United States: Common Mistakes in Prosecuting Trademarks and How to Avoid Them

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In summary

Although trademark registration with the United States Patent and Trademark Office offers a plethora of rights, it is crucial for trademark owners to be aware of the many pitfalls – for example, with regard to the proper and timely identification of all goods and services intended to be covered by an application – before embarking on prosecution.


Discussion points

  • Critical elements of a trademark application
  • Declaration of use
  • Opposition and cancellation

Referenced in this article

  • Trademark Manual of Examining Procedure
  • Accelerated Case Resolution programme
  • Trademark Modernization Act
  • Post Registration Audit Program

Registration and common law rights

Trademark registration with the United States Patent and Trademark Office (USPTO) provides the owner (or registrant) with multiple rights, including:

  • the exclusive and presumptive right to use the registered trademark in connection with the goods or services listed in the registration throughout the United States;
  • the ability to sue for trademark infringement in federal court;
  • the ability to register the trademark with US Customs and Border Protection to help prevent the import of counterfeit goods;
  • the ability to use the ® symbol to indicate trademark registration; and
  • the ability to use the trademark registration as evidence of ownership and priority of use in any dispute.

However, trademark registration in the United States is not mandatory and one can acquire common law rights simply by using a trademark in US commerce. Common law provides some but not all of the rights of a registration, including establishing the right to use the trademark in connection with the goods or services, and the ability to sue for trademark infringement in federal court or oppose a trademark before the USPTO’s Trademark Trial and Appeal Board (TTAB).

Trademark application elements

Mark

The United States has a broad definition of what may constitute a trademark for registration purposes.

  • words;
  • designs;
  • slogans;
  • sounds;
  • colours (eg, Nestlé’s use of yellow for packaging);
  • shapes or trade dress (including packaging);
  • scents (eg, Hasbro’s vanilla scent); and
  • motion marks (eg, the HBO ENTERTAINMENT moving mark).

Despite this broad list, there are some categories of terms that cannot be registered. For instance, generic terms, that is words commonly used to describe a particular good or service, such as ‘chair’ to identify chairs; however, in June 2020, the US Supreme Court held that Booking.com was entitled to registration, rejecting the USPTO’s position that Booking.com was per se generic.[1] Similarly, generic product designs cannot be registered.[2]

The Supreme Court also held in June 2020 that the prohibition under the Lanham Act (the primary federal trademark statute of law in the United States) on registering ‘immoral . . . or scandalous’ trademarks[3] violates the First Amendment of the US Constitution.[4] The Supreme Court reasoned that the USPTO’s refusal of an application for the term FUCT for clothing as immoral and scandalous under the Lanham Act discriminated against speech based on its content. Despite this, the same business owner as in the Iancu v Brunetti case attempted to register FUCK for phone cases, jewellery, bags and retail store services.[5] The Trademark Trial and Appeal Board affirmed the refusals to register the mark on the grounds that FUCK fails to function as a trademark because it is so commonly used and it does not indicate the source of the goods. The applicant’s request for reconsideration is pending.

Finally, government symbols or insignia cannot be registered. The USPTO provides a list of protected names, including Little League, Peace Corp and Red Cross.[6]

Applicants should conduct a trademark search to establish whether there are earlier users of their proposed mark. This can provide information beyond third-party use. For example, a search can be conducted to develop a more informed idea as to whether or not the mark may be more descriptive than initially understood. The search, or clearance process, is also when the business owner should take the opportunity to consider future expansion, the legal protectability of the proposed mark, and any meaning that could be detrimental to the mark’s use. It is advisable to conduct the early clearance of a trademark before there has been any significant expenditure on branding.

A common mistake at this stage is not being aware that once an application is filed and the mark is identified, in most cases, it cannot be amended, or it will be considered a ‘material alteration’ of the mark.[7] Therefore, it is important to be strategic about the exact trademark to include in the trademark application; for example, a design element may help if the trademark may be considered descriptive. Alternatively, including words may help with gaining registration for product packaging.

