2020 relief bill includes sweeping changes to trademark and copyright law
As the nation continues to fight the ongoing COVID-19 pandemic, many took notice of the December 27, 2020, signing of the Consolidated Appropriations Act, a bipartisan relief and government funding bill passed by Congress only six days earlier. Less noticed was the signing of two different acts that same day that make wide-sweeping changes to federal trademark and copyright law: The Trademark Modernization Act of 2020 (TMA) and the Copyright Alternative in Small-Claims Enforcement Act of 2019 (CASE Act).
Trademark Modernization Act (TMA) of 2020
The TMA brings about key changes in federal trademark law aimed at helping owners enforce their intellectual property in federal court and before the U.S. Patent and Trademark Office (USPTO).
- Presumption of irreparable harm. First, the TMA clarifies that irreparable harm may be presumed for trademark owners seeking injunctive relief for alleged infringement in federal courts. Courts historically found such a presumption to exist until the U.S. Supreme Court’s decision in eBay Inc. v. MercExchange, 547 U.S. 388 (2006), which caused a split among federal appellate courts concerning the applicability of such a presumption. The TMA amends federal legislation to resolve the split and affirms a presumption of irreparable injury in trademark actions, although not retroactively. This immediately-effective clarification provides trademark owners with an important tool in obtaining injunctive relief when enforcing their rights in federal court.
- New USPTO cancellation and expungement procedures. The TMA also creates new procedures for cancelling third party registrations that are not actually in use. According to one of the bill’s sponsors, the USPTO has seen a “significant increase in trademark registrations that falsely claim use of a mark” in recent years. In an effort to target such registrations, the TMA creates a new expedited “expungement” procedure and amends reexamination procedures to allow a third party to seek cancellation of a registration on the grounds that a mark was never properly used in commerce. This basis may now be used as an additional ground for parties to seek cancellation of a registration in formal cancellation proceedings before the USPTO’s Trademark Trial and Appeals Board. These new reexamination and expungement procedures do not go into effect immediately, and the USPTO is required to issue regulations to implement them within one year. Ultimately, once effective, these new procedures will provide businesses new ways to seek cancellation of registrations for unused marks that could otherwise create a barrier to registration of a company’s new marks and logos.
- Codifying letters of protest. In addition to adding new ways for post-registration challenges, the TMA codifies the process for third parties to submit a letter of protest against registration of a mark while the mark is under USPTO examination. This protest procedure previously existed under USPTO rules; however, those rules lacked specifics on how and to what extent USPTO examining attorneys were required to utilize letters of protest. The TMA provides these specifics, giving the USPTO two months after the submission of a protest letter to determine whether it should be included in the application file. The director’s decisions regarding protests will be final and non-reviewable, but will not preclude a third party from using the same evidence in a subsequent opposition or cancellation proceeding.
- Shortened prosecution. Finally, the TMA provides USPTO examining attorneys with flexibility in setting response times to rejections to pending applications. Under the TMA, USPTO examiners can shorten the typical six-month response window to as little as two months; however, applicants will have the ability to request extensions up to six months in the aggregate.
Copyright Alternative in Small-Claims Enforcement (CASE) Act of 2019
The CASE Act similarly provides additional tools to enforce intellectual property rights.
- Creation of Copyright Claims Board. CASE establishes a new Copyright Claims Board to hear claims of copyright infringement that is ostensibly aimed at mitigating the costs of enforcement in federal litigation. The Board consists of three Copyright Claims Officers who will conduct individualized proceedings to resolve disputes. The proceedings can include limited discovery and hearings, however, parties that choose to proceed before the Board waive their right to formal motions and a jury trial. The Board must issue written decisions setting forth their factual findings and legal conclusions, but Board decisions may not be relied upon as legal precedent, even in future proceedings before the Board. As in federal court, parties before the Board may seek actual or statutory damages, but the CASE Act caps the amount of damages the Board may award to no more than $15,000 in statutory damages per work and no more than $30,000 in total actual or statutory damages in any single proceeding, regardless of the number of claims asserted. Attorneys’ fees are also recoverable, but only in the case of bad faith, and may not exceed $5,000, absent extraordinary circumstances. To deter abuse of the new process, the CASE Act provides that any party who pursues a claim or defense in bad faith more than once in a 12-month period may be barred from initiating a claim before the Board for 12 months.
- Limited opt-out of new Copyright Claims Board. The Copyright Office has one year to implement the CASE Act, so the Copyright Claims Board should be available and in use before the close of 2021. Importantly, participation in a proceeding before the Board is voluntary, and parties may opt out of utilizing the Board when served with a claim, choosing to resolve a dispute in federal court. Parties served with a notice and claim will have only 60 days to opt out, however. So, businesses should carefully monitor for such claims to avoid being forced into defending claims before this new, (somewhat) voluntary proceeding.
- Protecting Lawful Streaming Act of 2020. Other copyright provisions tucked into the 2020 stimulus bill address a loophole under criminal law that allowed unauthorized live streaming of copyright-protected materials to be charged as a misdemeanor rather than a felony like other copyright violations. New statutory language will allow the U.S. Justice Department to bring felony charges against a digital transmission service that is primarily designed or provided for streaming copyrighted works without authorization and intentionally markets its use for such streaming. This amendment is not directed to individual users in a compromise with critics who feared broader criminal provisions could be used to limit free speech online.
With the end of 2020 came legislation that should have broad impacts on federal intellectual property law. Trademark owners now have additional tools in both litigation and prosecution and should consult with counsel on how to most effectively use these new procedures to secure and enforce their trademark rights. Companies should also be mindful of the new Copyright Claims Board, which could be a useful tool for enforcing rights in copyright-protected works, but could also be a new forum in which companies are forced to defend against copyright infringement allegations.