Just as broken limbs or downed trees that fall during a storm can block your path, defunct trademarks can block a trademark owner from registering a new mark. Let’s examine some different ways to clear the deadwood that is impeding your client’s way forward.
Do Your Homework
The deadwood trademark registration scenario is common for any trademark practitioner and usually arises in one of two ways: First, you search for possible conflicts with your client’s desired mark and find a registration that appears confusingly similar but may not be in use.
Second, you receive an office action from the examining attorney assigned to your application that cites an existing registration as grounds for refusing your application under section 2(d) of the Lanham Act (15 U.S.C. § 1502(d)). What do you do when you encounter these obstacles?
First, check the status of the current registration. Is it current? Is it close to the deadline for a maintenance filing? Is it already in the six-month grace period for a maintenance filing? If it is close to the deadline for a maintenance filing, you may be able to wait for the deadline to pass. If you wait until close to the end of the six-month period to respond to the office action you received, you will buy more time for the current registrant to miss the deadline. If the owner of the cited registration has missed the filing deadline and is within the six-month grace period, the examining attorney must suspend your application pending the renewal or cancellation of the registered mark, rather than issue a final refusal or refuse to reconsider a denial of your application.
Second, research whether the mark is being used in commerce. If the specimens contained in the registration file are website screenshots, check if the website is still functioning and—more importantly—displaying the mark in connection with the goods or services identified in the registration. If the website is down or if it appears that it has not been updated for some time, the registrant may be out of business or not using the mark. General internet searches may turn up evidence of use or nonuse. The Internet Archive’s Wayback Machine has cached screenshots of most websites, which may allow you to determine if a website has changed and when—within a range of dates—it stopped using a mark or became a nonfunctioning site. While the Wayback Machine is not conclusive and will only provide evidence for the day or days it captured the website at issue and any specific pages it may have imaged, it is a valuable tool for searching online trademark uses.
Third, after investigating whether the registrant is using the mark, see what the owner is doing for business. In my experience, individual trademark owners—as opposed to business entities— allow their registrations to lapse at a significantly higher rate. Perhaps they devised a pithy slogan or eye-catching design and registered it, but their business never took off or they turned their attention to another venture. An individual owner, especially if not represented by an attorney of record, may be less likely to oppose a cancellation proceeding or other action to clear the owner’s dead trademark.
If the owner is a corporation, limited liability company, or other business entity, check the records for the relevant secretary of state. Is the business in good standing? Has it made the required corporate filings and paid the necessary fees? If the business is not active and has not maintained its registered agent or other required address with its state regulators, it will probably not continue to assert trademark rights. A deeper dive may reveal that the business filed for bankruptcy protection, was put into receivership, assigned its assets, or merged with another entity. In any of those situations, whoever acquired the relevant trademark must update the owner’s information, including the current address, with the Trademark Office. Failure to do so may have left the ownership of the business’s trademark in limbo and would cause the owner to miss any notices of cancellation or a lawsuit, resulting in a default judgment.
After performing your due diligence on the status of the trademark, whether it is being used in commerce, and whether the owner is in business, it is time to evaluate which method to use to clear the deadwood from your path.
The traditional way to remove a dormant registration that is blocking a pending application is to file a petition to cancel with the Trademark Trial and Appeal Board (TTAB). The most common grounds for cancellation are abandonment, fraud on the Trademark Office, and lack of a bona fide intent on the part of the owner to use the mark with the listed goods or services at the time the application was filed. If the owner has not used the trademark for three consecutive years or if the owner has abandoned use of the mark without a bona fide intent to resume use (Lanham Act § 45; 15 U.S.C. § 1127), the registration is subject to cancellation. Fraud consists of a filing with an intent to deceive the Trademark Office or to misrepresent material facts in the filing. Fed. R. Civ. P. 9(b). If the owner submitted a maintenance filing merely to keep the registration without actually using the mark, this may constitute actionable fraud. This situation commonly occurs when the trademark owner resuscitates a dormant website, takes screenshots to submit as specimens of use in commerce, and then takes the website back down. If archived search records reveal that the website did not display the mark before or after the date of the submission, the proffered specimens may not be evidence of bona fide use in commerce.
To initiate a cancellation proceeding with the TTAB, the petitioner must file a petition setting forth the grounds for cancellation, with the same specificity required in federal court. The filing fee for a cancellation is $600 per class of goods or services you are seeking to cancel in the target registration. (You do not need to cancel the entire registration if fewer than all the registered classes are blocking your application.) The TTAB will then serve the petition on the registrant at its listed address and on the registrant’s counsel of record, if any. The registrant has 40 days from the institution of the action to respond to the petition. If the registrant fails to respond, the TTAB will issue a notice of default, usually within 10–20 days after the expiration of the 40-day period to answer. The TTAB’s notice of default will grant the registrant 30 days to show cause why default judgment should not be entered canceling the registration. Upon the registrant’s further failure to respond to the notice of default, the TTAB will enter judgment canceling the registration, typically about three weeks after the expiration of the 30-day period.
Section 18 of the Lanham Act provides a related but less drastic remedy whereby the TTAB “may cancel the registration, in whole or in part, may modify the application or registration by limiting the goods or services specified therein, may otherwise restrict or rectify with respect to the register the registration of a registered mark.” 15 U.S.C. § 1068. This gives the new applicant the ability to seek a partial cancellation, which could include all or less than all of the goods or services in a particular class. Such a limited petition to cancel could be less likely to draw a response from the registrant, providing a more surgical approach to clear blocking goods or services from a cited registration.