Applicant

Identifying the applicant can be difficult if the applicant company is one of several related entities. The applicant should be the entity that has the bona fide intent to use the mark in commerce, or the entity that is using the mark in commerce or controlling the quality of the goods and services offered under the mark.

A common mistake is that, although some ownership issues can be corrected by assignment (see below), in some cases, if the applicant is not properly identified, the trademark application may be void from the start.

Identification

Proper identification of goods and services, like the proper mark, is critical to a successful application. Once an application is placed on file, an identification cannot be expanded – any expanded changes will be considered ‘beyond the scope’ of the original identification and will not be accepted.

The United States allows for multi-class applications, wherein the applicant can identify goods or services in more than one class in the same application. The USPTO also allows applicants to file a TEAS Plus application,[8] wherein the applicant selects goods or services from the USPTO’s identification of goods and services manual for reduced filing fees. The TEAS Plus option has the benefit of approved identifications; however, many new technology terms do not appear in the manual, so this option is not always available.

A common mistake by business owners is not ensuring that they identify all the goods or services intended to be covered by any single application from the start. Nevertheless, there may be strategic reasons to include or not include items; for example, to avoid potential refusal from the USPTO because of a likelihood of confusion with a prior filed application or registration.

Basis

There are several bases on which a trademark application can be filed: use; intent to use; a foreign application or registration; and a Madrid Protocol application.

Selection of the proper basis (or multiple bases) is critical. Although there may be a cost saving to file based on a Madrid application with other designations, the restrictions of the Madrid system may prove to be detrimental; for example, a Madrid application cannot be amended to the Supplemental Register (see discussion below).

Register

The United States has two registers – the Principal Register and the Supplemental Register. The Supplemental Register is for marks that are not as strong or distinctive as those on the Principal Register, including descriptive marks, geographical indications, surnames and trade dress. There are some benefits to registration on the Supplemental Register, such as being able to use the ® symbol and providing constructive evidence and notice of ownership and priority of use. However, it is not prima facie evidence of the validity of the registration, or of the ownership of the mark or of the exclusive right to use it. It is also important to note that seeking registration on the Supplemental Register requires either use of the mark in the United States, or a foreign application or registration, but an application filed under the Madrid Protocol is not eligible.[9] In the case of an application based on use, an amendment to the Supplemental Register may change the filing date of the application, and a new search may be conducted by an examining attorney. Furthermore, when an application that has been amended to the Supplemental Register has been approved, it is not published for opposition, as are applications seeking registration on the Principal Register.

Acquired distinctiveness

The United States also allows an applicant to provide evidence of acquired distinctiveness in an otherwise descriptive mark that will allow it to be registered on the Principal Register. Many of the non-traditional trademarks, such as colour, packaging or sound marks, require evidence of acquired distinctiveness before they can be registered on the Principal Register because they are not considered inherently distinctive.

Use

Allegations of use in the United States require proof of use of the mark on the goods and in advertising for services. When preparing any allegation of use, it is important to make sure that there is use on every item listed in the identification of goods or services before the applicant signs either a use-based application or a statement of use filed in connection with an intent-to-use application. Third-party cancellations based on fraud in the filing of an allegation of use are still available.

It is important to note that the USPTO’s requirements of this proof have become very stringent in recent years for many reasons, including the proliferation of fake specimens created to make it look like a mark is in use when it is not actually in use. The USPTO issued an updated examination guide in 2019 to address digitally created or altered and mock-up specimens.[10]

Pendency

According to the USPTO’s most recent statistics, the average pendency for a new trademark application to be examined is 8.5 months.[11] The time frame beyond that to registration can vary widely depending on the complexity of the application, the number of office actions issued and other factors.

