New Trademark Modernization Act will help Trademark Owners

Trademark Modernization Act passed as part of Consolidated Appropriations Act

On Sunday, December 27th, President Trump signed into law the Consolidated Appropriations Act for 2021. As part of the legislation, the Trademark Modernization Act (TMA) was passed as well. The TMA imposes several significant changes on US trademark law. The TMA is the most sweeping trademark legislation in decades and has several important features that trademark and business owners should note.

Two of the changes provide new and apparently more efficient tools for cleaning up the federal trademark register. First, the TMA allows third parties to initiate ex parte procedures (expungement or re-examination) to remove trademark registrations for marks that were never in proper use. This will allow persons and entities pursuing registration of their legitimate marks to clear out (1) zombie registrations for marks that are no longer in use and (2) faulty registrations for marks that were never properly in use. In particular, these tools will allow deserving trademark holders to remove foreign priority applications (Section 44 applications) that often create barriers to registration for domestic trademark applicants. Section 44 registrations do not require demonstration of use in commerce, and frequently include long lists of goods or services that will probably never be offered in marketplace. The TMA provides tools to address these unfortunate side effects of foreign-based registrations.

Second, the TMA allows third parties to intervene and submit evidence in a pending application to demonstrate that the application should be refused (e.g., because it is confusingly similar to intervener’s mark). This will allow those with legitimate prior rights to (1) intervene in a third party’s attempt to register a confusingly similar mark and (2) perhaps avoid the expense and delay of a formal opposition proceeding at the Trademark Trial and Appeals Board (TTAB).

Additionally, the TMA strengthens the legitimate trademark holder’s ability to police and enforce its rights by making injunctive relief more attainable. The TMA establishes a rebuttable presumption that a meritorious trademark plaintiff has sustained irreparable harm. This reverses a trend established by the U.S. Supreme Court's decision in eBay v. MercExchange, 547 U.S. 388 (2006). Since the eBay case, it has become challenging for trademark plaintiffs to obtain an injunction. Under the TMA, plaintiffs who have successfully proven infringement or have demonstrated a likelihood of success on the merits, will have an easier path to permanent and/or preliminary injunctions. This will increase the value and protection of trademark registrations and trademark rights generally, as the trademark holder will have much improved prospects of shutting down infringing use.