USPTO Proposed Rule Outlines Process for New Ex Parte Trademark Proceedings on Nonuse and Other Changes Under Trademark Modernization Act

The United States Patent and Trademark Office (USPTO) yesterday issued a Notice of Proposed Rulemaking (NPRM) titled “Changes To Implement Provisions of the Trademark Modernization Act (TMA) of 2020.” The Office is seeking input on the proposal, which would revise the rules in Title 37 of the Code of Federal Regulations, parts 2 and 7, and will be holding public roundtables to explain the amendments and answer questions. Here are some of the key proposed changes.

Implementing the New Ex Parte Proceedings to Challenge Nonuse for Registered Marks

The Trademark Modernization Act of 2020 (TMA) was passed by Congress on December 27, 2020, amending the Trademark Act of 1946 (the Trademark Act). It will become effective December 27, 2021.

In an attempt to curb the problem of fraudulent trademarks, the amendment established two new ex parte expungement and reexamination proceedings to either partially or wholly cancel registered marks when they do not meet the required use in commerce.

As a matter of policy, the ex parte and reexamination proceedings seek to clear the trademark register of unused marks, which will allow for easier registration of marks from legitimate businesses. As the House Report for the TMA noted, “[i]n order to have a well-functioning trademark system, the trademark register should accurately reflect trademarks that are currently in use.” A rise in fraudulent trademark applications, along with the rise in unused applications, clutters the system for legitimate marks.

The two new ex parte processes will allow a third party, or the Director, to challenge the use of a registered mark. The proceedings are intended to ensure the accuracy of the trademark register by allowing for the complete removal of a mark, or the cancellation of registration for certain goods and/or services, when proper use in commerce is not shown. The specific requirements for each proceeding are outlined below:

In an expungement proceeding, the USPTO must determine whether the evidence of record supports a finding that the registered mark has never been used in commerce on or in connection with some or all of the goods and/or services recited in the registration.

In a reexamination proceeding, the USPTO must determine whether the evidence of record supports a finding that the mark registered under section 1 of the Act was not in use in commerce on or in connection with some or all of the goods and/or services as of the filing date of the application or amendment to allege use, or before the deadline for filing a statement of use, as applicable.

If the USPTO finds that the required use was not made for the appropriate goods/services, the registered mark will be cancelled in whole or in part, as appropriate.

The NPRM proposes four new rules to implement these proceedings:

• Section 2.91, setting forth the requirements for a petition requesting the institution of expungement or reexamination proceedings;
• Section 2.92, regarding the institution of expungement and reexamination proceedings;
• Sections 2.93 through 2.94, setting forth the procedures for expungement and reexamination proceedings; and
• Section 2.143, addressing appeals to the TTAB in connection with these new proceedings.

The NPRM also notes conforming amendments that would be made to six existing rules.

Petition Timing, Requirements, and Fees

Under the proposed Section 2.91(b)(1), a petitioner may request, and the Director may institute, an ex parte expungement proceeding between 3 and 10 years following the date of registration. The TMA also provides that, until December 27, 2023, the 10-year limit may be ignored, as long as the registration is at least three years old. Under proposed Section 2.91(b)(2), a petitioner can make a reexamination proceeding request during the first five years after the date of registration.

The TMA gives the Director discretion to put limits on the number of petitions for expungement or reexamination. Currently, the Director intends to create no limitation beyond the statutorily implemented safeguards, protecting against multiple proceedings for the same mark, for the same good or service. The hope is to eradicate errant marks early. The USPTO seeks comment on this approach.

After a reasonable investigation is made, and the appropriate petition fee is paid, any person may file a petition with the USPTO requesting an expungement or reexamination proceeding. The USPTO is seeking comment to determine whether and when a real party in  interest will need to be identified. Further, the proposed Section 2.6(a)(26) will institute a fee of $600 for expungement or reexamination.

To file a petition, the petitioner must include a verified statement that sets forth the elements of the reasonable investigation the petitioner conducted to determine that “that the mark was never used in commerce (for expungement petitions) or not in use in commerce as of the relevant date (for reexamination petitions) on or in connection with the goods and/or services identified in the petition.” A “reasonable investigation” will be determined on a case-by-case basis and should include a number of easily accessible sources. Due to the temporal nature of the proceedings, evidence of a prima facie case should also be supported with past evidence, such as archival evidence of past webpages to show nonuse. Although every source need not be investigated, “[g]enerally, an investigation that produces reliable and credible evidence of nonuse at the relevant time should be sufficient.”

