A COVID Bonus For Trademark Owners: Presumptive Injunctive Relief And Sweeping Away Old Marks

Fox Rothschild LLP

Fox Rothschild LLP

Buried deep in the roughly 5,500 pages of the most recent COVID relief legislation are two unexpected gifts for trademark owners, courtesy of A little something called the Trademark Modernization Act:

(a) The Act essentially overrules eBay v. MercExchange and creates a rebuttable presumption of irreparable harm on a finding of trademark infringement, including in instances of cybersquatting; and,

(b) It allows petitions to expunge or reexamine registered marks that are not or have never been used in commerce in connection with the goods and services listed in the registration. This process is available for marks less than 10 years old, but during the first 3 years of enactment, the process can be used with older marks.

Trademarks and service marks are hugely valuable assets in many businesses, especially franchises; and every mark owner is obligated by law to protect its marks. Too often, however, the legal path to protection is studded with speed bumps. Even if an infringement action succeeds, courts are too often reluctant to issue permanent injunctive relief, and meeting the eBay v. MercExchange standard for that relief is daunting. After spending thousands of dollars, a trademark owner may end up with only partial relief – not enough bang for the bucks!

Happily for trademark owners, the Trademark Modernization Act changes the injunction calculus. Injunctive relief will be a presumptive remedy for infringement; the defendant must rebut the presumption. This provides a real opportunity for owners to achieve meaningful and permanent relief.

The second gift in the Modernization Act would have been helpful to me  years ago. I was an associate, helping a franchise client with a new concept. The client wanted to find the owner of a registered, uncontestable, but long-unused mark, to clear the way for the client’s chosen mark. I learned two things from the episode: (a) it’s difficult to challenge a long-standing but unused mark, and (b) if you don’t want to be found, the hills in northern Greenville (South Carolina) county are a good hiding place. (The latter situation has changed in the last 40 years.) Had the Modernization Act been law at the time, I might not have burned shoe leather trying to locate the owner. We could have filed a petition to expunge or reexamine the registration, rather than initiate a more burdensome cancellation proceeding.

While less important than reversing the injunctive relief standard for marks, this second change may be the basis for sweeping unused marks from registration, at least for classes in which the mark is not or has never been used.

And we all thought that that the bill was just 5,000 pages of COVID relief!

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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