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Client Alert: Trademark Modernization Act of 2020

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Key Takeaways To Consider

On December 27, 2020, the Trademark Modernization Act (the “TMA”) became law, as part of the bipartisan coronavirus relief bill. The TMA makes some significant changes to the Lanham Act, several of which became effective immediately, and others of which will go into effect on December 27, 2021. We have summarized the most important provisions of the TMA below.

Trademark Modernization Act of 2020 Key Components

Three key components of the TMA became effective upon passage and are now in effect:

Irreparable Harm Presumption. The TMA has restored the rebuttable presumption of irreparable harm in trademark infringement cases. For decades, courts uniformly held that where a plaintiff established that there was a likelihood of confusion, there was a rebuttable presumption that the plaintiff would suffer irreparable injury without injunctive relief. This presumption was questioned after the U.S. Supreme Court’s opinion in eBay, Inc. MercExchange, 547 U.S. 388 (2006), where the Court held that there was no presumption of irreparable injury in patent infringement cases. After eBay, there was a split among federal appellate courts as to whether there remained a presumption of irreparable injury in trademark infringement cases, with some courts holding that eBay also applied to trademark infringement and there was no presumption of irreparable injury. The TMA has clarified that there is a rebuttable presumption of irreparable injury in trademark infringement cases.

Flexible Response Periods. Currently, there is a six-month deadline for applicants to respond to United States Patent and Trademark Office (“USPTO”) Office Actions refusing registration. Under the TMA, the USPTO will be able to promulgate regulations that could require a shorter time to reply or amend the application. Time periods may vary depending on the ground for the refusal and could be between 60 days and six months. This provision was enacted to speed up the trademark examination process.

Director’s Authority Over the TTAB. In 2019, the Court of Appeals for the Federal Circuit held in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed Cir. 2019), that the Patent Trial and Appeal Board judges were “principal officers” who should have undergone Senate confirmation and were therefore unconstitutionally appointed. The Arthrex decision, which will be considered by the Supreme Court next term, also called into question the constitutionality of the appointment of the Trademark Trial and Appeal Board (the “TTAB”) judges. To avoid such a challenge to the TTAB judges, the TMA formalizes the Director’s authority to oversee TTAB decisions, thereby rendering constitutional the appointment of the TTAB judges.

The TMA also enacted the following new procedures, which will become effective on December 27, 2021:

Expungement & Reexamination.The TMA established two new ex parte procedures at the USPTO: expungement and reexamination. The purpose of these provisions is to declutter the U.S. Trademark Register by making it easier to remove registrations for trademarks that are not in use or were registered based on fraudulent specimens of use.

For both of these proceedings, the third-party petition must include supporting evidence and a verified statement explaining the petitioner’s “reasonable investigation” supporting the petition. After receiving a petition, the USPTO Director will determine whether it sets forth a prima facie case. If so, the USPTO will initiate the procedure, and the registrant may respond with its own evidence. The Director can also institute either of these proceedings sua sponte, without a third-party petition. Adverse decisions on expungement or reexamination may be appealed to the TTAB and then to the Court of Appeals for the Federal Circuit.

Letters of Protest. The TMA formalizes Letters of Protest to the USPTO. This procedure allows third parties to submit evidence to be considered when an application is examined. The utility of this provision is unclear because the USPTO codified the Letter of Protest procedure in its regulations, effective January 2, 2021.

As you can see, many of these changes will significantly impact trademark prosecution and litigation in the U.S. going forward. Our Intellectual Property Practice Group is here to assist you and answer any questions you may have as to how these changes will impact your trademark portfolios and enforcement efforts.

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