By Emma Janicki
The Trademark Modernization Act of 2020, a bill with bipartisan and bicameral support, was introduced in both houses of Congress in March to address problems with US trademark law. [1] Its goal is to combat the rise in fraudulent trademark applications, as well as provide new procedures to cancel fraudulent registrations, and settle the circuit split on irreparable harm.[2]
The recent surge in trademark applications from China-based applicants has consisted largely of fraudulent applications relying on doctored photographs, stolen marks, and other means of acquiring a trademark for marks that have never been used in commerce.[3] This has negatively impacted new market entrants, particularly small businesses in the US, by making it harder for them to obtain protection for their trademarks. The unused marks clog the system and block similar marks from being filed, despite the fact that these unused marks are just photoshopped images not actually tied to a real product.[4] To make the problem worse, the procedures for challenging these fraudulent registrations are extremely costly and cumbersome, dissuading a lot of potential challengers and perpetuating the harmful conditions.[5]
The bill strives to make it easier to cancel a mark that has never been used in commerce, in the hope of combating the rise in such filings from China.[6] Similarly, the bill will allow third parties to participate in a mark’s registration process by submitting evidence relevant to a ground for refusal of registration, taking a more proactive approach to stopping fraudulent registrations from crowding our system.[7] Another protection offered by the bill is the rebuttable presumption of irreparable harm. This concept was thrown into question following the Supreme Court decision in eBay v. MercExchange, and the Trademark Act would definitively restore this presumption for “plaintiffs seeking a preliminary injunction, temporary restraining order, or permanent injunction”.[8] Offering more protections for individuals and businesses interacting with our system will encourage lawful participation from both foreign and domestic entities.
This bill fits into a larger framework of international laws and treaties aimed at refreshing the trademark laws of multiple countries. These laws also influence how countries interact with one-another’s systems. Specifically, China recently passed new trademark laws that emphasize its intention of being a trademark powerhouse, centered on “creating procedural measures for more trademark registrations” and deemphasizing consumer protections.[9] Additionally, the Chinese government sponsors a program in which it pays its citizens to obtain US trademark registrations, regardless of the legitimacy of the registrations.[10] This has encouraged the influx of fraudulent filings we are experiencing, and the US Patent and Trademark Office responded by promulgating a rule that requires foreign applicants to retain US counsel in order to file applications.[11] The Trademark Modernization Act of 2020 is the latest development in this wave of foreign trademark regulation, and it remains to be seen how China, and other countries, will respond once it is law. While some experts praise this bill as an “imperative step” in combatting rising fraudulent trademarks from China, others have cautioned that the bill does not go far enough in protecting our system.[12]
[1] Press Release, Hank Johnson, Rep. Johnson Praises Passage of Trademark Modernization in Judiciary Markup (Sep. 9, 2020).
[2] Trademark Modernization Act of 2020, H.R. 6196, 106th Cong. (2020).
[3] Hank Johnson, Trademark Modernization Act of 2020 One Pager (2020), https://hankjohnson.house.gov/sites/hankjohnson.house.gov/files/documents/TM%20Act%20-%20One%20Pager.pdf [hereinafter One Pager]; Thomas W. Brooke, TM Bill Would Combat Application Fraud, Resolve Circuit Split, Law 360 (Apr. 30, 2020).
[4] One Pager, supra note 3.
[5] Thomas W. Brooke, TM Bill Would Combat Application Fraud, Resolve Circuit Split, Law 360 (Apr. 30, 2020).
[6] Kyle Jahner, Trademark Bill Advances With Agency Powers to Reverse Board, Bloomberg Law (Sep. 10, 2020), https://www.bloomberglaw.com/document/XEKLGKDK000000?bna_news_filter=ip-law&jcsearch=BNA%2520000001747887da4dab7eff8791d90001#jcite.
[7] Fenwick & West, LLP, Trademark Modernization Act: Congress to Combat Fraudulent Trademark Applications, JD Supra (Aug. 7, 2020), https://www.jdsupra.com/legalnews/trademark-modernization-act-congress-to-92357/.
[8] Fenwick & West, LLP, Trademark Modernization Act: Congress to Combat Fraudulent Trademark Applications, JD Supra (Aug. 7, 2020), https://www.jdsupra.com/legalnews/trademark-modernization-act-congress-to-92357/.
[9] Xuan-Thao Nguyen, The World’s Trademark Powerhouse: A Critique of China’s New Trademark Law, 40 Seattle U. L. Rev. 901 (2017).
[10] Josh Gerben, Massive Wave of Fraudulent US Trademark Filings Likely Caused by Chinese Government Payments, Gerben Law, https://www.gerbenlaw.com/blog/chinese-business-subsidies-linked-to-fraudulent-trademark-filings/ (last visited Nov. 9, 2020).
[11] Darren Cahr & Melissa Dillenbeck, New US Counsel Rule For Foreign TMs Promises Sea Change, Law 360 (July 16, 2019).
[12] See Kyle Jahner, supra note 6.