The New Trademark Modernization Act: Its Impact on Foreign Trademark Owners

In Trademarks, TTAB by Stacey Kalamaras

The Trademark Modernization Act (“TMA”) was signed into law on December 27, 2020 to address the increase in fraudulent trademark filings by foreign trademark owners, many of which reside in China. The TMA amends the Trademark Act (Lanham Act) and will mostly became effective at the United States Patent and Trademark Office (“USPTO”) on December 18, 2021. These changes will have a tremendous impact on the integrity of the U.S. trademark registry and, over time, will more accurately reflect the state of U.S. trademarks in current use in commerce and provide individuals, businesses and the USPTO “new tools to clear away unused registered trademarks” from the U.S. trademark register that are in contravention of U.S. trademark laws. By doing so, all legitimate trademark owners – both foreign and domestic – will have greater access to an improved system and the clearance process should become more efficient.

In the United States, use in commerce is a cornerstone of the trademark system and, in fact, the longer trademarks are used, the more valuable they become. The TMA’s sweeping changes will have the greatest impact on foreign trademark owners, who are allowed to apply for marks in the U.S. and secure registrations without first demonstrating use in commerce (thanks to international treaties and the Madrid Protocol). If a mark is not put into use in commerce after three years, it can be cancelled for nonuse. However, such an action requires that a party bring a contested cancellation proceeding before the Trademark Trial and Appeal Board (“TTAB”) to remove the registration, which can take a lot of time and financial resources.

Expungement and reexamination allow unused marks to be cancelled

Through new ex parte procedures being implemented as of December 18, 2021, parties now have a more efficient and inexpensive alternative to bringing a contested opposition or cancellation proceeding before the TTAB to prevent or remove a registration where they believe the mark is not being used in commerce on the goods in the application or registration. We outline the basic process below, along with the requirements and timing that all trademark owners should know.

Beginning on December 18, 2021, any third party may bring an expungement proceeding against any U.S. trademark registration between the third and tenth years following the registration date. The expungement proceeding applies to all registrations, even foreign owned registrations, whether the basis of the registration is through the Madrid System under Section 66 through the World Intellectual Property Office (“WIPO”) or by relying on a home country application/registration under Section 44. For the first three years following the TMA’s enactment until December 27, 2023, a petitioner may request an expungement against any registration that is at least three years old, regardless of the 10-year limit.

A similar ex parte process of reexamination is also available for any applications filed and based on use in commerce. These applications are filed based on  Section 1, usually by domestic applicants, but can also be filed by any foreign applicant. Reexamination proceedings are available at any time during the first five years of registration where the petitioner is claiming there is no use in commerce as of the “relevant date.” The relevant date is either the application date or the date the Statement of Use was filed, depending on the type of application filed.

Lastly, the cancellation rules allow for a new ground to be added to contested proceedings where petitioners can claim that the mark has never been used on all or some of the goods in the registration. This is a different cause of action from abandonment, which is the current ground for cancellation used against most foreign trademark owners. This new cancellation ground is valid against any trademark registration that is at least three years old.

Expungement and reexamination petition requirements, process, and timing

For both expungement and reexamination proceedings, it’s important to note that the USPTO Director may also initiate such a proceeding. In addition to certain requirements specified in the regulations, a third party must pay a $400 fee, specify the mark against which it is complaining, and specify the goods and services that are not in use. Most importantly, the petition must be accompanied by a verified statement  that sets forth the results of the reasonable investigation that was conducted into the lack of use. The USPTO rules are clear that “a single search using an internet search engine would likely not be considered a reasonable investigation.” Conversely, “an investigation that produces reliable and credible evidence of nonuse at relevant times should be sufficient.” The evidence must be publicly available and accessible. All evidence submitted will be accessible in the USPTO’s public database for all to view.

As for the timing of these proceedings, they are meant to be much faster than the contested cancellation proceedings. Further, once the petitioner files a petition and evidence and pays the requisite fee, there isn’t anything more required. After receiving the petition, the USPTO will institute the proceeding, the registrant (trademark owner) will be notified of the petition via email, and an Office Action will issue. The registrant will be given three months to respond to the allegation of nonuse. Failure to respond will result in cancellation of the goods and services or the mark will be cancelled entirely (depending on the circumstances alleged in the petition). To overcome the petition, the trademark owner can surrender its registration, or it must prove use in commerce of all the goods/services at issue. This will generally take the form of specimens of use, but the USPTO also mentions that other forms of documentary evidence may be acceptable. In certain circumstances, a registrant may be able to claim excusable nonuse.

Receive a notice of an expungement or reexamination petition?

What should you do before or after you receive notice of an expungement or reexamination petition? First, make sure that all of your contact information is up to date in the USPTO database. Next, review all of your U.S. trademark registrations now. If any goods and services are not currently being used in the U.S., you can make amendments to your registrations with no additional filing fees by deleting the requisite goods, so long as you are not filing a Section 8/71 Declaration of Use. Your designated U.S. trademark counsel can help you prepare and file the appropriate form. Third, should you receive such a petition, do not panic, but please make sure you have an experienced U.S. trademark counsel that can assist you. Although these rules may be new, we knew they were coming for the past year. Even though we have not yet been through the process, the rules are quite detailed and experienced trademark attorneys will know how to help.

Lastly, going forward, when you file new applications based on foreign applications or registrations, make sure you remove any goods or services that you do not intend to use in the U.S. before the mark – registers. For instance, when working with our clients during the past year, we have recommended deletions to their applications during the Office Action stage to insulate them from these new proceedings and protect them from these actions.

The Trademark Modernization Act effects other aspects of trademark practice as well, which we will cover in a future post. If you have any questions or need help with an expungement or reexamination proceeding, please contact us.