In May 2021, the USPTO implemented the Trademark Modernization Act[12] by issuing new rules addressing:

  • ex parte expungement and re-examination proceedings that allow third parties to petition to cancel a trademark registration on the grounds of non-use;
  • shorter response times for office actions from six months to three months for all applications except for those filed under Madrid Protocol section 66(a) applications. There is an optional three-month extension with the payment of fees;
  • letters of protest practice that established formal procedures to allow third parties to submit letters of protest to the USPTO to raise objections about a pending application; and
  • the requirement that any applicant listing a foreign address must appoint a qualified US attorney as its representative before the USPTO and provide the attorney’s bar information.

Oppositions and cancellations

Trademark oppositions and cancellations are handled by the TTAB, which is an administrative tribunal of the USPTO. An opposition is where a party seeks to prevent the registration of an applicant’s mark and a cancellation is where a party seeks to cancel an existing registration.

The grounds for opposition and cancellation are largely the same, with a few exceptions. A broad list of grounds is as follows:

  • likely to cause confusion with a mark previously used in the United States;
  • mark is descriptive, deceptively misdescriptive, geographically descriptive and (or) geographical deceptively misdescriptive;
  • mark falsely suggests a connection to the opposer’s name or identity;
  • mark is functional;
  • mark is generic;
  • no bona fide intent to use the mark at the time the application was filed;
  • applicant is not the rightful owner of the mark;
  • applicant’s mark would dilute opposer’s mark by blurring or tarnishment; and
  • additional grounds for cancellation only:
    • mark has been abandoned; or
    • any mark issued on the Supplemental Register.

It is important to remember that the TTAB only decides registration of a particular mark. There are no determinations made regarding the right to use a mark; however, there are still distinct advantages in pursuing a TTAB proceeding, such as: (1) it is less expensive than litigation in district court; (2) it may be easier to resolve because the TTAB has a more flexible suspension schedule to allow for negotiations; (3) TTAB decisions can be persuasive in any subsequent federal court litigation should a determination on use be necessary later; and (4) it can be leverage to negotiate terms, including use between the parties.

It is rare that oppositions and cancellations proceed through to decision, but when they do, they typically take about four years to resolve. The vast majority (estimated at about 90 per cent) of oppositions and cancellations settle during discovery before testimony is taken.

Accelerated case resolution

Parties involved in an opposition or cancellation proceeding before the TTAB have the option to use the Accelerated Case Resolution programme, which is a voluntary programme initiated by the agreement of both parties. It involves a streamlined process with limited discovery and a shortened timeline for the resolution of disputes to provide a faster, less expensive and more efficient alternative to the traditional opposition and cancellation proceedings.

Declarations of use

Regardless of the original basis of the application, registrants are required to file a declaration of use (DOU) (or excusable non-use) between years five and six from the registration date and then in 10-year increments. The DOU includes a declaration by the registrant or its authorised agent declaring current use of the mark in connection with all the listed goods and services and must include at least one specimen per class demonstrating use of the mark in US commerce.

After five years of continuous use, trademark owners may also include a declaration of incontestability under section 15 of the Trademark Act.[13] Only marks that are registered on the Principal Register may achieve incontestable status, which limits the grounds on which a trademark’s validity can be challenged.

It is crucial that the information and statements provided in a DOU and a claim of incontestability are accurate and truthful. False statements can be grounds for the USPTO to cancel a trademark registration. In a case heard in 2019,[14] the TTAB granted cancellation of the registration of the mark DANTANNA’S owing to intentionally false statements by the owner on the claim of incontestability form, on which the owner stated that there were no proceedings pending against the Great Concepts’ registration when there was one.

Note also that, in 2017, the USPTO started its Post Registration Audit Program,[15] wherein a random selection of trademark DOUs are selected to require additional evidence of use of the mark. The programme was intended to improve the accuracy and integrity of registered trademarks. If a registrant is not able to provide specimens of use on requested goods or services as listed in the registration, those goods or services must be removed from the registration at a cost of US$250 per class.

Licensing

A trademark licence allows a trademark owner (licensor) to authorise a third party (licensee) to use its trademark in connection with certain goods or services while the licensor continues to own the trademark. A licence should preferably be written and identify the scope of the licence by identifying the mark and goods and services, including quality control provisions regarding the use of the mark, and terms for termination of the licence.

