IP Gets Modernization “Stimulus” in New Consolidated Appropriations Act, 2021

While a majority of the attention related to the passage of the Consolidated Appropriations Act, 2021¹ on December 27, 2020, has centered on the coronavirus stimulus and relief portion, the law also includes important changes to US intellectual property law, which are summarized below.

TRADEMARK MODERNIZATION ACT (2020)

With President Trump’s signature, the Trademark Modernization Act of 2020 (TM Act),² a bipartisan bill originally introduced in March 2020, will help to “modernize” trademark law by dealing with the ever-increasing reliance on electronic communications and by protecting legitimate trademark users from fraudulent attempts at trademark registration. Among the most interesting changes are:

• Irreparable Harm: The TM Act codifies the rule that a plaintiff in a trademark case is entitled to a rebuttable presumption of irreparable harm when seeking an injunction to remedy a trademark violation. Thus, an injunction can be issued based on the merits of the plaintiff’s trademark rights without the need to establish the plaintiff has suffered irreparable harm due to the infringement. This law clarifies that there is a rebuttable presumption of irreparable harm in trademark violations that came into question after the eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) Supreme Court decision in a patent infringement suit held that irreparable harm is not presumed.

• Ex Parte Cancellations: Current practice only allows for third parties to request the cancellation of trademark registration through an inter partes procedure before the Trademark Trial and Appeal Board (TTAB) or district court. The new act would provide third parties the ability to file an expedited ex parte proceeding requesting the cancellation or reexamination of registrations for any registered mark that has never been used in commerce or in connection with some or all of the registered goods and services after the standard three-year grace period following registration. Unlike the inter partes proceeding, the ex parte petition will not require the filing party to plead a “real interest” or allege a “direct or personal stake” in the outcome of the decision. This change will likely affect many US registrations based on foreign registrations with long lists of goods and services that were not required to prove use in commerce prior to obtaining registration.

• Office Action Response Time: Examiners will now be able to set response times to office actions issued during examinations different than the current six-month standard window. Examiners can set response times between 60 days and six months, with the applicant able to request extensions (for a fee) to a full six-month period.

• Third-Party Evidence: While already a common practice (in the form of a Letter of Protest), the TM Act codifies the ability of third parties to submit evidence relevant to the examination of an application pending at the United States Patent and Trademark Office (USPTO). Such evidence may address any ground on which an examiner can refuse registration. The decision by the USPTO director on the inclusion of any evidence in the record is final and non-reviewable. However, exclusion of any evidence will not preclude any party’s rights to raise an issue in a later proceeding (i.e., opposition).

COPYRIGHTS

The legislation also includes the Copyright Alternative in Small-Claims Enforcement Act of 2019 (CASE Act).³ While current copyright lawsuits can disadvantage small businesses or individuals due to the significant costs of copyright litigation, the CASE Act will provide copyright owners of all sizes access to a more affordable and streamlined alternative to settle smaller disputes.

The CASE Act will implement a new Copyright Claims Board that will focus on disputes valued at under $30,000 ($15,000 per claim or $30,000 for the entire case). These disputes allow for defendants of infringement to opt out of the case and pay the fines rather than enter into a lengthy court case. Further, parties will be able to remotely participate in the hearing without the requirement of attorney representation.

In addition to the CASE Act, this bill will enact the Protecting Lawful Streaming Act, which will elevate copyright infringement claims based on streaming copyrighted works without permission from misdemeanor charges to felony charges. These upgraded punishments put infringement by streaming violations on par with current charges for reproduction and distribution rights violations.

DOMAIN NAME REGISTRATION INFORMATION

The Consolidated Appropriations Act, 2021 also includes the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2021.⁴ As part of the Joint Explanatory statement, the National Telecommunications and Information Administration (NTIA) is directed to work with the Internet Corporation for Assigned Names and Numbers (ICANN) to expedite the process that provides law enforcement and IP rights holders timely access to accurate domain name registration information. This comes after years of frustration due to ICANN’s decision to suspend mandatory whois requirements, not just for individuals but for corporations and other legal entities, as its solution to comply with various data regimes, most notably the European Union’s General Data Protection Regulation (GDPR). ICANN’s decision to undo decades of whois improvement over the objections of constituencies representing these interests has left legitimate third parties who wish to pursue criminal or civil remedies against the registrant of a domain name with little practical recourse.

While the current US legislation does not and cannot direct ICANN to restore a functioning whois, it makes clear that the United States has taken the position that a broad shutdown of the primary identification, and therefore accountability, mechanism is not acceptable to address legitimate interests around personably identifiable information. This bill makes clear that the United States is prepared to use legislative powers, whatever they may be, to prevent anonymous registration of domains, which can be a harbinger for fraudulent and/or criminal activity.

---

¹ Full text of the Consolidated Appropriations Act, 2021 can be found at: https://www.congress.gov/116/bills/hr133/BILLS-116hr133enr.pdf

² Continuing Appropriations Act, 2021, H.R. 133, 116th Cong. (2020) at 1019-1029. The full Trademark Modernization Act (2020) bill can be viewed at: https://www.congress.gov/bill/116th-congress/house-bill/6196/text?r=1

³ Id. at 994-1019. The full Copyright Alternative in Small-Claims Enforcement Act of 2019 bill can be viewed at: https://www.congress.gov/bill/116th-congress/house-bill/2426/text

⁴ Id. at 54. The full joint explanatory statement for the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2021 can be viewed at: https://docs.house.gov/billsthisweek/20201221/BILLS-116RCP68-JES-DIVISION-B.pdf