Trademark Modernization Act: A Renewed Emphasis on Use

Trademark Modernization Act of 2020

Buried in the last round of COVID relief legislation were some major changes in the area of intellectual property law that will impact both trademarks and copyrights. This week we’re reviewing the Trademark Modernization Act of 2020 and how it might impact small businesses in particular.

The Trademark Modernization Act of 2020 (TMA) makes several updates to trademark law. But for our small business clients, we think there is one major change in particular that you should be aware of. The law has the potential to make it much easier for your competitors to challenge your trademark registration, even several years after the fact.  

Challenging Existing Trademarks under the Trademark Modernization Act
The Trademark Modernization Act creates new avenues for challenging existing trademark registrations by alleging:

1. The trademark isn’t actually being used in commerce;
2. The trademark isn’t being used on the goods or services listed in the registration; or
3. The trademark wasn’t being used on or before the date claimed in the trademark application.
   
   

If you’ve ever had a trademark search conducted, then you know how easy it is to find potentially similar trademarks that could prevent you from registering your own chosen trademark or even force you to consider rebranding. Naturally, you might wonder whether all of those trademarks are really in use. In theory, the new procedures created by the TMA will make it possible to clean up the trademark register and get rid of old, unused, or even fraudulent registrations.

But the TMA could also be used by larger companies to flex their larger legal budgets against small businesses, particularly those that are less familiar with the nuances of trademark law.

Re-Examining Registered Trademarks
The TMA will allow someone to ask the USPTO to take a second look at registered trademarks and remove some or all of the goods or services in the registration by arguing that the trademark wasn’t actually in use on or before the date you claimed in your application. Remember, a trademark application requires you to identify two dates:

1. the date your first started using the trademark, and
2. the date you first used the trademark “in commerce”
   
   

“Use in commerce” is a legal concept that has two key elements. First, you are actually selling your goods or services across state lines. If your business is strictly local, then a federal trademark registration isn’t really appropriate. Second, your use of the trademark must be “bona fide,” i.e., something more than just a sale to your best friend out of state for the sake of establishing your trademark rights.

Prior to the TMA, “use in commerce” was considered a very low bar, and we really didn’t spend much time worrying about how “bona fide” your use of the trademark was as long as we had a use date that we could work with. But the TMA will create an avenue for challenging whether and when and to what extent you really started using your trademark. And we suspect that this will be especially problematic for smaller businesses:

• Do you have proof of when you first started using your trademark? When you first made a sale under that trademark?
• If you’re a startup, can you prove that your sales are “bona fide”?
• Most importantly, can you afford to litigate against a larger company with a bigger budget that’s determined to prove you’re so “small” that your trademark “use” should be re-examined?

A petition for re-examination must be brought within 5 years of the trademark registration date. The challenger will have to submit a statement showing that they conducted a reasonable investigation into your use of the trademark (or lack thereof) and what evidence they have found to support their allegation. At this stage, details are scarce as the USPTO is still accepting public comments on the new law. But going forward, getting your trademark registered will only be a small part of the battle.

Removing Registered Trademarks
The TMA will also allow someone to request the USPTO to expunge (or remove) a trademark registration by arguing that the trademark has never been used in commerce on some or all of the goods or services listed in the registration. Much like petitions to re-examine a trademark, the petitioner will have to submit a statement showing that they conducted a reasonable investigation to support the allegation along with evidence of the non-use. But unlike re-examination petitions, the petition to expunge a trademark must be submitted between 3 and 10 years after the registration date.

How might the TMA impact you in the real world?
Let’s say, for example, that you register a trademark for your new consulting business. You list in the application a variety of services that you currently provide as well as some additional services you plan to add in the future. But after your trademark is registered, you haven’t quite gotten around to adding the additional services you listed in your application. Or you’ve dropped some services as you’ve learned what works and what doesn’t in your market. Providing an exhaustive list of services in your trademark application is especially easy to do with service marks because to prove “use” in your trademark application, you often just attach samples of the advertising for your services. But advertising alone doesn’t really mean you’ve actually sold any of those services, or that you first sold those services by the date you listed in your trademark application.

These new procedures under the TMA would allow someone to challenge your “use” of the trademark and potentially cancel your registration, or at least cancel it in connection with the goods or service that aren’t in use. Alternatively, a competitor might come along and argue that you weren’t using the trademark by the date you claimed, and that they were actually using a similar trademark first. Because trademark rights are based on first use and two trademarks cannot be confusingly similar to one another, your competitor wants to get rid of your trademark registration to clear the way for their own registration.

What happens if someone files a petition against your business?
The USPTO will examine any petitions that are filed to see if they make a prima facie case (i.e. present the minimum standards to pursue a case). If so, the USPTO will grant the petition which starts a litigation-like process. You’ll be notified and required to submit evidence of your actual use of the trademark (or one of the rare excuses for non-use). And then the USPTO will decide whether you get to keep your trademark registration and, if so, on what goods or services.

When does this new law go into effect?
The Trademark Modernization Act will go into effect one year after its passage, or on December 27, 2021.

What should small businesses do to get ready?
The TMA makes it more important than ever that you monitor and maintain your trademarks.

1. Keep evidence showing when you first started using any business names, logos, or slogans, and when you first started making sales using those trademarks. Keep this evidence in your business records for at least 10 years after registering any trademark. Even if you don’t plan to file a trademark registration, keep everything related to your brand ideas and brand identity development just in case you decide to pursue it later, or you need to defend your unregistered trademark from a challenger.
2. Trademark law requires that you continue to use your trademark in order to keep your rights in it. Before you put the time, effort, and money into pursuing a trademark registration, make sure the brand you are building is part of your long-term plans. Will you still be consistently using that name, logo, or slogan 5, 10, or even 15 years from now?
3. Use trademark monitoring to be aware of who your competitors are, what trademarks they are using, and what new applications are being filed that might infringe your trademark. Contrary to popular belief, the USPTO does not police every trademark in the world. Many are never registered with the USPTO, and even when they are, the fact that these avenues exist shows that that the USPTO doesn’t always get it right. If you don’t protect your trademark rights, you just might lose those rights.
4. When it’s time to file your initial 5-year trademark filing, make sure you also file your Declaration of Incontestability. If you have been continuously using your trademark for 5 years, you can stop others from potentially challenging your trademark rights by declaring it incontestable.

Trademark law is incredibly important when it comes to building and protecting a brand. But it’s not easy to find a brand that isn’t “confusingly similar” to something that’s already out there. And the nuances of trademark law can make it even more challenging to protect the rights you thought you had established with a trademark registration. 

If you have any questions about protecting your business’s brand identity,
​then schedule a consultation today.

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