New Nonuse Provisions of Trademark Modernization Act May Significantly Impact Non-US Trademark Owners

Here is a Trademark Alert published by Wolf Greenfield yesterday, regarding the Trademark Modernization Act of 2020 ("TMA"), and focusing particularly on the "nonuse" provisions and their impact on non-US owners of US registrations.

In large part, the Trademark Modernization Act (TMA), signed into law by then President Trump on December 27, 2020, will take effect on December 27, 2021. Driven by a rising concern regarding the proliferation of applications and registrations (particularly emanating from China) for trademarks that are not actually in use in United States commerce, the TMA requires the United States Patent and Trademark Office (USPTO) to implement new procedures that will allow third parties to more readily challenge pending applications and issued registrations that may be spurious. The new provisions may have a significant impact on non-US trademark owners and may require a fresh look at their trademark portfolios in order to avoid these new avenues of attack.

• Registrations for marks unused for any three-year period are more easily cancelled.
• Evidence of efforts to commence or restart use is no longer relevant in nonuse challenges. 
• Nonuse provisions require frequent audits and possibly new filings.
  

BACKGROUND

Under current practice, challenges to pending applications are limited in scope, and challenges to registrations require costly cancellation proceedings. Pursuant to the TMA, the USPTO will broaden the range of evidence that a third party may submit for consideration during examination of a pending application (including evidence of nonuse) and will streamline procedures for challenging issued registrations.

In keeping with the focus on clearing the Trademark Register of so-called “deadwood,” the USPTO will encourage owners of registrations to remove goods and services for which the mark is not being used at the time of maintenance or renewal, by charging a fee to a registrant who is required to remove goods or services from the registration due to nonuse.

These changes will help clear the way for legitimate trademark users to obtain registration of their marks without being blocked by specious applications or registrations.

WHAT YOU NEED TO KNOW

Of particular import are two new ex parte procedures for challenging a registration on the ground of nonuse of the registered mark for some or all of the identified goods or services.

In a procedure called reexamination, directed at registrations that issued based on alleged use of the mark, a challenger may submit evidence to show that the mark was not in use either as of the day the underlying application was filed, or as of the day a statement of use was filed. The petition for reexamination must be filed prior to the fifth anniversary of the registration. In addition, the Director of the USPTO may institute a reexamination on his or her own initiative. A successful challenge will result in removal of the “unused” goods and services from the registration.

In a procedure called expungement, a registration may be challenged, between the third and tenth anniversaries of the registration, on the ground that the registered mark was never used in commerce for some or all of the identified goods or services. Again, the Director of the USPTO may institute an expungement proceeding on his or her own initiative. A successful challenge will result in removal of the “unused” goods and services from the registration.

In the traditional inter partes context, the TMA adds a new claim of nonuse that will be available for challenging a registration if the registered mark has never been used. This claim is available after the three-year period following issuance of the registration. In the case of a registration issued under Sections 44(e) and 66(a) of the Lanham Act, the registration will not be cancelled if the owner can prove “special circumstances” that excuse the nonuse.

WHAT TO CONSIDER

For non-US owners of registrations that are not based on actual use, the new ex parte expungement proceeding and the new nonuse cancellation claim will represent a major change in the viability of their registrations. Under current law, a claim of abandonment may be made against a registration when a mark has not been used and there is an intention not to commence or resume use. A registration owner may defeat the abandonment claim by showing an intent to commence use in the US, for example by proving their efforts to license the mark or find distributors for the products or services. Under the new provision, such proof of an intention to commence use will not immunize an owner from expungement or nonuse cancellation.

Non-US registration owners would be wise to recognize that these changes in US law require a re-assessment of their trademark portfolios. For a registration that is more than three years old, and as to which the registered mark has not been used, the owner may want to consider filing a new application to register. For applications that are pending, the owner may want to delay issuance of the United States registration until a time when the owner is ready to put the mark into use; this can be achieved, at some cost, by including in the application a Section 1(b) intent-to-use basis. Once the application receives a Notice of Allowance, the applicant may either drop the Section 1(b) basis and let the registration issue, or postpone issuance for up to three years by filing timely requests for extension of time (including government fees) to submit proof of use.

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TTABlogger comment: New regulations implementing many of the provisions of the TMA will be issued soon by the USPTO.

Text Copyright John L. Welch 2021.