Legal Alert: Trademark, Copyright Legislation Passed as Part of COVID-19 Relief Bill

At over 5,000 pages long, few have likely read the entire contents of the recently enacted COVID-19 relief bill (known as the "Consolidated Appropriations Act, 2021"). The highlights of the bill, of course, are its economic relief measures, including $300 per week in enhanced unemployment benefits, $284 billion in business loans through the Paycheck Protection Program, and direct stimulus payments to individuals. However, buried deep within the bill are three important acts that could have far-reaching implications for trademark and copyright owners: the Trademark Modernization (TM) Act, the Copyright Alternative in Small-Claims Enforcement (CASE) Act, and the Protecting Lawful Streaming Act.

The Trademark Modernization Act

The TM Act, set to become effective one year after it is signed into law (so, on December 27, 2021), makes changes to the Lanham Act by providing for third-party submission of evidence relating to trademark applications, establishing ex parte expungement and ex parte reexamination relating to the validity of trademarks, and providing for a rebuttable presumption of irreparable harm in certain proceedings, in addition to others.

Third-Party Submission of Evidence in Trademark Examination

Sec. 223 codifies the process by which third parties may submit evidence relevant to the examination of a trademark application, which appears to broaden the grounds for which third parties may submit a Letter of Protest. Under this procedure, a third party may submit evidence related to any ground on which an examiner could refuse registration, and must include a concise description of each piece of evidence submitted. Any determination by the Director as to whether to include the evidence in the record is final and non-reviewable.

Flexible Response Times

Sec. 224 grants examiners the authority to shorten the standard six-month response time to Office Actions to as little as 60 days, provided that applicants may obtain extensions up to six months in aggregate.

Ex Parte Proceedings

Sec. 225 creates two new ex parte cancellation procedures intended to address concerns that the trademark register has become bloated with fraudulently-filed and unused marks. The first of these procedures, ex parte expungement, applies to marks that have never been used in commerce. The second, ex parte reexamination, applies to trademarks that were not in use in commerce on or before the relevant date.

A petition for expungement or reexamination will require a verified supporting statement and evidence, along with fees. To begin an ex parte proceeding, the petitioner must:

1. Identify the registration;
2. Identify each good or service in the registration for which it alleges that the mark has never been used in commerce or was not in use in commerce on or before the relevant date;
3. Include a summary of the petitioner's reasonable investigation to determine that the mark has never been used in commerce or was not in use in commerce on or before the relevant date, as well as any additional facts to support its allegation; and
4. Include any supporting evidence upon which the petitioner relies.

For each good or service identified in the petition, the Director will determine whether the petitioner sets forth a prima facie case and, if he or she finds that it has, institute an ex parte proceeding. Determinations by the Director whether to institute a proceeding are final and non-reviewable, and future petitioners are estopped from bringing further ex parte proceedings against marks that were not cancelled in a prior ex parte proceeding. The TM Act further authorizes the Director to initiate an ex parte proceeding on his or her own initiative if he or she discovers information that supports a prima facie case of the mark having never been used in commerce or having not been used in commerce on or before the relevant date.

Trademark registrations based on a foreign or international registration that do not require evidence of use to secure a trademark registration will be subject to a petition to expunge, but the trademark owner may offer evidence showing excusable nonuse if there has been no use.

A petition for expungement must be filed between the third and the end of the tenth year of registration, except during the three years that follow the law's enactment in which this petition may be filed against any registration that is more than three years old.  A petition for re-exam must be filed within five years of registration of mark that was subject to the use requirement.

Presumption of Irreparable Harm

Sec. 226 restores the rebuttable presumption of irreparable harm when a Lanham Act violation has been proven or upon a finding of a likelihood of success on the merits, thereby abrogating eBay, Inc. v. MercExchange, LLC, as applied to trademark infringement actions and potentially easing the path for trademark owners to obtain both temporary and permanent injunctions.

Protection of the Independence of Administrative Law Judges Serving on the Trademark Trial and Appeal Board

The law also contains provisions designed to insulate Administrative Law Judges (ALJs) serving on the Trademark Trial and Appeal Board from claims that they were unlawfully appointed. These provisions are in response to a prior Federal Circuit decision finding that ALJs serving on the Patent Trial and Appeal Board were unlawfully appointed because they had not been nominated by the President and confirmed by the senate.

The Copyright Alternative in Small-Claims Enforcement Act

The CASE Act creates a Copyright Claims Board in the Copyright Office to adjudicate disputes valued at under $30,000 in an effort to streamline the process by which copyright owners bring claims without the expense and hassle of litigation in federal court. The Board will consist of three Copyright Claims Officers who may exercise many of the duties of Article III judges, including rendering claims on civil copyright claims, hearing evidence, managing discovery, and awarding monetary relief. The CASE Act limits the jurisdiction of the Board to the following claims:

1. Claims for infringement of an exclusive right in a copyrighted work
2. A claim for a declaration of noninfringement of an exclusive right in a copyrighted work
3. A claim under 512(f) for misrepresentation of claimed infringement
4. Counterclaims asserted solely against the claimant in a proceeding arising out of paragraphs 1, 2, and 3
5. Legal or equitable defenses in response to claims asserted under this subsection
6. A single claim or multiple claims permitted under paragraphs 1, 2, or 3 by one or more claimants against one or more respondents, so long as all claims asserted in any one proceeding arise out of the same allegedly infringing activity or continuous course of infringing activities

Judicial review of Board decisions is limited. After the Board issues its decision in a matter, a party may submit a request for reconsideration. If the Board declines, the party may petition the Register of Copyrights to review the decision under an abuse of discretion standard of review. The party may then petition a district court for an order vacating, modifying, or correcting the Board's determination if (1) the determination was the result of fraud, corruption, misrepresentation, or other misconduct, (2) the Board exceeded its authority or failed to render a final determination concerning the subject matter at issue, or (3) in the case of a default determination or determination based on a failure to prosecute, it is established that the default or failure was due to excusable neglect.

The Protecting Lawful Streaming Act

The Protecting Lawful Streaming Act closes a loophole in the law of criminal copyright infringement liability. Previously, felony charges for copyright infringement could be brought only for the reproduction or distribution of physical copies or downloads of copyrighted material. Streaming, by contrast, was considered a "public performance" and was thus treated as a misdemeanor. The Protecting Lawful Streaming Act allows federal felony charges to be brought against "digital transmission services" that:

1. Are primarily designed or provided for the purpose of publicly performing copyrighted works by means of digital transmission without the authority of the copyright owner or the law;
2. Have no commercially significant purpose or use other than to publicly perform copyrighted works by means of a digital transmission without the authority of the copyright owner or the law; or
3. Are intentionally marketed to promote their use in publicly performing copyrighted works by means of digital transmission without the authority of the copyright owner or the law.

The act does not apply to individuals, noncommercial activities, or good faith business disputes.

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The summaries above do not cover every change to the law or provision in these acts.  We will continue to monitor how all of these changes play out and, in particular, how the USPTO and Copyright Office will implement these changes and new procedures in the year to come.

Authors: Cindy Walden and Kristen McCallion