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Trademark Modernization Act Tips for Non-U.S. Brand Owners

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By: Rita Kline

Partner

Regulations implementing the Trademark Modernization Act (TMA) will take effect on December 18, 2021. The TMA directs the United States Patent & Trademark Office (USPTO) to implement new streamlined and low-cost procedures that will allow third parties to challenge pending applications and issued registrations more easily for marks that are not in use.

The driving force behind the TMA is to increase the accuracy and integrity of the Federal Trademark Registry by clearing so called “deadwood” registrations for marks that receive federal protection but are not actually being used in commerce. The presence of deadwood registrations on the Registry creates inaccuracies that harm the public by preventing legitimate trademark users from protecting their marks, forcing parties to either incur significant costs to try to dispute the deadwood registrations or settle for a second-choice mark.

Current procedures include USPTO driven non-use audits and inter partes cancellation proceedings based on abandonment of the mark. However, audit efforts are not fast enough, and inter partes proceedings are costly with claims of abandonment that could be easily overcome with evidence of an intent to commence or restart use. 

New Nonuse Proceedings

Two new ex parte procedures are available starting December 27, 2021 to review and cancel existing registrations for unused marks for some or all of the goods or services: “expungement” and “reexamination”. Each have important deadlines that affect the timing of filing.

In an expungement proceeding, which can only be filed between three years and ten years after registration, a registration can be challenge on the basis that the mark was never properly used in commerce. Anyone can petition the USPTO to expunge a registration, either in whole or in part, by filing evidence of a “reasonable investigation” into the non-use of the mark, and payment of the $400 per class fee. If the Petition is accepted, the USPTO will “take over” and institute direct communications with the Registrant. The petitioner is no longer involved. A successful proceeding results in deletion of the “unused” goods or services from the registration, or cancellation of the registration altogether. Furthermore, as an added boost to decluttering the register, the ten-year cap has been removed until December 27, 2023.

In a reexamination proceeding, which can be filed anytime within the first five years of registration, a registration based on actual use can be challenged on the basis that the mark was never actually used as of a relevant date, i.e., either the filing date of a use-based application, or the filing date of a Statement of Use. Anyone can petition the USPTO to institute the proceeding, with payment of the $400 per class fee, in addition to the USPTO, sua sponte. A successful proceeding results in deletion of the “unused” goods or services from the registration, or cancellation of the registration altogether.

In addition, the TMA adds a new claim of nonuse to current inter partes cancellation proceedings. Similar to a “nonuse cancellation procedure” available in many foreign countries, registrations become vulnerable to this challenge during any three-year period after registration. However, non-U.S. brand owners of registrations issued under Sections 44(e) (based on foreign registrations) and 66(a) (Madrid Protocol), can prove “special circumstances” that excuse the nonuse. This new claim of nonuse does not affect the current ground of abandonment.

What To Do: Assess Portfolios and Implement Proactive and Defensive Strategies

Non-U.S. trademark owners are particularly vulnerable to expungement procedures and the new nonuse cancellation claim, because in many cases, registrations are often not based on actual use. These proceedings more easily cancel registrations that are unused for any three-year period. Evidence of an intent to commence or restart use are not relevant in either proceeding.

Strategies:

  • Identify registrations that are not based on actual use and are more than three years old. Assess use in commerce and consider filing a new application to register marks not in use. The new application can be based on a foreign registration and will provide the advantage of restarting the timeline for having to show use if a non-use proceeding is filed.

  • In situations where some of the listed goods and services in the registration are not going to be offered in U.S. commerce, delete goods and services from any filings made on the relevant dates e.g., Declarations of Use under Section 8 or Section 71. For remaining goods and services in use, consider filing all available use evidence to prevent registrations from being vulnerable to attack.

  • Consider delaying registration of pending applications that are based solely on foreign registration by adding or maintaining a claim of intent-to-use, by filing extensions of time for a total of three years from the date of issuance of the Notice of Allowance. This entails some cost but allows for additional time to delay the opening of the three-year window for expungement or cancellation.

Non U.S. brand owners of registrations based on actual use are vulnerable to reexamination proceedings filed anytime within the first five years of registration.

Strategies:

  • Identify registrations based on actual use that are less than five years old to ensure accuracy of all claims of use of the mark in connection with each of the goods and services. Best practice is to proactively obtain and archive a specimen of use for each item listed initially, and to obtain and archive specimens of ongoing use, at a minimum of once a year, going back in time if needed to the date of the relevant filing e.g., just before the filing date of the application or Statement of Use.

  • Consider filing a new application to register marks for goods and services not in use.

In addition to the above strategies, non-U.S. brands looking to enter the U.S. market can take advantage of these proceedings to remove potentially conflicting marks that arise in clearance search reports or are raised in likelihood of confusion refusals in pending applications. If initiated, these procedures suspend the time for responding to office actions. However, to prevent abuse, the TMA includes provisions for estoppel and bars co-pending proceedings involving the same registration and the same goods and services.

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The information provided in this publication is for informational purposes only and should not be considered as legal advice on any specific facts or circumstances. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the author(s) and do not necessarily reflect those of Renner Otto.