A Look At Trademark Law Changes In Congress' Spending Bill

The federal trademark registration system in the U.S. is primarily premised on how a mark is used in commerce on or in connection with the provision of certain goods and services. Most U.S. trademark applicants must show the U.S. Patent and Trademark Office how they are using their marks prior to registration.

However, under various international treaties, foreign applicants can register their marks in the U.S. without having to demonstrate commercial use. They can do this by basing their U.S. trademark applications on either home-country registrations or extensions of protection under the Madrid Protocol. Many of these foreign-owned applications and registrations cover wide ranges of goods and services that were not in use in the U.S. at the time of filing or at anytime thereafter. These registrations have also been routinely renewed despite scant evidence of use in the U.S.

Due in large part to these foreign-owned registrations, the Federal Register is now chock-full of marks that are not being used in the U.S. This makes it increasingly difficult for U.S. entities to clear new marks and puts them at a competitive and legal disadvantage given that they must show commercial use prior to registration while foreign applicants do not. And in recent years, many foreign applicants have begun filing use-based U.S. applications that contain fake and doctored examples of use. These fraudulent filings have only added to the number of questionable foreign-owned marks on the Federal Register.

Until now, foreign applicants and registrants have faced few consequences for applying to register marks that are not in use and will never be used in the U.S. The options for trying to object to these marks or remove them from the Federal Register have not been very appealing to most trademark owners as they involve expensive and time-consuming legal proceedings in the Trademark Trial and Appeal Board or in a federal court.

The act tries to fix this situation by creating two new procedures designed to make it easier to take action against registered marks that are not in use or were never in use in the U.S.

The first is an ex parte expungement proceeding that can be brought by any person or by the USPTO itself. A party bringing an expungement proceeding can file a petition with the USPTO alleging that a registered mark has never been used for all or some of the goods or services in a registration. The act details the filing requirements for the petition, which includes a statement that the person filing the petition has conducted a reasonable investigation into whether the mark in question has ever been used.

If the USPTO determines that the petition has established a prima facie case of a mark never having been used in commerce, it will institute an expungement proceeding. Once instituted, the USPTO will inform the registrant of the expungement. The registrant will have an opportunity to respond and present evidence of either use in commerce or excusable nonuse.

The USPTO can then decide to cancel a registration, in whole or part, based on the evidence of use or nonuse produced by the parties. These proceedings can be brought three years after a mark's registration date and no later than 10 years after a mark's registration date. Decisions can be appealed first to the Trademark Trial and Appeal Board and then to the U.S. Court of Appeals for the Federal Circuit.

The second proceeding is a reexamination process that can be brought against a registration, in whole or part, by any person or the USPTO itself no later than five years from a mark's registration date. This reexamination process will cover situations in which a mark was not in use in commerce during the examination process prior to registration.

The reexamination process will have rules, requirements and outcomes nearly identical to those of the expungement proceeding option. The primary difference is the timing involved. Reexaminations involve situations where a registrant must show use during the time before a registration issued. Reexaminations may be filed within the first five years after a mark's registration date.

The outcome of a reexamination can be appealed to the TTAB and then the Federal Circuit. The USPTO will need to write rules governing exactly how the expungement and reexamination proceedings will operate.

The act also states that a plaintiff seeking an injunction to remedy a trademark violation is entitled to a rebuttable presumption of irreparable harm, upon a showing of infringement. This provision addresses a circuit split that occurred after the U.S. Supreme Court's 2006 ruling in eBay Inc. v. MercExchange LLC, a patent infringement lawsuit holding that irreparable harm could not be presumed. This split led many courts to abandon the presumption of injury, with some courts finding a likelihood of confusion between marks but refusing to issue an injunction due to a lack of proof of irreparable injury.

The act will also make several other changes to current USPTO rules. It will augment the current letter of protest option by allowing third parties to submit evidence, including evidence of nonuse, that can be added to the file of a new trademark application prior to the examination process. It will allow the USPTO to provide flexible response deadlines that can range from six months to no less than 60 days, with extension options. And it will allow the USPTO to study the Federal Register and decide whether other measures to declutter the register might be advisable or necessary.

The USPTO has a year to write detailed regulations implementing the new procedures and rules in the act.

The only clear takeaway from the act is that plaintiffs in trademark cases should have an easier time obtaining injunctive relief where circumstances allow. Everything else will depend on the regulations the USPTO writes to implement the other provisions in the act, especially those governing the expungements and reexaminations.

The act does not indicate what sort of activities will constitute reasonable investigations into whether a mark is in use in the U.S. prior to the filing expungements or reexaminations. These investigations could be difficult to do if the mark owners in question do not have websites or have only nominal amounts of information on their sites. The act also does not contain any information about the time limits the USPTO will place on the expungements and reexaminations or how the USPTO will prevent them from being abused. It is also not clear who at the USPTO will make decisions in expungements or reexaminations or how long those decisions might take.

Depending on the regulations that are implemented, it could still be easier in some situations to file a nonuse cancellation with the TTAB and either wait for a default judgment or negotiate a settlement with the owner of the registration in question than it would be to do the necessary diligence prior to filing an expungement or requesting a reexamination.

While the act is a step in the right direction and should eventually result in at least a partial decluttering of the Federal Register that will make searching and clearing new marks a bit easier, nothing in the act is going to prevent the filing of new foreign-owned applications based on home-country registrations or extensions through the Madrid Protocol or fraudulent use-based applications. People will continue to file those applications until the USPTO takes steps to prevent them from doing so.

For every registration that is expunged or canceled via the act, hundreds or thousands of new foreign-owned applications will continue to be filed daily. Requiring a separate example of use for every item in a new application or in a renewal is probably the only way the USPTO is going to be able to clean up the register. But it is not clear whether the USPTO has the time, interest or resources to implement those types of changes to federal trademark law.

And it is unlikely that the USPTO could force the owners of applications based on home-country registrations or Madrid Protocol extensions to provide examples of use prior to registration. This would require statutory changes that are probably not possible under the treaties involved. So the problem of overly-broad foreign based applications and fraudulent use-based applications will continue for quite some time.

For the time being practitioners will have to add the new provisions in the act to more traditional mechanisms for acting against improperly registered or renewed marks and make decisions on which options to employ based on the facts involved in a situation. Practitioners will also need to begin counseling their foreign clients about how to comply with U.S. trademark law in light of the act and to take steps to avoid the filing of marks or renewals that could be susceptible to challenge under the act.

Regardless of how the final regulations are written, the act is going to change how federal trademark law is practiced.