Another COVID-19 Surprise: Important New Trademark and Copyright Legislation Buried In Spending and Relief Package

Written by Marissa B. Lewis

Yesterday, Congress’s omnibus spending and COVID-19 relief bill, H.R. 133, was signed into law.  Buried in the legislation are two new acts that potentially have sweeping implications for intellectual property owners.  The Trademark Modernization (“TM”) Act and the Copyright Alternative in Small-Claims Enforcement (“CASE”) Act introduce measures that are poised to significantly impact the way that trademark and copyright owners protect and enforce their rights.  Below is a discussion of the most notable changes promised by the new legislation.

The Trademark Modernization (TM) Act

In addition to navigating the new fee structure for U.S. Patent and Trademark Office (USPTO) filings starting on January 2, 2021, practitioners will be addressing new changes in the law resulting from the TM Act. First, and perhaps most notably, the TM Act provides trademark owners with a statutory rebuttable presumption of irreparable harm in trademark infringement actions, effective one year after the enactment of the TM Act.  Historically, trademark plaintiffs who prevailed in court were presumed to suffer irreparable harm as a result of the violation, which essentially guaranteed that the court would award an injunction against the defendant’s continuing use of the infringing mark.  However, in 2006, the U.S. Supreme Court issued a landmark decision, eBay, Inc. v. MercExchange LLC, 547 U.S. 388 (2006), which upended the standard for injunctive relief and created a circuit split as to whether prevailing plaintiffs are entitled to such a presumption in trademark infringement cases.  The TM Act restores the presumption of irreparable harm nationwide, making it easier once again for trademark owners to obtain an injunction and prevent consumer confusion in the marketplace.  This legislation has no effect on copyright or patent cases, in which the presumption has been eliminated following eBay.

Second, the TM Act introduces new mechanisms for opposing and canceling trademark registrations before the USPTO to combat the increasing surge of fraudulent trademark filings.  Rather than requiring a party opposing a trademark to undertake the arduous and costly process of commencing proceedings before the Trademark Trial and Appeal Board (TTAB), the TM Act offers new ex parte procedures for third parties to submit evidence to the USPTO during the examination of trademark applications regarding their validity.  The TM Act also creates procedures for third parties to request expungement and reexamination of existing trademark registrations for marks that have not actually been used in commerce.  These tools will be particularly useful for new market entrants whose trademark applications are blocked (or are at risk of being blocked) by prior registrations or pending applications for unused or otherwise invalid marks.  These changes would take effect one year after the enactment of the TM Act and apply to any mark on the registry, regardless of whether it registered before, on, or after that effective date.

Third, and of particular note to trademark practitioners, the TM Act grants the USPTO flexibility in setting the time period in which an applicant must respond to an office action issued during examination.  Instead of the automatic six-month response period, the USPTO now can, by regulation, require an applicant to respond to an office action in as few as sixty days.  The applicant will have the option to request to extend the response period to a full six months.   

Finally, the TM Act “confirms” that the Director of the USPTO has “the authority to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board” rendered in both inter partes proceedings and ex parte appeals.  While the Director already implicitly had such authority under current law, the TM Act makes this explicit in order to shield the TTAB from constitutional challenges such as those raised in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019), cert. granted, No. 19-1434 (Oct. 13, 2020), wherein the Federal Circuit held that Patent Trial and Appeal Board judges are unconstitutionally appointed because they lack sufficient oversight from the Director.    

A copy of the full text of the TM Act can be found here.

The Copyright Alternative in Small-Claims Enforcement (CASE) Act

After years of debate, Congress finally passed the CASE Act, which establishes a small-claims court known as the Copyright Claims Board within the U.S. Copyright Office to decide certain copyright disputes.  The Copyright Claims Board is authorized to hear infringement claims, actions for declaration of infringement, claims that a party knowingly sent false takedown notices, and related claims.  Damages are capped at $30,000.

The CASE Act is designed to streamline and allow for quick and efficient resolution of copyright disputes.  Currently, copyright owners with “smaller” claims—particularly individual creators and small businesses—are caught between a rock and a hard place:  either file a lawsuit in federal court for a potential monetary recovery that is lower than the likely cost of litigation or do nothing.  The Copyright Claims Board offers an alternative for redress.  Critics of the CASE Act argue that the new tribunal will be exploited by “copyright trolls.”  Notably, however, participation in proceedings before the Copyright Claims Board is voluntary and includes an opt-out procedure for defendants who prefer to litigate the dispute in federal court.

A copy of the full text of the CASE Act can be found here.

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