It is a common mistake for a licence not to include provisions for quality control regarding the use of the mark, which may render it invalid. It could also result in the abandonment of the licensed mark.

Assignments

Ownership of a trademark in the United States can be transferred through a trademark assignment whereby the owner (assignor) assigns the trademark to a third party (assignee). To transfer ownership, the parties must execute a written agreement that identifies the trademark being transferred and sets out the terms of the transfer. The trademark assignment should also be recorded with the USPTO to ensure that the transfer is reflected in the USPTO’s records.

Before assigning or acquiring a trademark, each party should conduct due diligence to ensure that the trademark is free and clear of any encumbrances and that the assignor has clear title to the mark.

Summary of key stages

Conduct a trademark search

Before filing a trademark application, it is important to conduct a comprehensive trademark search to ensure that the trademark is available for use and registration. The United States is a first-to-use jurisdiction so searching the USPTO database as well as common law uses is imperative.

File a complete and accurate trademark application

The trademark application should be complete and accurate, including all necessary information and specimens of use, if applicable. Any errors or omissions could result in delays or even rejection of the application.

Avoid presumptive abandonment

Three years of non-use of a registered mark in the United States is presumptive abandonment. It is important, therefore, for trademark owners to collect evidence of the use of marks in the United States, including specimens and invoices. According to the TTAB, ‘holding a mark with no use, with only an intent to sell the mark at some time in the future, is not proof of present use or intent to resume use’.[16] The USPTO and the TTAB aim to prevent this kind of ‘trademark squatting’;[17] however, there are some circumstances under which the TTAB could consider a period of non-use excusable. In ARSA Distributing, Inc v Salud Natural Mexicana SA de CV,[18] the TTAB held that seven years of non-use were excusable because the trademark owner had to cease use of its mark because of government sanctions but had maintained the intent to resume use of the mark once the sanctions were lifted.

File declarations of use

All US registrations, whether based on use of the mark in the United States, a foreign registration or the Madrid Protocol, must be maintained by filing a declaration of use of the mark between the fifth and sixth anniversaries of registration and prior to every 10th anniversary. If any goods or services are not in use, they should be deleted from the registration.

Naked licensing

It is important for trademark owners wishing to license their mark to have a written licence with a clear quality control provision. A licence that does not include provisions for quality control is a naked licence, which could result in the abandonment of the licensed mark.

For an exploration of the tension between balancing First Amendment expression with Lanham Act trademark infringement claims in the media space, please see "Sidestepping the Rogers two-step: clearing entertainment titles in a crowded social space".


Footnotes

[1] United States Patent and Trademark Office et al. v Booking.com B.V., 591 U.S. ___, 140 S. Ct. 2298 (2020).

[2] See, eg, Stuart Spector Designs, Ltd. v Fender Musical Instruments, 94 USPQ2d 1549, 1555 (TTAB 2009) (guitar shape).

[3] 15 U.S. Code §1052(a).

[4] Iancu v Brunetti, 588 U.S. ____, 2019 USPQ2d 232043 (2019).

[5] In re Erik Brunetti, 2022 USPQ2d 764 (TTAB 2022).

[6] Trademark Manual of Examining Procedure (July 2022) (TMEP), Appendix C (https://tmep.uspto.gov/RDMS/TMEP/Oct2012#/Oct2012/TMEP-Cd1e1.html).

[7] TMEP, §1215.08.

[9] TMEP, §816.04, §1014.

[14] Chutter, Inc. v Great Management Group, LLC and Chutter, Inc. v Great Concepts, LLC, 2021 USPQ2d 1001 (TTAB 2021).

[16] Vans, Inc. v Branded, LLC, 2022 USPQ2d 742 (TTAB 2022).

[17] When someone else registers a trademark for the purpose of later selling it for a profit or riding on the success of a brand.

[18] 2022 USPQ2d 887 (TTAB 2022).

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