The Legal Brief
Coronavirus Relief Package Offers New Trademark Rules
December 28, 2020
The president signed into law a multi-trillion-dollar spending and relief package which includes the Trademark Modernization Act of 2020 (TM Act of 2020), making several technical changes to the Lanham Act. The new rules could fundamentally alter how intellectual property owners protect and enforce their rights.
In the United States, with some limited exceptions, a trademark must be used to qualify for trademark registration. But many applicants increasingly obtain registrations for marks that have never been used or were not used as required before registration. When unused marks remain on the trademark register, those registrations hurt small businesses by making it harder for them to obtain protection for strong, commercially viable marks. A recent flood of fraudulent trademark registrations from China has exacerbated this problem.
The TM Act of 2020 addresses the false-use-claim problem by creating new procedures to allow third parties to submit evidence during the examination of trademark applications—such as evidence that claims of use in an application are inaccurate. It also creates new ex parte procedures at the U.S. Patent and Trademark Office (USPTO) to cancel trademark registrations for marks that have not been used: expungement and reexamination. These new post-registration procedures provide significant tools to address the flood of fraudulent trademark registrations that currently cannot be cleared except through costly, time-consuming cancellation actions before the Trademark Trial and Appeal Board.
Finally, the TM Act of 2020 promotes remedies designed to protect consumers in trademark cases. Historically, if a trademark owner prevailed in an infringement lawsuit, the owner would be entitled to a presumption that the court would award an injunction against the competitor’s continuing use of a confusingly similar trademark so that consumers would not be misled about
the source of a good or service. However, following the Supreme Court’s ruling in a patent infringement lawsuit holding that injunctions could not be presumed in that context, eBay, Inc. v. MercExchange LLC (2006), a circuit split developed as to whether irreparable harm can be presumed when a trademark violation has been proven. The TM Act of 2020 clarifies that for trademark violations, a rebuttable presumption of irreparable harm exists given the consumer protection concerns that would occur otherwise.
Although the full impact of these new provisions will remain uncertain for months as the USPTO promulgates rules and regulations implementing these new processes, some of the impact will be immediate, especially for those concerned with trademarks and branding. First, mark owners should consider whether their portfolio of trademark registrations (or a competitor’s portfolio) is potentially a target for these new cancellation tools. Second, when searching new marks, businesses should consider a more aggressive posture challenging other marks at earlier stages. Finally, if you consider an action alleging trademark infringement or violations of Section 43(a) of the Lanham Act, the new presumption of irreparable harm can broaden your enforcement strategy if you can obtain injunctions.