harm could not be presumed and that plaintiffs must affirmatively demonstrate irreparable harm to secure injunctive relief.(1)
Although eBay was a patent infringement case, many federal courts subsequently began departing from the longstanding presumption of irreparable harm in trademark infringement cases, causing a circuit split on the applicability of the presumption of irreparable harm. The TMA’s amendment to Section 34 makes seeking injunctive relief more feasible for litigants which present a case that is likely to succeed on the merits and removes some of the uncertainty in seeking injunctive relief that has existed since eBay.
New mechanisms for review and cancellation of marks for non-use
The TMA makes certain changes to combat fraudulent trademark applications and ‘clutter’ on the register. This enables parties to forgo full cancellation proceedings for marks that have never been used or that have been used improperly in commerce in light of the fact that full cancellation proceedings “can resemble district court litigation” and “are often expensive and time consuming”.(2) The new procedures present a significant shift from the status quo and enable challengers to clear the register of marks that are not being used or are not being used for the goods or services named in the registration.
Ex parte expungement
The TMA amends the Lanham Act to add a new Section 16A, “Ex parte expungement”, which enables challengers to move to expunge a mark on the ground that it has never been used in commerce as required by the registration. An ex parte expungement petition must be filed within three to 10 years of the mark’s registration. The TMA also provides a three-year window in which potential petitioners can file an ex parte expungement petition for registrations older than 10 years if the petition is filed within three years of the TMA’s enactment. The TMA also establishes the requirements for the content of an ex parte expungement petition, including:
a verified statement that sets forth the elements of the reasonable investigation the petition conducted to determine that the mark has never been used in commerce on or in connection with the goods and services identified in the petition.(3)
Ex parte re-examination
The TMA amends the Lanham Act to include a new Section 16B, “Ex parte re-examination”, which enables anyone to petition for re-examination of a registration on the ground that it was not properly used in commerce before the registration date. A Section 16B petition for re-examination must be filed within five years of the registration’s issuance and, like a petition under Section 16A, must contain a verified statement that the challenger conducted a reasonable investigation. Under both procedures, challengers must submit to the director of the USPTO evidence or testimony establishing a prima facie case of non-use, enabling the director to initiate a proceeding as well.
Non-use as ground for cancellation
The TMA also introduces non-use as a ground for cancellation that can be brought at any time after three years of registration. The ground for cancellation follows the ‘never used in commerce’ theory, similar to a Section 16B petition for ex parte expungement. This new ground for cancellation is not time barred after five years of registration, which is the case for certain grounds in cancellation proceedings. This enables potential third parties to cancel a mark after the five-year window on the basis that the mark had no genuine use in commerce and likely does not require potential opposers to use other bases for cancellation, such as fraud on the USPTO, which require much more onerous pleading obligations.
Comment
The changes implemented by the TMA are likely to bring more stability to trademark law. It is hoped that the new ex parte proceedings will reduce the presence of registered marks that are not used in commerce without forcing interested parties to undergo full cancellation proceedings. Likewise, the return to a presumption of irreparable harm makes securing injunctive relief more attainable if litigants are likely to succeed on the merits of their trademark claim. Going forward, as the USPTO establishes procedures to implement the TMA, businesses and individuals should consult with attorneys to determine whether using the new TMA procedures or seeking injunctive relief as an enforcement measure is right for them.
For further information on this topic please contact Marcella Ballard, Kristen Ruisi or Maria Sinatra at Venable LLP by telephone (+1 410 244 7400) or email (mballard@venable.com, ksruisi@venable.com or mrsinatra@venable.com). The Venable LLP website can be accessed at www.venable.com.