Under proposed Section 2.92, an expungement or reexamination proceeding will only be instituted for a good/service when a prima facie case of relevant nonuse has been established. The determination of a prima facie case will be based on the evidence that is collected and presented by a petitioner as part of their reasonable investigation. Further, proper notice will be required to allow the registrant to respond and potentially rebut the claim, which the USPTO will consider and decide on. When a petition is filed, the petition will be uploaded into the registration record to be viewable through the Trademark Status & Document Retrieval (TSDR) tool. The USPTO will then send an email notification to the registrant and the registrant’s attorney.

Procedures for Expungement and Reexamination Proceedings

A proceeding is instituted by notifying the registrant through an Office action, which will require the registrant to provide evidence of use, information, exhibits, affidavits, or declarations as is necessary to rebut the prima facie case by showing use in commerce or in connection of the goods/services at issue.

Nonuse, New Ground for PTAB Cancellation

The TMA created a new nonuse ground for cancellation under section 14 of the Trademark Act, which allows a petitioner to allege that a mark has never been used in commerce as a basis for cancellation in the TTAB at any time after the first three years from the registration date. The proposed rule would amend Section 2.111(b) “to indicate when a petition on this ground may be filed and to distinguish it from the timing of other nonuse claims.”

USPTO Proposes New Response Timing

Under amended Section 12(b) of the Trademark Act, the USPTO proposes to set response periods by regulation for a time period between 60 days and 6 months, with the option to extend to a full six month response time. The goal is to promote expeditious prosecution for simple legal issues, while still maintaining a six month response time for more complex issues.

The USPTO is also considering two alternate approaches, the first is a two-phase examination system where a “formalities Office action” would be implemented, which would provide two-month increments to respond, extendable up to six months. After the formalities Office action has been addressed, an Office action would be issued that would contain substantive refusals and have a response deadline of three months, extendable to six.

The second alternative is to set the initial period for responding to an Office action at two months but allow applicants to file a response in the third through sixth month after issuance of the Office action by submitting an extension request and fee payment along with the response.

Existing Letter-of-Protest Stands

The TMA amends section 1 of the Trademark Act to provide express statutory authority for the USPTO’s existing letter-of-protest procedure, which allows third parties to submit to the USPTO evidence hindering the registrability of a mark. The intention is to aid the examination without causing undue delay in the registration and subsequent ex parte examination. The fee will remain unchanged at $50 per letter-of-protest submission.

Attorneys No Longer Revoked Upon Grant or Abandonment of Application

The USPTO proposes revising Section 2.17(g) to indicate that for the purposes of application or registration, recognition of a qualified attorney as the application or registrant’s representative will continue “until the owner revokes the appointment or the attorney withdraws from representation.” Recognition will continue when an application abandons, post-registration documents are filed and accepted, or when a registration expires or is cancelled. Under this new rule, attorneys and owners will have to take the definitive step to file a revocation or withdrawal, as opposed to the current system, which is automatic.

The proposed rule seeks to align the standards of Section 2.17(g) with the requirements of Section 2.18(a), which requires the USPTO to correspond to the attorney on file, and to only communicate with the applicant or registrant when no attorney is on file. Because representation is revoked at registration or abandonment under Section 2.17(g), the attorney will cease to receive correspondence to their address. The current amendment would allow representatives to continue to receive documentation without the need to be re-designated as attorney of record.

Court Orders Concerning Registration Officially Codified

The USPTO also proposes the new Section 2.177 to codify the USPTO’s procedures concerning action on court orders cancelling or affecting a registration under Section 37, 15 U.S.C. 1119. The USPTO requires submission of a certified copy of the order and does not normally act on such orders until the case is final.

More Information

The first public roundtable on the NPRM will be held on June 1 from 1:00pm to 3:00pm and the second will be held on June 14 at the same time. Formal comments should be submitted at www.regulations.gov.

Further information on the roundtables will be provided on the TMA webpage of the USPTO website.

You may submit feedback from May 18, 2021, to Monday, July 19, 2021, at www.regulations.gov.

More information about TMA implementation is available on the TMA webpage of the USPTO website.