The advantages of clearing deadwood through a cancellation proceeding include the TTAB’s familiarity with and consistency in handling these proceedings and the relatively little amount of attorney work involved. Assuming that the registrant will not oppose the petition, the prosecuting attorney need only prepare and file the petition to cancel; the TTAB issues the notice of default and order to show cause and generally follows the timeline outlined above, sparing the attorney from preparing and filing a separate motion for default judgment. On the other hand, the $600 per class filing fee can weigh against a cancellation for multi-class registrants, especially foreign registrations that include several unrelated classes.
Trademark Modernization Act
The Trademark Modernization Act of 2020 (TMA) provides two new tools for canceling or otherwise removing dead or fraudulent registrations. See generally David T. Azrin, “The Trademark Modernization Act: New Procedures and Rules That Will Benefit Trademark Owners,” Intellectual Prop. Litig. (Spring 2021). Section 16A of the TMA (15 U.S.C. § 1066A) allows anyone to petition to expunge a registration, either or whole or in part, where the petitioner can show that the trademark has never been used in U.S. commerce with specific goods identified in the registration. Under this ex parte expungement procedure, the petitioner need only provide evidence of a “reasonable investigation” demonstrating that the mark was never used for the goods and services at issue. This proceeding may only be initiated three years after the date of registration. Because this three-year period is when a presumption of abandonment arises under the Lanham Act, it is apparent that the TMA is targeting registrations obtained by foreign trademark owners who registered their marks under the Madrid Protocol and the Paris Convention. Allowing for expungement after three years provides the owner of a newer mark another remedy to pursue without waiting for the deadwood owner to miss a maintenance filing, potentially accelerating the timeline to clear this deadwood.
Section 16B of the TMA (15 U.S.C. § 1066B) provides a new ground for ex parte examination and cancellation of a registered mark that was not used in U.S. commerce as of the “relevant date” in the application process as to some or all of the goods identified in the registration. As used in section 16B, the “relevant date” is (1) the filing date for a U.S. “use in commerce” application, (2) the date of an amendment claiming current “use in commerce,” or (3) the due date for a statement of use for an “intent to use” application. As with section 16A, a petitioner under 16B must provide evidence that a “reasonable investigation” has determined that the registrant was not using the mark with the goods or services at issue on the relevant date. Congress apparently aimed this provision at registrations obtained through the filing of false statements.
It is important to note that section 16A targets marks that were never used with certain goods or services, and section 16B focuses on marks that were not used as of the relevant date, providing an easier path to cancel fraudulently obtained registrations. Neither of these provisions directly addresses an abandoned mark.
On January 22, 2021, the Trademark Office issued proposed rules to put each of the new TMA provisions in force. The statute and the proposed rules call for the new procedures to go into effect by December 21, 2021.
The final venue for pursuing the cancellation of a trademark registration is federal court. Section 39 of the Lanham Act vests federal courts with jurisdiction over any cause of action arising under the act (15 U.S.C. § 1121), and section 37 (15 U.S.C. § 1119) provides that “[i]n any action involving a registered mark the court may determine the right to registration, order the cancellation of registrations, in whole or in part . . .” Thus, federal courts have concurrent jurisdiction with the U.S. Patent and Trademark Office to cancel registrations.
Federal courts have consistently held, however, that section 37 alone does not confer jurisdiction on federal courts for a cancellation action. Because the statute provides only a remedy, an independent cause of action is necessary to grant the court jurisdiction. Courts have required a plaintiff to show monetary or nonmonetary injury relating to the cancellation claim to warrant jurisdiction. While such independent claims typically arise in an infringement action, the applicant seeking to clear the deadwood cannot allege that the registrant who is not using the registrant’s mark is infringing the applicant’s mark. An applicant could file related claims for loss of goodwill, monetary loss from the inability to register a mark, or, in some cases, damages from an inability to deter competitors from selling counterfeit goods (as when online platforms will not act against alleged infringers without a registered mark).
One advantage of pursuing litigation in federal court is that, assuming you can file in a favorable jurisdiction, the registrant would have to retain counsel in what may be an unfavorable, expensive, and geographically undesirable forum. Applicants with ample resources will file lawsuits seeking to cancel registrations or oppose applications they deem harmful even when their case on the merits may not be strong, in the hope that the registrant or new applicant will back down rather than incur the fees involved in federal court litigation.
If the deadwood owner steps forward to challenge a cancellation action, a federal court is more likely than the TTAB to move the case on a tight schedule, declining to delay the proceedings for settlement discussions, discovery disputes, or other dilatory tactics. Depending on the jurisdiction, a federal court may also be less likely to vacate a default by the owner of the dormant mark. On the other hand, federal court litigation is usually significantly more expensive in an unopposed case than before the TTAB, as federal courts’ firm deadlines, in-person appearances, and especially the necessity of preparing default papers and moving for default judgment with competent evidence all require much more attorney time. In addition, federal courts tend to rule on default judgments on their own schedules. I have received default judgments less than a month after filing the motion; in other cases, I have waited well over six months for a ruling.
There are several routes to clearing deadwood trademark registrations. The path you take will incorporates some art and some science, and your due diligence can help determine your best way forward to cancel an abandoned mark efficiently while conserving your client’s resources. The Trademark Modernization Act has added some valuable tools to remove problematic registrations that should never have been granted, and federal court can be a last resort to challenge an abandoned trademark if you can show that your client has suffered actual harm.
An earlier version of this article appeared in the American Bar Association’s Intellectual Property Litigation Newsletter