The Trademark Modernisation Act: mechanisms to declutter the register with practice tips

On 27 December 2021, The Trademark Modernisation Act of 2021 (TMA) took effect in the United States. The TMA was part of the larger Consolidate Appropriations Act of 2021. The primary purposes of the TMA are:

  • to clear registrations from the trademark register in connection with marks for which proper use in commerce was not made;
  • clarifying the standard for injunctive review in trademark infringement cases; and
  • confirming the authority of the director of the USPTO to reconsider decisions of the Trademark Trial and Appeal Board (TTAB).

This article deals with only the mechanisms to clear improper registrations or prevent them from issuing.

The TMA was implemented to declutter the US Trademark Register of registrations that primarily resulted from fraudulent activity. The legislative history of the TMA indicates that a disproportionate number of fraudulent filings for trademark registration were generated by Chinese entities. It was noted that, as at September 2018, “there had been more than a 1,100% increase in trademark applications originating from China” (House Report (HR) 116-645, page 14) over the preceding six years, many of which appeared fraudulent.

Fraudulent activity is not limited to entities from China. The trademark register is also cluttered as a result of renewals of marks containing multiple goods or services when, in fact, they are used in connection with less than all of the goods or services. The resultant harm from such activity is trademark depletion – that is, words that comprise marks and confusingly similar potential marks, thus precluding the valid use and registration of the mark. Accordingly, such fraudulent registrations can effectively block legitimate trademark registration.

Prior to the enactment of the TMA, the USPTO had limited ability to police the register. It was difficult to determine whether there was fraudulent activity during examination. Further, there was no ex parte procedure available to cancel marks that were not in use. Trademark cancellation proceedings were the mechanism to cancel an improper registration, and those proceedings required at least the trademark owner and the party seeking cancellation.

Several provisions of the TMA seek to accomplish the goal of decluttering the principal register by implementing two new ex parte procedures that can be invoked by any person. These procedures are expungement and re-examination, and are aimed at allowing any person to take action to reconsider the validity of a trademark that is not in use at all, or only in use on less than all of the goods or services covered by the registration. Expungement and re-examination each attack the underlying “use in commerce” of all or part of the goods or services necessary to support a valid registration.

Taking advantage of the new procedure can provide a pathway to registration for persons that were previously blocked from doing so. Knowing when and how to apply the relevant statues and rules is paramount. This article contains reference to key elements of the TMA and certain practice tips are provided for the reader’s consideration. A guide through the relevant statutory sections is also provided.

Ex parte expungement

Ex parte expungement is codified in 15 United States Code (USC) Section 1066(a) and is implemented by the filing of a petition directed to the director of the USPTO “to expunge a registration of a mark on the basis that the mark has never been used in commerce on or in connection with some or all of the goods or services recited in the registration”. To be timely, a petition must be filed by a person after the expiration of three years after the date of registration and before 10 years following the date of registration (15 USC Section 1066a(i)).

The requirements of the petition are found in 15 USC Section 1066a(b) and 37 Code of Federal Regulations (CFR) Section 2.91(c). This statute identifies two evidentiary requirements necessary to meet the prima facie requirement showing that the mark has ever been used in commerce. The first is that a verified statement must be filed. The verified statement must specifically state “the elements of the reasonable investigation the petitioner 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” (5 USC Section 1066a(b)(3)(a)). The requirements for a reasonable investigation are not defined in statue and very little guidance is provided. The legislative history (HR 116-645) does note:

It is understood that what constitutes a reasonable investigation may vary across industry and by types of goods and services. For example, evidence of sales of a large, specialized commercial product may not be returned by the results of internet searches, and may require additional efforts to satisfy the showing needed to support a prima facie case. Without foreclosing the possibility that there may be some exceptions, it is not expected that the results of a single internet search-engine search would be sufficient to support a prima facie case.

The rules governing trademark practice provide guidance on reasonable investigation and acknowledge that there is no rigid rule for determining if a reasonable investigation has been conducted. Such an investigation must be “calculated to return information about the underlying inquiry from reasonably accessible sources where evidence concerning use of the mark during the relevant time period on or in connection with the relevant goods or services would normally be found” (37 CFR Section 2.91(d)(1)). The rule also provides a non-exhaustive list of eight items that may be included in a reasonable inquiry. It is expected that what constitutes a reasonable inquiry will become clearer as the director of the USPTO decides more petitions. However, petitioners need to take heed that it is unlikely that a single internet search engine result will result in a grant of the petition (HR 116-645).

The second evidentiary requirement is that the petitioner must provide all supporting evidence that is relied upon (15 USC Section 1066a(b)(4)). Again, there is no discussion of what constitutes “supporting evidence” in the statute. The rule again provides a non-exhaustive list of what may be considered evidence, and petitioners must also present clear and legible copies of all evidence (37 CFR Section 2.91(c)(9)).

Another important requirement in the statute is that the petition must include a verified statement that includes the results of the investigation and identifies any additional facts that are relied upon (15 USC Section 1066a(b)(3)). The implementing rule adds that the verified statement must be signed by someone with first-hand knowledge of the evidence. Accordingly, an individual who is not involved in conducting the reasonable inquiry or gathering the evidence is not eligible to sign the verified statement.

Ex parte re-examination

Ex parte re-examination is codified in 15 USC Section 1066b. As with an ex parte expungement, an ex parte re-examination can be started by any person. The petition requirements mirror those for expungement. The requirements for a valid petition to start a re-examination are provided in 37 CFR Section 2.92. A re-examination is used when the mark has not been used in commerce on, or in connection with, some or all of the goods or services covered by the registration. A petition for re-examination may be filed “at any time not later than five years after the date of registration of a mark registered based on use in commerce” (15 USC Section 1066a(i)).

