Prove It: TMA Sets Forth New Streamlined Approach to Combat the Rise of Fraudulently Registered Trademarks

By Joseph Diorio and Monica Riva Talley

As has been the case in recent years, trademark filings in 2020 again increased over the previous year. While at first glance this may seem to indicate that the U.S. economy continues to grow and innovate, at least some of the growth is attributed to foreign, primarily Chinese, applicants who receive government subsidies based on obtaining U.S. trademark registrations. As detailed in a recent USPTO report on the issue, the subsidy amount typically exceeds the low filing costs of a US trademark application, providing incentives to file applications for marks the applicant has no intention of commercializing in the U.S. This cluttering of the Register not only obstructs and frustrates legitimate trademark owners, but also creates a backlog at the USPTO.

To combat these frivolous filings and address the possibility of “deadwood” on the Register, the recently enacted COVID-19 relief package included some additions to the Lanham Act, providing additional tools for third parties to challenge and cancel existing registrations that fail to comply with the use requirements for trademark registration.

Signed on December 27, 2020, the Trademark Modernization Act of 2020 (“TMA”) introduces two new procedures, Ex Parte Expungements and Ex Parte Reexaminations, to the trademark tool chest. These procedures aim to provide a faster and more cost efficient mechanism to challenge registered trademarks compared to existing cancellation proceedings before the TTAB.

1. Section 16A – Ex Parte Expungements – provides a basis for expungement of a trademark registration on the grounds that “the mark has never been used in commerce on or in connection with some or all of the goods or services recited in the registration.” Expungement is aimed to combat the recent influx of registrations that include false assertions of use or fake specimen samples. If successfully challenged within 3 years from the date of registration, the registration will be canceled for lacking the necessary use in commerce.
2. Section 16B – Ex Parte Reexamination – states that “any person may file a petition to reexamine a registration of a mark on the basis that the mark was not in use in commerce on or in connection with some or all of the goods or services recited in the registration on or before the relevant date.” Instead of expungement, which targets registrations that have never been used, reexamination targets bad faith filings which claim an earlier use in commerce date than that supported by the evidence. If successfully challenged within 5 years from the date of registration, the mark will be canceled for lacking the necessary support to show the alleged use in commerce.

If a mark survives a challenge, all future challengers are estopped from initiating another proceeding against the goods or services previously challenged. Therefore, both reexamination and expungement also provide a defensive prong for trademark owners to restore and maintain credibility for their marks.

These new additions to the Lanham Act have been lauded as providing brand owners with a streamlined process for challenging registrations based on fraudulent use claims and evidence. As the U.S. trademark register is one of the largest in the world, these new steps should also provide legitimate filers with additional pathways forward should they find their way blocked by a fraudulent filer.

This article appeared in the January 2021 issue of MarkIt to Market®. To view our past issues, as well as other firm newsletters, please click here.