New Law Strengthens Trademark Enforcement Rights, Makes Other Improvements
By Sandra G. Gibbs on January 07, 2020
On December 27, 2020, the Trademark Modernization Act of 2020 was signed into law. The TMA, which will become effective December 27, 2021, strengthens the right of trademark owners to obtain injunctive relief against infringers, and makes certain other important changes to trademark law and practice. Franchisors and licensors will be among the trademark holders who stand to benefit from the TMA.
Rebuttable Presumption of Irreparable Harm Is Restored
The federal Lanham Act grants certain rights to holders of valid, enforceable trademarks, including the right to exclude unauthorized, noncompliant, or otherwise infringing uses of the mark. In a franchise system, where shared use of a common brand is the key distinguishing characteristic, this right to stop unauthorized or noncompliant use of trademarks is fundamental to the system’s operation.
In order to compel a person to stop infringing activities, the trademark holder must seek injunctive relief. To obtain injunctive relief in a trademark infringement case, a trademark holder is required to show, among other things, (a) proof of infringement—or, in the case of a preliminary injunction, likelihood that the party would be able to prove infringement—and (b) proof of irreparable harm, meaning harm that cannot be adequately compensated by money damages. Traditionally, courts have combined these two elements into one, on the theory that misuse of another person’s trademark so thoroughly disrupts the critical link between brand and source that infringement cannot help but cause irreparable harm.
This presumption of irreparable harm under the Lanham Act began to crumble in some courts in the wake of the U.S. Supreme Court’s 2006 decision in eBay Inc. v. MercExchange, LLC. The eBay case held that a more rigorous application of the traditional four-part equity standard was necessary before injunctive relief could issue. Although the eBay case concerned patent law, rather than trademark law, some courts in Lanham Act cases began to demand separate proof of irreparable harm and denied injunctive relief to trademark holders who failed to present it.
The TMA rectifies this line of cases by explicitly recognizing the presumption that trademark infringement creates irreparable harm to the trademark holder. Although the presumption is rebuttable (under standards yet to be developed), this aspect of the TMA will support enforcement of trademark rights.
Trademark Registration Can Be Challenged Based on Nonuse of Marks
Trademark protection in the United States is based primarily on use of the marks in commerce; except for certain limited rights to reserve a mark that a registrant intends to use in the near future and excusable nonuse under special circumstances, it is prohibited to register a mark that is not actually in use in each of the classes of goods and services for which it is registered. The U.S. Patent and Trademark Office (USPTO) relies on registrants’ certification of use of the marks, but in recent years it has seen a sharp increase in inaccurate and even fraudulent certifications. The result has been a glut of improper registrations, which block legitimate applications and increase trademark prosecution costs.
The TMA establishes procedures to make it easier for third parties to challenge a trademark holder’s registration on the ground that the mark is not, in fact, being used. Any person will be permitted to initiate a challenge to use-based registrations by making a prima facie showing of nonuse: a petition for reexamination may be filed at any time within the first five years of registration, and a petition for expungement of the registration (for marks that have allegedly never been used) may be filed at any time between the third and tenth anniversaries of registration. These procedures will apply in addition to certain actions already implemented by the USPTO to stem registration abuse, including more frequent audits of use, enhanced training to identify fraudulent specimens of use, and requiring foreign applicants to be represented by a U.S.-based attorney.
Other provisions of the TMA give the USPTO broader discretion to shorten the time period to respond to office actions, codify the “Letter of Protest” procedure for submitting evidence regarding another party’s application, and clarify that Administrative Law Judges on the Trademark Trial and Appeal Board are inferior officers of the United States and are therefore not subject to the Appointments Clause of the U.S. Constitution.
This article was prepared by Sandra G. Gibbs (firstname.lastname@example.org) of the Irvine law firm of Mulcahy LLP. Mulcahy LLP is a boutique litigation and regulatory firm that provides legal services to franchisors, manufacturers and other companies in the areas of franchise, trademark, trade secret, unfair competition, and distribution laws.
Disclaimer: While every effort has been made to ensure the accuracy of this article, it is not intended to provide legal advice as individual situations will differ and should be discussed with an experienced franchise lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
 15 U.S.C. §§ 1051 et seq.
 547 U.S. 388 (2006).
 This reasoning was adopted in the Third Circuit (including federal district courts in Delaware, New Jersey, and Pennsylvania), the Ninth Circuit (Alaska, Arizona, California, and Hawaii), the Eleventh Circuit (Alabama, Florida, and Georgia), and several district courts.
 For expungement petitions brought within the first three years after enactment of the TMA, the ten-year deadline is eliminated. This will allow the timely filing of expungement petitions against even long-registered marks.