Changes to USPTO Procedures from the Trademark Modernization Act of 2020
On December 7, 2020, Congress enacted the Trademark Modernization Act of 2020 (the “TMA”).1 The United States Patent & Trademark Office (the “USPTO”) recently promulgated rules implementing the TMA, which, in large part, took effect on December 18, 2021.2 The TMA and associated regulations bring major changes to procedures at the USPTO, most notably, the addition of new ex parte expungement and reexamination proceedings for trademark registrations, based on nonuse. These new proceedings were added in large part to combat the large number of trademark registrations that were submitted with a fraudulent statement of use. The newly introduced proceedings offer some key benefits. First, there is no standing requirement and any third party may challenge a registration. This is different from a cancellation proceeding where the petitioner must establish a real interest in the proceeding and a reasonable basis for its belief that continued registration will cause the petitioner harm. The TMA also provides a new ground for cancellation of a trademark registration at the Trademark Trial & Appeal Board (the “TTAB”), a shorter three-month period to respond to Office actions, and statutory authority for the USPTO’s letter-of-protest practice.
Recently, there has been an uptick in fraudulent trademark applications at the USPTO, resulting in the grant of registrations for marks that were never in use in commerce or were not in use as of a required date.3 To combat these mounting problems, the TMA introduced two new ex parte proceedings that will allow a third party, or the Director of the USPTO, to challenge the registrant’s purported use of its registered mark. If the registered mark was not properly used in commerce as of a required date, the USPTO may cancel the challenged registration. An important feature of these new ex parte proceedings is that the requesting party need not identify the real party in interest on whose behalf the petition is being filed, although the Director may require this information in certain cases.4
A. Ex Parte Expungement
Any party may request cancellation of a registration for some or all of the goods or services identified in the registration on the basis that the registrant has never used the trademark in commerce in connection with those goods or services.5 Until December 27, 2023, a party may request institution of an expungement proceeding for any registration that is at least three years old.6 After December 27, 2023, a party must request an expungement proceeding between the third and tenth years following the registration of the challenged mark.7
Any party may request cancellation of a use-based registration for some or all of the goods or services identified in the registration on the basis that the trademark was not used in commerce in connection with those goods or services on or before a particular relevant date.8 For registrations issuing from applications filed based on use in commerce, the relevant date is the date of the filing of the application.9 For registrations issuing from applications filed on the basis of intent-to-use, the relevant date is the later of the date of the filing of the amendment alleging use or the date that the deadline to file a statement of use expired.10 A party must request reexamination within five years after registration.11
C. Reasonable Investigation of Nonuse
For both proceedings, a petitioner must make a “bona fide attempt to determine if the registered mark was not in use in commerce or never in use in commerce on or in connection with the goods and/or services . . . by conducting a reasonable investigation.”12 A “reasonable investigation” is defined as “an appropriately comprehensive search, which may vary depending on the circumstances but is 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 and/or services would normally be found.”13 Sources for such an investigation may include, but are not limited to the following:14
• State and Federal trademark records;
• Internet websites and other media likely to be controlled by the registrant;
• Internet websites, other online media, and publications where the relevant goods/services likely would be advertised or offered for sale;
• Print sources and web pages likely to contain reviews or discussion of the relevant goods and/or services;
• Records of filings made with or of actions taken by any State or Federal business registration or regulatory agency;
• The registrant’s marketplace activities (i.e., any attempts to contact the registrant or purchase the relevant goods and/or services);
• Records of litigation or administrative proceedings reasonably likely to contain evidence bearing on the registrant’s use or nonuse of the registered mark; and
• Any other reasonably accessible source with information establishing nonuse of the mark.
D. Institution of a Proceeding and Procedures Once Instituted
For both proceedings, the Director will determine if a complete petition sets forth a prima facie case of nonuse. If the petitioner sets forth a prima facie case of nonuse, the Director will institute the proceeding accordingly.15 The Director may also institute either proceeding on his or her own initiative, within the proper time period, and for the proper reasons.16 In the case of a proceeding based on a petition, the Director may institute a proceeding, on his or her initiative, for additional goods or services not identified in the petition.17 The institution decisions of the Director are final and non-reviewable.18 If the Director determines that a proceeding should be instituted based on a prima facie case of nonuse of a registered mark as to any goods or services identified in the registration, the Director’s determination and a notice of institution will be set forth in an Office action.19
The registrant will have three months from the issue date of the Office action to respond with evidence of use to rebut the prima facie case of nonuse.20 The USPTO will then review the registrant’s evidence of use, or showing of excusable nonuse in the case of marks registered on the basis of a foreign registration, and determine compliance with applicable legal requirements.21 If the registrant’s response fails to rebut the prima facie case of nonuse or fully comply with all outstanding requirements, a final Office action addressing the evidence and including the examiner’s decision will issue. 22 The registrant then has three months from the issuance of the final Office action to either request reconsideration, or appeal to the TTAB.23
Upon review of any response, if the registrant has rebutted the prima facie case of nonuse and complied with any outstanding requirements, the proceeding will terminate.24 If, however, the registrant fails to rebut the prima facie case of nonuse, the proceeding will terminate after the time for appeal has expired.25 Upon termination of the proceeding, the Office will issue a notice of termination memorializing the final disposition. Where appropriate, the registration will be cancelled in whole or in part.26
E. Key Takeaways
The TMA’s new ex parte expungement and reexamination proceedings may offer some benefits over the TTAB’s current cancellation proceedings.
