New Law Establishes Procedures and Rules that Will Benefit Trademark Owners
Recently enacted amendments to the federal Lanham Act trademark statute (Trademark Modernization Act of 2020) which took effect last month, create new procedures and rules that will benefit trademark owners by: A) clearing up the “clutter” of fraudulent trademark registrations which makes it difficult for business people launching a new business or product/service to find a new brand name that is not already registered, and B) giving trademark owners who prevail in court proceedings stronger legal tools to stop infringing use.
Clearing up the “Clutter”
Any business person who has tried to come up with a new name for their business, or a new product/service, knows how difficult it can be to come up with a unique name that is not already being used by a similar business and that is not already registered with the federal trademark office.
As of 2016, 23.5% of the most frequently used word in American English had already been claimed in trademark registrations as single-word marks, according to the Congressional Committee Report. In addition, research shows that there has been a significant increase in “fraudulent” applications, in which the applicant has obtained a registration even though it might not be actually using the mark in all the categories claimed, according to the report. The result is that it is increasingly difficult for business people to come up with new and unique names.
Part of the problem stems from the fact that, in issuing trademark registrations, trademark office examiners must rely on the information submitted by the applicant as to whether they are actually using a mark based on the “specimens” or examples submitted by the applicant which may be fraudulent. Prior to the new law, there was no procedure for the trademark office to open an investigation of the basis for the registration after it is issued, and there was no simple and easy way for a third party to bring an objection. Under the prior procedures, the only way for a third party to object to a registration was to bring a full-blown cancellation proceeding against the registrant, which can be very expensive and time-consuming.
The new law establishes a new procedure, where a third party, or the trademark office acting on its own, can initiate a proceeding by the trademark office itself to investigate the basis for a registration, referred to as Ex Parte Reexamination or an Ex Parte Expungement proceeding. The third party need only submit some evidence (a “reasonable predicate”) that the registrant is not actually using the mark or never used the mark for particular categories. Then, the trademark office will take over the process, by requesting evidence from the registrant, which the trademark office will consider in deciding whether to cancel all or parts of the registration.
The new law also seeks to clear up the “clutter” by speeding up the current application process. Under current procedures, if an applicant files a questionable application, the trademark office must give the applicant six months to respond. In the meantime, nobody else can file an application to register that mark because there is already a pending application. The new law gives the trademark office authority to set shorter response times, so that fraudulent or improper applications will get weeded out sooner.