Final Rule Implementing Trademark Modernization Act Will Soon Allow USPTO to Crack Down on Fraudulent Filings from China

“These new proceedings are intended to provide a more efficient and less expensive alternative to a contested inter partes cancellation proceeding before the TTAB.” – USPTO Federal Register Notice U.S. Patent and Trademark Office yesterday published a final rule implementing the Trademark Modernization Act of 2020 (TMA), which was signed into law as part of the Consolidated Appropriations Act of 2020 last year. The new rule does the following:

  • Establishes ex parte expungement and reexamination proceedings for cancellation of a registration when the required use in commerce of the registered mark has not been made;
  • provides for a new nonuse ground for cancellation before the Trademark Trial and Appeal Board (TTAB or Board);
  • establishes flexible Office action response periods;
  • amends the existing letter-of-protest rule to indicate that letter-of-protest determinations are final and non-reviewable;
  • sets fees for petitions requesting institution of ex parte expungement and reexamination proceedings, and for requests to extend Office action response deadlines;
  • amends the rules governing the suspension of USPTO proceedings and attorney recognition in trademark matters; and
  • addresses procedures regarding court orders cancelling or affecting registrations.

The new regulations go into effect on December 18, 2021, except for the implementation of the shorter response period for office actions, which will go into effect on December 1, 2022.

Addressing Fraudulent filings

The changes to procedures for challenging pending applications and registered marks are meant to address the proliferation of bad faith and fraudulent registrations, mainly from China. According to an August 11, 2021 report from the U.S. Department of Commerce Office of Inspector General (OIG) on the audit of the United States Patent and Trademark Office (USPTO) trademark registration process, since 2015, the USPTO has seen a rapid uptick in potentially fraudulent trademark applications. A previous audit in 2012 found that more than 50% of audited trademark maintenance filings contained goods/services not in use in commerce.


The new rule implements the TMA’s creation of “two new ex parte processes that will allow a third party, or the Director, to challenge whether a registrant made use of its registered trademark in commerce.” The first process is an expungement proceeding, in which the USPTO will determine whether the registered mark has been used in commerce for some or all of the goods and/or services recited in the registration. The second process is a reexamination proceeding, in which the USPTO must determine whether the mark was not in use in commerce for 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.” Upon a finding that the mark was not in use as required, the registration can be canceled in whole or in part.

“These new proceedings are intended to provide a more efficient and less expensive alternative to a contested inter partes cancellation proceeding before the TTAB,” explains the final rule. The USPTO Director also has authority to consolidate expungement and reexamination proceedings on the same registration.

With respect to expungement, a petitioner may request and the Director may institute the proceeding between 3 and 10 years following the date of registration. Under the TMA, however, “until December 27, 2023 (3 years from the TMA’s enactment date), a petitioner may request, and the Director may institute, an expungement proceeding for a registration that is at least 3 years old, regardless of the 10-year limit.”

For reexamination proceedings, a petitioner must make a request during the first five years following the date of registration.

After considering the comments submitted on the rule, the USPTO declined to impose a limit on the number of petitions that can be filed against a particular registration.

Joseph Matal of Haynes & Boone, who served as both former Acting Director and Acting Solicitor of the USPTO, said the rules on expungement and reexam proceedings signal that the Office “has been careful, but it has tailored the rules with an eye toward encouraging their robust use.” The decision to allow an unlimited number of petitions as well as to cut the filing fee for petitions to $400 shows that the USPTO “recogniz[es] the public benefit of the use of these proceedings.” The Office also will not require identification of the real party in interest behind a petition, “so that potential users are not deterred by fear of retaliation from a registrant,” Matal said. He added: “The Office, along with businesses, has felt the burden of the increasing amounts of deadwood that are cluttering the register, and appears to be eager to give these new proceedings a chance to help address the problem.”

New Deadlines for Office Action Responses

Another big change will be the new “flexible response periods” for Office actions. Currently, the deadline for responding to Office actions is six months; under the new rule, the deadline will be three months, with a one-time optional three-month extension for an additional fee of $125. In its discussion of the comments received on this topic, the USPTO explained in the Rule that, while it considered the concerns of some commenters about reducing the response times, it ultimately determined that the flexible approach “is the best option to promote efficiency in examination by shortening the overall prosecution timeline for applications and facilitating faster disposal of applications that may delay the disposition of later-filed applications.”

Commenters who opposed the change feared that three months might be insufficient in cases involving foreign applicants or “substantive refusals”; that it could be an administrative burden on stakeholders; and that the additional fee to extend the deadline would become a cost burden for applicants.

Addressing its decsion to charge $125 for extension requests, the Office explained that “charging no fee or a nominal fee would undercut the USPTO’s objective of encouraging applicants to respond sooner.” The $125 fee “is set at a level to address this reality and is the same amount as the analogous fee for requesting an extension of time for filing a statement of use through TEAS.”

However, recognizing that the changes will require stakeholders to update processes for reviewing, docketing, and submitting responses, the Office extended the implementation of the new timing rules from June 27, 2022, to December 1, 2022.

Katie McKnight of Finnegan said the Rule is a reminder for trademark registrants to get their affairs in order. “Registrants should strongly consider reviewing their portfolios to ensure their registrations are accurate, both in terms of registration information and use,” McKnight said. In particular, registrants should make sure their correspondence information is accurate, as failure to respond to an Office Action under the new three-month response period could result in cancellation. However, the expungement and reexamination proceedings could be a boon for trademark practitioners. McKnight explained:

With a filing fee of only $400 per class, a petition for expungement or reexamination may be more cost efficient than a petition to cancel at $600 per class (filed via TEAS). Moreover, because a petition need not identify the real party in interest, the new expungement and reexamination proceedings could allow brand owners a way to fly under the radar, if they are afraid of “poking the bear.” However, registrants should be aware that under Trademark Rule 2.91(h), the Director retains the discretion to require the identity of the real party in interest in order to discourage abusive filings.

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Join the Discussion

3 comments so far.

  • [Avatar for Pro Say]
    Pro Say
    November 19, 2021 12:46 pm

    Excellent move on the Office’s part.

    The cesspool of illegitimate and fraudulent TMs needs to be capped off and pumped clean. The sooner the better.

    Only negative:

    “The Office also will not require identification of the real party in interest behind a petition, ‘so that potential users are not deterred by fear of retaliation from a registrant,'”

    Exactly what kind / type of retaliation is the Office concerned about?

    Everyone should be entitled to know who their IP attacker / accuser is. Everyone.

    Is this another gift to Big Corp?

    You know. Just like the PTAB was.

  • [Avatar for Steven M. Hoffberg]
    Steven M. Hoffberg
    November 19, 2021 10:33 am

    The fee structure, and discusion of the fees, make clear that these are taxes having no relation to costs.

    The trademark office now warns that examination latency has increased. How does shortening response times actually increase efficiency? Also, the extension fees are now DUE IN ADVANCE, and failure to pay on the 3 month date will result in cancellation. Pure money grab, IMHO.

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