WASHINGTON – This week, Senators Chris Coons (D-DE) and Thom Tillis (R-NC) and Representatives Hank Johnson (D-GA), Doug Collins (R-GA), Martha Roby (R-AL) and Jerry Nadler (D-NY) introduced bipartisan, bicameral legislation that modernizes the U.S. trademark system and provides new procedures that minimize barriers to entry and properly protects both consumers and brand owners.

In the United States, with some limited exceptions, a trademark must be used to qualify for trademark registration. Increasingly, trademark registrations are issuing and being maintained for marks that have never been used or were not used as required before registration. Those registrations hurt new market entrants—like small businesses—making it harder for them obtain protection for strong, commercially viable marks. This market-entry problem has been exacerbated by the recent flood of fraudulent trademark registrations from China, many of which rely on doctored photos to demonstrate use of a mark to fraudulently obtain a trademark registration.

The Trademark Modernization Act of 2020 addresses the false-use-claim problem by creating new procedures to improve examination effectiveness and efficiency, and to allow third parties to request ex parte cancellation of trademark registrations for marks that have not been used.

“Consumers rely on trademarks to purchase products and services from sources they trust,” said Senator Coons. “I am concerned that the recent flood of fraudulent trademark filings, many of which originate in China, have frustrated legitimate branding efforts by U.S. companies.  Meanwhile, owners of trademarks for authentic products face unreasonable hurdles when trying to block the use of confusingly similar marks that would mislead the public – including dangerous counterfeit products from China.  I am proud to introduce this bipartisan, bicameral bill to address both of these problems and modernize our trademark system.”

“The United States trademark system is long-overdue for an update to ensure it protects American consumers and brand owners,” said Senator Tillis. “The bipartisan, bicameral legislation would modernize the trademark system and make changes that protect small businesses and consumers across North Carolina. Recently, there has been a flood of fraudulent trademark registrations coming from China that harm American consumers and businesses by making it difficult for new businesses to obtain trademark protection for their commercially used marks. I am proud to introduce this much needed update with Senator Coons and Representatives Nadler, Collins, Roby and Johnson, and I will work to build bipartisan support so we can combat fraudulent trademark registrations coming from China to move our trademark system into the 21st century.”

“Consumer protection is also a key focus of the trademark system.  A well-functioning trademark system allows consumers to rely on trademarks to know the source of the products they buy.  That is why this legislation clarifies that when a trademark violation is proven in court, a rebuttable presumption of irreparable harm exists.  In many trademark cases, without injunctive relief, the risk that consumers will be confused is high,” said Congressman Johnson.

“Small businesses must have equal access to the trademark system,” said Chairman Nadler. “Trademarks are often a critical component of building a brand and a successful venture. This bill would help ensure that the robust U.S. trademark system will continue to function for all players in today’s fast-moving economy.”

“Trademarks are intended to provide consumers with confidence in the products and services they’re purchasing and small businesses with protection for their products, but, currently, our trademark system is failing to give businesses the confidence they need,” said Judiciary Ranking Member Doug Collins. “Bad actors, like individuals in China backed by the Chinese government, have taken advantage of vulnerabilities in our system, and as a result, hold possibly thousands of fraudulently trademarks obtained by deceiving the Patent Office. The Trademark Modernization Act will help provide small businesses with new cost-effective tools needed to fight fraud and block bad actors from illegally obtaining trademarks. This legislation ultimately will provide much needed relief for our small businesses, and it will give consumers peace of mind,” said Collins.

“In a hearing last year, I heard testimony on issues pertaining to fraudulent registrations from overseas and the cluttering of the trademark registry, said IP Ranking Member Roby. “Trademarks play a vital role in boosting our economy, creating jobs, and providing trust to American consumers. Millions of Americans rely on trademarks daily to purchase products from sources they depend on, and consumers should feel confident when making these purchases. This piece of legislation provides resources that limit fraudulent trademarks and help to declutter the registry.”

Stephen Lee, Chief Intellectual Property Counsel for Target said: “The development of intellectual property and a strong means to protect our designs is a key to our success.  Yet we are concerned about fraudulent trademarks flooding the U.S. Register.  When the USPTO approves a fraudulent trademark application, it can effectively block our legitimate efforts to trademark our owned brands.  The bill provides several different avenues for a third party, typically a trademark brand holder, to object and offer evidence regarding registrations and pending applications.” Read the full letter here.

“We support reforms that will help to preserve the proper functioning of the trademark system and further its core purposes of promoting competition and enhancing consumer welfare,” said New York University School of Law Professors Barton Beebe and Jeanne Fromer, who have studied the issue of fraudulent trademark filings.  “Today’s bill helpfully takes just such steps by providing for ex parte expungement and ex parte re-examination proceedings relating to the validity of marks.  These proceedings will enable third parties and the PTO to seek the removal of unused marks from the register more easily and cheaply than is possible under existing law.” Read the full letter here.

Thomas Williams, a Supervising Attorney with the Start-Up Ventures Clinic at Duke School of Law, said in support of the bill:  “Creating opportunities for the voices of small businesses to be heard in these processes, as they seek to protect their brands, services and products, is critical to maintaining and extending the role of small entrepreneurs in our communities and the larger economy.” Read the full letter here.

The TM Act would:

·       Create new expedited ex parte cancellation procedures that would allow a new-market entrant or other third party to request cancellation of a trademark registration when the mark was never used or was not used before registration.  The new procedures offer options in addition to traditional inter partes cancellation, which is often a time-consuming and expensive process.

·       Codify additional trademark examination procedures, which gives the U.S. Patent and Trademark Office flexibility and additional authority to gather evidence during examination. 

·       Clarify that, notwithstanding the Supreme Court’s decision in a patent case, eBay, Inc. v. MercExchange LLC, a rebuttable presumption of irreparable harm exists for trademark violations.

A copy of the full bill text can be found here
A section-by-section analysis of the bill can be found here
A one-pager on the bill can be found here.