US trademark modernisation: what it means for foreign brand owners

On December 27, 2020, then US President Donald Trump signed the Trademark Modernization Act (TMA) into law. While the TMA can benefit foreign brand owners with its new rules and proceedings, it may also present them with challenges.

One of the TMA’s principal goals is to reduce the number of spurious trademark registrations and applications that are based on inaccurate claims of use in US commerce.

The TMA has created three new tools to address this goal. Specifically, the TMA (i) provides for a broader and easier Letter of Protest system; (ii) creates a streamlined expungement procedure; and (iii) establishes new grounds for the re-examination of a registration.

These tools have significant advantages over opposition and cancellation proceedings available before the US Trademark Trial and Appeal Board (TTAB).

A key advantage of the TMA’s new tools is that restrictive standing requirements can be eliminated.

Until now, foreign brand owners were required to show standing when objecting to the registration of a trademark with the US Patent and Trademark Office (USPTO). The TMA has removed this requirement in connection with both Letters of Protest and the new ex parte proceedings. On the flipside, competitors can use the TMA in the same way to object to the registration of foreign brand owners’ trademarks in the US.

Expanded Letters of Protest

A brand owner can submit Letters of Protest during the trademark examination process to the director of the USPTO, who then decides whether to forward the information to the examining attorney assigned to the objected application. Under this procedure, if the application raises sufficient grounds for refusal by the examining attorney, the problematic application will never be approved for publication.

The current USPTO rules restrict Letters of Protest to issues relating to genericness, prior registrations, ongoing litigation, and examiner error, and do not allow for addressing fraudulent specimens or non-use issues. Now, the TMA has expanded the Letters of Protest avenue to allow evidence of a conflicting prior-registration and evidence that a mark is not actually in use for the goods or services identified in the application.

Foreign brand owners can use the expanded Letters of Protest to submit evidence that relates to any ground on which an examiner can refuse registration under the TMA.

While Letters of Protest are much cheaper for the objecting party compared to proceedings before the TTAB, there is still no way to make an argument in Letters of Protest.

The submission of evidence through the expanded Letters of Protest procedures only means that the examining attorney is made aware of evidence that should lead him or her towards issuing a refusal. Importantly, the decision marker for a Letter of Protest is different from the decision marker in an opposition or cancellation action.

Specifically, the Letters of Protest procedure is decided by the director and the appropriate examining attorney, whereas oppositions and cancellations are decided by the TTAB. The denial of a Letter of Protest does not taint the opposer or petitioner in the eyes of the TTAB.

If the protest is denied, is granted but not acted upon by the examining attorney, or the applicant overcomes a refusal based on a Letter of Protest, the evidence gathered can still be used in the proceedings before the TTAB.

Ex parte expungement

Section 16A of the TMA provides a new post-registration procedure for an ex parte expungement of certain improperly granted registrations. Specifically, under this provision anyone can petition the TTAB to expunge a registration, either in whole or in part, where there are specific goods or services listed in the registration for which the trademark has never been used in US commerce.

To institute the expungement proceeding, the complaining party is merely required to supply evidence of a “reasonable investigation” showing that the registered mark was never used for the goods and services identified in the petition.

The director will then, upon finding of a prima facie case, provide notice to the registrant. Because the expungement proceeding can be filed only three years after issuance of the registration, when a presumption of abandonment arises, Congress clearly intended for the invalidation proceedings to target registrations obtained through provisions under the Madrid Protocol and the Paris Convention.

These international agreements are frequently used by foreign brand owners, so it is essential that brand owners bear the three-year use deadline in mind when building their US trademark portfolios. These registrants can always provide evidence showing that the non-use was due to special circumstances that should excuse such non-use in an expungement proceeding, for example, the COVID-19 pandemic.

Conversely, section 16A provides major advantages over the existing US opposition and cancellation proceedings for foreign brand owners who find that someone has fraudulently attempted to pirate a brand in the US.

Traditionally, foreign brand owners have always had difficulties surviving a motion to dismiss in oppositions and cancellations because the TTAB requires the plaintiff to have “standing”, ie, a personal stake in the outcome of the opposition or cancellation.

To establish standing, the opposer or petitioner must show that it owns and uses its mark in the US or that a substantial percentage of the consumers in the relevant US market is familiar with the foreign brand.

The rationale for the standing requirement is that under the Lanham Act, a mark must be used or known in the US to be enforced against others.

If a foreign brand owner who uses a trademark exclusively outside of the US wishes to bring an opposition or cancellation proceeding, it may not survive a motion to dismiss. This will happen if  the relevant US consumers do not know enough about the foreign brand for the unauthorised use of its foreign brand in the US to be deemed harmful to the foreign brand owner.

For example, the Federal Circuit ruled in Person’s v Christman (1990), that a Japanese trademark owner could not cancel a US trademark registration for the same mark even though the US registrant had seen the Japanese mark while travelling and had modelled its mark on the Japanese mark.

With the TMA’s removal of the standing requirement for section 16A, if the foreign brand owner asserts fraud or non-use as the ground to expunge a registration, it no longer needs to plead that it has a US proprietary right or an ownership interest in the mark to have standing.

Ex parte re-examination

Under section 16B, the TMA adds new grounds for the invalidation of a registered mark that was not used in US commerce for some or all of the goods or services listed in the registration as of the “relevant date” in the application process. Importantly, the TMA expressly provides that Congress is not altering the standards for use in commerce.

This section of the TMA defines “relevant date” as any of the following: