Late 2020 Stimulus Bill Includes Sweeping Changes to the Lanham Act

Fenwick & West LLP

Fenwick & West LLP

[author: Ashleigh Armstrong]

A heavily anticipated and equally heavily debated stimulus bill, the Consolidated Appropriations Act, 2021, was signed into law on December 27, 2020. In addition to $900 billion in COVID-19 relief, this lengthy bill also included the Trademark Modernization Act of 2020. The TM Act of 2020 brings about sweeping changes to trademark law, giving the director of the U.S. Patent and Trademark Office the ability to make changes to deadlines, codifying a rebuttable presumption of irreparable harm, adding a new grounds for cancellation of an existing registration, and creating opportunities for third parties to submit evidence and request expungement or reexamination of registrations.

Currently, an Office action has a six-month response period, but the TM Act of 2020 empowers the Director to change this deadline to any time between 60 days and six months. If the new deadline is shorter than six months, extensions with the payment of fees will be allowed, up to six months. The Act also establishes a rebuttable presumption of irreparable harm in a request for permanent or preliminary injunctive relief in a trademark infringement action, and adds a new ground to Lanham Act § 14, which will allow a petition to cancel a registration at any time after three years from the registration date if the mark has never been used in commerce on or in connection with some or all of the goods and services.

Notably, the TM Act of 2020 establishes three new opportunities for third parties to challenge an application or registration:

  1. During an examination, any third party may submit evidence identifying what they believe to be grounds for refusal of a pending application. Within two months, the USPTO will decide whether the evidence should be included in the record.
  2. At any time, up to five years after registration, third parties may file an ex parte reexamination petition providing evidence and asserting that, after a “reasonable investigation,” some or all of the goods and services were not in use as of either the filing date of a use-based application or the filing date of the Statement of Use for an intent-to-use application.
  3. Similarly, at any time between three and 10 years after registration, third parties may file an ex parte expungement petition providing evidence and asserting that, after a “reasonable investigation,” some or all of the goods and services have never been used in commerce.

After either of the petitions cited in examples two and three is filed, the USPTO will decide if a prima facie case was established, and, if so, the Examiner will decide if there was use for each good or service in a procedure similar to the initial examination. The USPTO may also initiate either proceeding upon discovery of information that would support the same finding. What constitutes “reasonable investigation,” and what evidence will establish a prima facie case, is up to the Director to decide.

In both ex parte proceedings and the admission of evidence, the initial decision is final, nonreviewable and without prejudice, meaning it will not prevent either party from using the evidence or raising the same issues in other proceedings. The Examiner’s final decision to cancel or allow each good or service is appealable.

While there is still much uncertainty surrounding how drastic the response period changes will be, or what constitutes a prima facie case after a “reasonable investigation,” it’s clear that the TM Act of 2020 has the potential to change your application and enforcement strategy.

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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