Significant New Trademark and Copyright Legislation Enacted: CASE Act of 2020 and the TM Act of 2020

January 12, 2021

On December 27, 2020, bipartisan legislation was signed into law that will usher in significant changes to copyright and trademark law.  We highlight below some of the key aspects of the new Copyright Alternative in Small-Claims Enforcement Act of 2020 (or CASE Act of 2020) and the Trademark Modernization Act of 2020 (or TM Act of 2020).

CASE Act of 2020

The CASE Act establishes the Copyright Claims Board (CCB), which will provide a streamlined process for resolving minor copyright disputes. The Register of Copyright must establish regulations to carry out the legislation, which may significantly affect its utility, but the CASE Act itself includes many deviations from existing copyright practice before U.S. district courts.  Notable deviations include the following:

• No registration is required to bring a case before the CCB—only a completed application that has not been refused (although no decision may issue until a registration issues and the parties have a chance to address it; if a registration is refused, the case is dismissed without prejudice);
• The CCB cannot award monetary relief in excess of $30,000 in any proceeding, exclusive of attorneys’ fees and costs;
• The CCB cannot grant injunctive relief (although it may include a requirement for a party to cease certain activity if the party agrees to do so);
• Statutory damages are available for all works, even those that were not timely registered;
• If works were timely registered, statutory damages are capped at $15,000 per work (instead of $30,000 for non-willful violations and $150,000 for willful violations in district court);
• If works were not timely registered, statutory damages are capped at $7,500 per work and $15,000 per proceeding;
• In awarding statutory damages, the CCB may not consider willfulness, but it may consider a party’s agreement to cease or mitigate infringing activity;
• Parties bear their own attorneys’ fees and costs except where a party has taken a position in bad faith (This means claimants with timely-registered works are less likely to choose the CCB because if they prevail in district court, they may receive an award of attorneys’ fees without a showing of bad faith.);
• Attorneys’ fees are generally capped at $5,000 (or $2,500 for pro se claimants), but may go beyond the cap in “extraordinary circumstances” (This also discourages claimants with timely-registered works from choosing the CCB because attorneys’ fees are not capped in district court.);
• There is no requirement for in-person appearances, but the Act anticipates online hearings;
• Discovery is limited to written document requests, interrogatories, and requests for admission;
• Testimony is limited to statements of the parties and non-expert witnesses (although expert witness testimony may be admissible upon a showing of good cause); and
• Filing fees will be between $100 and the cost to file an action with a district court.

Participation Voluntary. Participating in a procedure before the CCB is voluntary—a respondent may opt out of a procedure originally brought before the CCB. In that event, the CCB must dismiss the proceeding without prejudice, which presumably would force the claimant to file a case in district court. Although other consequences of opting out are not yet clear, we would expect that doing so may lead to larger damages awards and increase the probability of an award of attorneys’ fees for a claimant who prevails over a respondent who has opted out.

Review of CCB Decisions. Parties may request that the CCB reconsider any decision, and if denied, may request a review from the Register of Copyrights, limited to whether the CCB abused its discretion in denying reconsideration. If a party fails to comply with relief awarded by the CCB, the aggrieved party may apply to a district court for an order confirming the relief awarded, which, if granted, comes with a mandatory award of reasonable expenses, including attorneys’ fees. A party may also challenge CCB determinations issued as a result of fraud or other misconduct, where the CCB has exceeded its authority, or where there was a default for excusable neglect.

Trademark Modernization Act of 2020

The TM Act of 2020 has several distinct elements, relating to litigation, prosecution and post-prosecution practice before the U.S. Patent and Trademark Office (USPTO) and Trademark Trial and Appeal Board (TTAB):

Creates a Rebuttable Presumption of Irreparable Harm. To obtain injunctive relief, a trademark plaintiff must establish that it would be subject to irreparable harm in the absence of the relief sought, which is often difficult to prove. The TM Act of 2020 makes it easier for trademark plaintiffs to obtain injunctions by creating a rebuttable presumption of irreparable harm where the plaintiff has established a violation (for permanent injunctions) or a likelihood of success on the merits (for preliminary injunctions and temporary restraining orders). This effectively settles the debate that federal appellate courts had regarding the impact in trademark cases of the Supreme Court’s ruling in eBay Inc. v. MercExchange, 547 U.S. 388 (2006).  Irreparable harm will now be presumed in trademark cases. The presumption applies not only to infringement of registered marks, but also infringement of unregistered marks, trademark dilution and cybersquatting.

Allows USPTO to Shorten Response Deadlines for Office Actions. In the past, while prosecuting a federal trademark application before the USPTO, applicants have had six months to respond to refusals to register and other office actions. The TM Act of 2020 allows the USPTO to shorten the existing six-month response time to not less than 60 days, although it also provides for the availability of extensions that the applicant may aggregate to six months.

 Establishes Ex Parte Expungement and Reexamination Procedures. In response to the perception that the Federal Register is brimming with suspect registrations for marks not actually in use (due in large part to the ease with which foreign and international registrations may serve as the basis for U.S. registrations without a showing of use), the TM Act of 2020 establishes two new ex parte procedures designed to facilitate decluttering the Register: expungement and reexamination. The big difference between the two procedures relates to timing: An expungement petition may be commenced any time between three and ten years after registration, while a petition for reexamination may be commenced any time before the fifth anniversary of registration. (There is one caveat on the timing of petitions for expungement, namely, that all registrations—including those more than 10 years old—are subject to the process until December 27, 2023.)

Starting December 18, 2021, any person may bring a petition to expunge a registration or a petition to reexamine a registration. For expungement proceedings, the crucial question is whether the mark has ever been used in commerce on or in connection with some or all of the recited goods or services. (Note that this differs from a cancellation for abandonment because it only applies if the registrant has never used the mark.) For reexaminations, the crucial question is whether the mark was in use in commerce on or in connection with some or all of the recited goods or services when the applicant submitted its specimens of use.

To initiate either proceeding, the petitioner must verify that it has conducted a reasonable investigation to establish the required non-use. The Director of the USPTO may also initiate either proceeding on its own initiative if the Director discovers evidence that a mark has not been used as required. In either case, the standard for “use” is whether the registrant has made a bona fide use of the mark on the applicable goods or services in the ordinary course of trade, not merely to reserve rights in the mark.

Both processes have a few other noteworthy features:

• Registrants who have relied on foreign registrations or extensions under the Madrid Protocol but have not actually used a mark will have the opportunity to offer evidence of excusable non-use.
• The Act includes an estoppel provision that prohibits further expungement or reconsideration proceedings with respect to any goods or services that have survived an earlier proceeding regardless of the identity of the petitioner.
• Parties dissatisfied with the results of the procedures may appeal to the TTAB or to the U.S. Court of Appeals for the Federal Circuit.

Establishes New Basis for Non-use Cancellations. Harmonizing U.S. trademark prosecution practice with many of its foreign counterparts, the TM Act of 2020 also adds a new basis for cancelling registrations based on non-use. Any registration may be cancelled any time following the third anniversary of registration if it has never been used. If this seems similar to the new expungement proceeding, it is: The only differences between this proceeding and the new expungement proceeding are: (1) registrations more than three years old are always subject this ground for cancellation, while the expungement proceeding is designed to apply only to registrations that have yet to be renewed (i.e., are less than 10 years old); (2) the regulations that the Director of the USPTO adopts for the expungement proceeding may make that process more or less efficient, speedy, etc.

Author: David Steiner