• Cost and Efficiency: The cost of filing a petition to cancel is $700 on paper and $600 through the ESTTA, per class of good identified in the petition.27 The cancellation proceeding then proceeds in a fashion similar to district court litigation. The cost of filing either of the new ex parte proceedings, on the other hand, is $400 per class, and the party requesting ex parte proceedings need not participate beyond its petition.28 Further, if the Director institutes an ex parte proceeding, the registrant will have three months from the issue date of the Office action to rebut the prima facie case of nonuse.29 The registrant may of course appeal a final Office action in an ex parte proceeding to the TTAB.30 This relatively short response period offers a condensed timeline for resolution of the proceeding as compared to the TTAB trial procedures for cancellation proceedings.
• Real Party in Interest Need Not be Identified: The requesting party need not identify the real party in interest on whose behalf the petition is being filed, and standing is not required.31
In light of these new changes, trademark owners should consider whether, under the circumstances of each particular case, an ex parte proceeding might be more appropriate than a cancellation proceeding before the TTAB. If a mark has never been used in commerce, or may not have been in use as of the relevant date, an ex parte proceeding may, in some circumstances, be a more cost-effective route than cancellation proceedings before the TTAB. It may also be the appropriate choice for a party that may lack standing to bring a cancellation. If the deadline to file an ex parte proceeding has passed, however, a cancellation proceeding based on fraud (e.g., because an applicant submitted a false specimen of use in connection with the application that led to the registration) may be more appropriate. Moreover, the circumstances of the registrant’s use of the mark may make a cancellation proceeding grounded in abandonment more appropriate. Thus, consideration of the registrant’s use of the mark is key.
In addition to the new ex parte proceedings, parties may now request cancellation of a registered mark through the TTAB on the new ground of expungement, that is, that the registered trademark has never been used in commerce.32 This ground is available any time after three years from the date of registration.33 The current grounds for cancellation based on nonuse and abandonment are not affected by this new ground.34
The TMA also amended 15 U.S.C. § 1062(b) to allow the USPTO to set response periods for Office actions by regulation for a time period between 60 days and six months, with the option of extension to the full six-month period. Before the USPTO introduced regulations implementing the TMA, an applicant had six months to respond to Office actions issued during the examination of a trademark application. The USPTO has amended this requirement, and applicants or registrants (except in cases of applications filed under the Madrid Protocol) will now have to respond within three months.35 Now, a party may request a single three-month extension of the deadline to respond.36 As the USPTO will need to update its information technology systems to accommodate this change, the USPTO will not implement this shorter response period until December 1, 2022.37
The TMA also added 15 U.S.C. § 1051(f), providing express statutory authority for the USPTO’s existing letter-of-protest procedure. This procedure allows third parties to submit evidence bearing on the registrability of a mark for consideration and entry into the record. The existing requirements for this procedure are set forth in 37 C.F.R. § 2.149, which the USPTO has determined is consistent with the TMA.
However, the TMA provides additional requirements for the letter-of-protest procedure. First, the TMA provides that the Director will determine whether submitted evidence should be included in the record of the application no later than two months after the date the submission was filed.38 Second, the TMA provides that any decision by the Director to include such evidence in the record of the application is final and non-reviewable, but any decision to include or not include evidence will not prejudice any party’s right to raise issues or rely on evidence in later proceedings.39 Although the TMA authorizes the USPTO to charge a fee for letters of protest, the USPTO did not change its current charge of $50.40
The Trademark Modernization Act of 2020 and recently promulgated rules implementing the TMA, bring major changes to procedures at the USPTO. The most notable of these changes are the new ex parte expungement and reexamination proceedings for trademark registrations, based on nonuse added to combat the large number of fraudulent registrations at the USPTO. These new proceedings offer some key advantages over existing USPTO procedures including no standing requirement and the ability to challenge registrations without the burden of a full cancellation proceeding. Aside from this major addition, the TMA also provides a new ground for cancellation of a trademark registration at the TTAB, a shorter three-month period to respond to Office actions, and statutory authority for the USPTO’s letter-of-protest practice.