Developments in trademark law – Lexology
TMA AND OTHER ENHANCED PTO MEASURES FOR ANTI-FRAUD
In 2020, the US Congress enacted the TMA. Some of its changes merely codify existing PTO practice, such as the letter of protest. Others, including two new ex parte procedure (that is to sayexpungement and reconsideration), were designed to assist the PTO’s efforts to rid the US Trademark Registry of fraudulent registrations and applications, as well as “deadwood” or marks that are no longer in use.
- Debarment and reconsideration procedures: the TMA created these new ex parte procedures, which allow third parties, including the PTO Director, to challenge recordings for non-use. As stated in the PTO’s final rules on this subject, “when the register includes marks that are not currently in use, it is more difficult for legitimate businesses to erase and register their own marks.” Motions to strike and reconsider require, among other things, a $400 fee and information regarding the basis of the motion, including a verified statement of facts with details of the “reasonable investigation into non-use” of the applicant. The PTO Director will then review the request and the electronic file to determine whether to initiate proceedings. If instituted, a bureau action will be issued requiring the registrant to provide evidence disproving the non-use.
- Protest Letters: The TMA has codified the PTO’s long-standing practice for protest letters, which allow third parties to submit evidence regarding a trademark’s eligibility for registration while the application is pending. ‘exam. Protest letters filed before publication must include evidence supporting the reason(s) for rejection, while protest letters filed after publication hit a higher evidentiary hurdle, namely evidence establishing a At first glance case of refusal. The TMA clarifies that the PTO has two months to respond to the submission and that the PTO Director’s decisions regarding protest letters are final and not subject to review. However, while there is no right of appeal if a letter of protest is ignored (nor is there the ability to “amend” or “add to” a letter protest once filed), parties may file a new letter of protest as long as the publication period of the affected application has not expired.
On December 1, 2022, changes to the Office Action Response Schedule will go into effect. Previously, applicants/registrants had six months to respond to office actions. Under the new provisions, this period will be reduced to three months (for most requests), with the option of a one-time three-month extension upon payment of a $125 fee.
Fraud, penalties and cancellations
The TMA is just one of many measures taken to combat fraudulent filings. Concerned that some U.S. attorneys were assisting non-U.S. plaintiffs without doing proper due diligence as to the authenticity and veracity of information included in trademark applications, the PTO began investigating parties who were filing a suspicious number of trademark applications on behalf of foreign applicants. The PTO has since issued several penalty orders where he found evidence of fraudulent job applications and breaches of PTO ethics rules. Penalties for at least two US attorneys who assisted Chinese applicants with illegitimate claims included a 12-month probationary period and mandatory courses in ethics and trademark law. The PTO also sanctioned a Chinese trademark agency, ending more than 15,000 application procedures involving the agency and barring the agency from further correspondence or submission to the PTO, noting that the agency n is “not and never w[as] licensed or recognized to practice before the USPTO in trademark matters.
Consistent with the PTO and TMA’s concentrated efforts to clear clutter from the register, the Federal Circuit and the Trademark Trial & Appeal Board (TTAB) have provided clarification on — and arguably lowered — the standard for proving fraud. In particular, in Chutter, Inc. v. Great Management Group, LLC and Chutter, Inc. v. Great Concepts, LLC2021 USPQ2d 1001 (TTAB 2021), the TTAB held that “reckless disregard” for the truth can satisfy the “intent to deceive” requirement for fraud set out in the root case, In Re Bose Corp., 91 USPQ2d 1938 (Fed. Cir. 2009). In Chutter, Inc.., the TTAB granted a request to cancel a registration for DANTANNA’S, finding that the conduct of the defendant (that is to sayfiling a combined declaration of use and incontestability under sections 8 and 15 of the Trade Marks Act which incorrectly stated that there were no proceedings pending in respect of the mark concerned) constituted a disregard reckless from the truth and, therefore, demonstrated an intent to deceive the PTO—sufficient evidence to conclude fraud.
Moreover, in Galperti, Inc. v. Galperti SRL, Case No. 21-1011 (Fed. Cir. Nov. 12, 2021), the Federal Circuit (for the second time) ruled that the TTAB erred in denying a motion to quash for fraud based on the statement of the plaintiff of “substantially exclusive” use of its trade mark for five years, which plaintiff submitted in support of its claim for acquired distinctiveness under section 2(f) of the Trade Marks Act. Specifically, the Federal Circuit held that, as a matter of law (and contrary to the assertions of the TTAB), (1) a party disputing a claim under Section 2(f) based on the substantially exclusive use of this mark n need not have acquired the distinctiveness of its own mark in order for the use by the challenger to compromise the plaintiff’s claim of substantially exclusive use; and (2) the use of the mark by any party, regardless of its relationship to the applicant, is relevant to the evaluation of the applicant’s substantially exclusive use claims.
Both Chutter, Inc.. and Galperti, Inc. helped ease the burden on parties seeking to void certain registrations on the basis of fraud. These decisions, along with the efforts of Congress and the PTO, should help combat the fraudulent filings that clog the registry.