On December 27, 2020, the President signed the Trademark Modernization Act of 2020 (“TMA”) into law when he signed the year-end Consolidated Appropriations Act for 2021. The TMA, which will become effective within one year of its signing, introduces several amendments to the Lanham Act to address the issue of false trademark registrations, clarify the standard for obtaining injunctive relief by restoring the presumption of irreparable harm once a trademark violation has been proven, and provide immunity to Administrative Law Judges (ALJ) of the Trademark Trial and Appeal Board (TTAB) against challenges to its independence under the Appointments Clause of the Constitution.
To address the issue of false registrations, i.e., marks that falsely claim to be used in commerce to obtain or maintain a trademark registration, the TMA has introduced several new amendments. For instance, the TMA now codifies the current letter of protest procedures that are designed to allow third parties to submit evidence to contest a trademark application during its examination. Currently, the existing procedures are informal, e.g., it does not specify a timeline in which a letter of protest must reach the trademark examiner nor does it require any filing fees. Under the TMA, the Director of the USPTO will have two months to review a letter of protest’s evidence and will allow it to establish appropriate procedures for the consideration of the evidence and whether to establish any additional filing fees.
Additionally, to address other false registrations, such as “deadwood” trademarks (i.e., marks that remain registered but are not in use in commerce), the TMA introduces new ex parte reexamination and expungement procedures that to allow the USPTO to cancel a registration on the basis of nonuse. Specifically, the ex parte reexamination procedures allow for the cancellation of a mark that has never been used in commerce on or in connection with some or all of the goods or services recited in the registration. Ex Parte expungement procedures allow for cancellation of a mark that has never been used in commerce. These new procedures, however, become unavailable after the targeted registration has passed its fifth anniversary.
For the standard of obtaining injunctive relief, the TMA clarifies that for trademark violations, a rebuttable presumption of irreparable harm exists. Before the Supreme Court’s decision in eBay, Inc. v. MercExchange LLC, 547 U.S. 388 (2006), if 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. The Supreme Court decision in this case, however, held that a presumption of irreparable harm could not be applied to its patent infringement case. Given that Lanham Act did not explicitly specify a presumption of irreparable harm for an injunction, a circuit split developed as to whether such presumptions are appropriate in trademark cases. The TMA, however, now abrogates court decisions that have applied eBay to trademark cases and eliminated the presumption of irreparable harm.
Lastly, the TMA seeks to avoid legal challenges to ALJs of the TTAB under the Appointment Clause of the Constitution. Specifically, in Arthrex v. Smith & Nephew, 941 F.3d 1320 (Fed. Cir. 2019) the Federal Circuit held that Patent Trial and Appeal Board (PTAB) judges were not subject to sufficient oversight and supervision by the Director to be considered inferior officers under the Appointments Clause of the Constitution, and thus were unconstitutionally appointed since they had not been nominated by the President and confirmed by the Senate. Although this decision was in reference to the PTAB and not the TTAB, to avoid potential legal challenges to the TTAB’s decisions the TMA provides the Director with additional oversight of TTAB’s decisions. Specifically, it states the “Director may reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board under this section.”
Sources:
Trademark Modernization Act of 2020, H.R..6196 (please note that TMA was originally introduced as a stand alone bill. It was later introduced as part of the Consolidated Appropriations Act for 2021)