Trademark Modernization Act Sets New Procedures, Rules

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The Trademark Modernization Act of 2020, or TMA, was signed into law on Dec. 27, 2020, and is the latest in a series of initiatives to update and strengthen U.S. trademark law. The TMA makes it easier for trademark owners who prove infringement to obtain injunctive relief in litigation, and in response to concerns regarding an increase in applications and registrations of trademarks that are not actually in use in U.S. commerce, the TMA provides new procedures for challenging applications and trademark registrations.

With respect to litigation and effective upon enactment, the TMA restores the presumption of irreparable harm upon a showing of likelihood of confusion, which makes it easier for trademark owners to obtain injunctive relief.

The TMA resolves a split with several circuit court decisions that developed after the U.S. Supreme Court’s holding in eBay Inc. v. MercExchange, 547 U.S. 388 (2006). In eBay, the Supreme Court held that a plaintiff who proves patent infringement must prove irreparable harm to obtain permanent injunctive relief. The TMA specifically clarifies that a rebuttable presumption of irreparable harm applies upon a finding of infringement in the permanent injunction context, or upon a finding of likelihood of success on the merits in the context of preliminary injunctive relief.

The TMA also addresses the U.S. Patent and Trademark Office’s growing concern about the proliferation of fraudulent or “deadwood” trademarks, i.e., registered trademarks that are not being used, or not being used for the goods or services named in the registration. These registrations are commonly located in connection with a trademark clearance search, which is aimed at finding potentially similar trademarks that could prevent registration or continued use of a company’s own selected trademark. As a result of this initial diligence search, the company might further seek to determine if any of the located registrations are actually being used in the real world, and if not, the new procedures created by the TMA should make it easier to cancel these fraudulent or deadwood trademarks.

In particular, the TMA also establishes new procedures for challenging applications and registrations for trademarks that are not actually being used in commerce, aren’t being used on the goods or services listed in the registration, or aren’t being used on or before the date claimed in the trademark application. Even though the legal concept of “use in commerce” is an extremely low bar, the TMA creates an avenue for challenging whether, when, and to what extent the trademark registrant is really using the trademark. As such, proof of when the company first started using the trademark in a consumer-facing fashion, proof of when it first made a sale of a branded-good or –service, and proof of these sales being “bona fide” could be problematic for companies not familiar with the nuances of U.S. trademark law.

While these new procedures under the TMA should greatly benefit companies, it is ever more important to monitor, maintain, and protect the companies’ valuable trademarks. While the new procedures under the TMA will not be fully established by the USPTO for roughly one year, companies are advised to keep evidence showing when it first started using any business, product, and service names, logos, slogans, and when it first started making sales under those trademarks.

Companies also should pursue a trademark registration to provide notice to any third-party clearing potentially similar trademarks and to ensure the trademark is registered with the USPTO as part of its long-term asset plans.

This article first appeared in The Journal Record on April 9, 2021, and is reproduced with permission from the publisher.

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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