The primary differences between Expungement and re-examination are laid out in the following table.

TMAExpungement (15 USC Section 1066a)Re-examination (15 USC Section 1066b)
Registrations subject to attackAttack a registration in connection with which the goods or services were never used in commerceAttack a registration in connection with which some or all of the goods are not in use in commerce
TimingAfter the expiration of the third year and before the 10th year following the date of the registrationAny time not later than five years after the date of registration

While there are minor differences between expungement and re-examination, each of these proceedings aims to accomplish the same result of decluttering of the US Trademark Register by removing registrations that are not entitled to protection. It should also be noted that, while the discission above relates to any person seeking to petition for expungement or re-examination, the director of the USPTO may institute such a proceeding sua sponte.

Effect of previously filed proceedings

Prior to filing an expungement or a re-examination, a proposed petitioner should check with the USPTO to determine if any earlier proceeding has been filed against the registration and the earlier proceeding involved the same goods or services that would be proposed to be attacked in a later filed proceeding. Each of the expungement and re-examination sections of the statute include a provision that precludes later expungement or re-examination proceedings from being instituted with respect to the same goods or services that are the subject of a pending proceeding (15 USC Sections 1066a(j)(1) and 1066b(j)(1), respectively).

In addition to the prohibition against concurrent proceedings, the result of an earlier proceeding can affect a subsequent petition to invoke an expungement or a re-examination. Each of the statutory provisions for expungement and re-examination provides an estoppel when the USPTO has determined in an earlier proceeding that the registrant had used the mark for particular goods or services, as relevant, and the registration was not cancelled as to those goods or services. In such a case, no further ex parte proceedings may be initiated as to those goods or services, even if another party tries to initiate an ex parte procedure (15 USC Sections 1066a(j)(2) and 1066b(j)(2), respectively).

The estoppel provisions of the TMA are unique in that a person that never participated in an earlier proceeding may be precluded from initiating its own petition, even if its proposed evidence was not presented in the earlier proceeding. This is particularly problematic because the estoppel is only effective when adequate use has been found, meaning the registration will stay in place and cannot be attacked in a subsequent expungement or re-examination. This leaves a potential petitioner only the avenue of a cancellation proceeding.

Good practice would include early investigation of suspect marks that present an impediment to a valid registration. A person wanting to file an application for registration but that cannot do so due to a registration that is vulnerable for non-use of the mark should act quickly to petition for expungement or re-examination. This way, the person will be able to present the proof that it wants and is not beholden to the proof presented by a third party who happened to petition first.

Heading off an expungement or re-examination

This section provides a good practice approach to heading off an expungement or a re-examination procedure against a registration owner. It would be good practice for an owner of a registration to periodically check to be sure that the mark registered is used in connection with all of the goods or services listed in the registration. For a single good or service, this is a relatively easy undertaking. It should also be determined whether there has been continuity of such use, or a valid reason for non-use. The results of these investigations, including the evidence relied upon, could be stored for later use if needed.

One practical way of developing such evidence is to gather a specimen for each good or service covered by the registration as it is used in commerce on a periodic basis. At minimum, this should be done at the time for filing a statement of use under Section 8 of the Lanham Act (15 USC Section 1058) or a renewal declaration under Section 9 of the Lanham Act (15 USC Section 1065), or both. More frequent gathering of such evidence is better.

Current USPTO practice does not require a trademark owner to submit a specimen for every good or service identified in the registration upon renewal, or the filing of a declaration or statement of use. Rather, a trademark owner need only submit a specimen of the good in each class covered by the registration. The practice point here is prudent to help fend off an expungement or a re-examination, or at least to be able to defeat it without scrambling to find necessary evidentiary support after a petition has been filed. In addition, this practice of gathering a specimen for each good or service in the registration can be used to defeat an audit of the registration. Specifically, the USPTO already randomly audits registrations with required maintenance filings to help preserve the trademark register as a reliable reflection of trademarks in use in commerce. The proof gathered by this practice tip can also be used to meet those necessary in any audit.

Third-party submission of evidence

The TMA also allows a third party to submit evidence relevant to a ground for refusal of registration while an application is pending (15 USC Section 1051(f)). This is a voluntary procedure and no petition need be filed. The third-party submission codifies the procedures for previously allowed letters of protest. In submitting such a third party submission of evidence, the third party must “identify the ground for refusal and include a concise description of each piece of evidence submitted in support of each ground for refusal” (15 USC Section 1051(f)).

Once a submission has been made, the director of the USPTO must make a determination as to whether or not to include the evidence contained in the submission. The director’s decision is final and non-reviewable. Unlike expungement or re-examination, there is no estoppel created by a third-party submission.

The third-party submission is less involved than an expungement or a re-examination. Good practice on this point will be to monitor pending applications (eg, by a trademark watch service) and determine if a potential mark might be improper. If the evidence is clear that such a proposed mark should not be registered, a third-party submission should be considered. Furthermore, any such submission should be filed as promptly as possible as the procedure is only applicable to pending applications.

Conclusion

The TMA provides ways to remove marks from the Trademark Register that no longer support registration and to submit evidence in an attempt to preclude registration. Fast action is prudent in the case of the ex parte proceedings so as not to be foreclosed by another party filing first. Similarly, letters of protest should promptly be filed as they are only useful against pending applications.

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