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Beyond The Stimulus Check: How The Latest COVID-19 Stimulus Relief Bill May Affect Your Intellectual Property

Client Updates

Buried within the nearly 5,600-page Consolidated Appropriations Act, 2021, the bill providing the federal government’s latest installment of stimulus relief for the COVID-19 pandemic that was signed into law by President Trump on December 27, 2020, is legislation impacting most forms of intellectual property, including trademarks, copyrights, and patents.  After the Act goes completely into effect later this year, third parties will be able to challenge trademark registrations and applications through the U.S. Patent and Trademark Office (“USPTO”), a copyright small-claims forum will make it easier for professional creators and small businesses to enforce their rights, biological product sponsors will have to disclose their patents to the Food and Drug Administration (“FDA”), and more.

Trademarks

The Trademark Modernization Act of 2020 (“TM Act”) amends the Lanham Act in several ways that impact many areas of trademark practice, including prosecution, registration, and litigation. 

Trademark Prosecution Procedures.  The TM Act changes two procedures related to trademark prosecution before the USPTO.  First, the TM Act amends 15 U.S.C. § 1051 by adding a new subsection that allows third parties to submit evidence for consideration during prosecution of a trademark application that is relevant to a ground for refusing registration.1  Such evidence may relate to a third party’s prior rights with which the trademark application conflicts.  The USPTO has already issued rules setting out procedures and a $50 fee for these third-party submissions.2  The new amendment, however, does not go into effect until December 27, 2021.3 At that time, trademark owners may want to consider utilizing a trademark monitoring service to identify any new, potentially conflicting trademark applications in order to take advantage for these early protest procedures.    

Second, the TM Act amends 15 U.S.C. § 1062(b) to give the USPTO flexibility to set shorter deadlines for trademark applicants to reply or amend their applications.4  The USPTO is authorized to set response deadlines between 60 days and six months.5  However, as with patent prosecution, extensions of time are available for any response deadlines less than six months, up to the traditional six-month period.6  Trademark practitioners should pay close attention to response deadlines to avoid having to pay the yet-to-be determined extension of time fees resulting from any shortened deadlines.

Ex Parte Registration Challenges.  Aimed at combating an increasing number of false and inaccurate use claims, the TM Act adds Sections 16A and 16B to the Lanham Act to create ex parte expungement and reexamination procedures through the USPTO for challenging registrations based on lack of use in commerce.  Under Section 16A, any person may file a petition to expunge a registration of a mark on the basis that the mark has never been used in commerce on or in connection with some or all of the goods or services recited in the registration.7  A petition to expunge may be filed at any time following the expiration of three years after the date of registration and before the expiration of ten years after the date of registration.8  

Under Section 16B, any person may file a petition to reexamine a registration of a mark on the basis that the mark was not in use in commerce on or in connection with some or all of the goods or services recited in the registration on or before the relevant date.9  A petition for reexamination must be filed before the fifth anniversary of registration of a mark registered based on use in commerce.10

A petition for either expungement or reexamination must set forth elements of a “reasonable investigation” that the petitioner conducted to determine that the mark has never been used in commerce and include supporting evidence.11  The Director of the USPTO makes a final and non-reviewable determination about whether or not to institute an ex parte proceeding.12  If the proceeding is instituted, a trademark examiner will reexamine the registration, during which time the registrant may respond with evidence of use or evidence showing that any nonuse is due to special circumstances that excuse such nonuse.13  For each good or service for which it is determined that a mark has never been used in commerce and that such nonuse is not excusable, the registration will be cancelled for each such good or service.14

Both applicants and owners should watch for more information as the USPTO establishes and implements regulations, procedures, and fees for these ex parte proceedings later this year before they go into effect on December 27, 2021.15   A trademark applicant may be able to utilize these proceedings to cancel unused or fraudulent registrations that prevent the applicant from obtaining their desired mark.  A trademark owner, in contrast, should be sure to use their mark in commerce and to document such use in the event their registration becomes the subject of an ex parte proceeding.

Injunctive Relief in Federal Court.  Finally, the TM Act amends 15 U.S.C. § 1116 to resolve a split among circuit courts16  by establishing that trademark plaintiffs seeking injunctions are entitled to a rebuttable presumption of irreparable harm upon a finding of infringement for a permanent injunction or upon a finding of likelihood of success on the merit for a preliminary injunction.17  This change may lead to an uptick in the issuance of permanent and preliminary injunctions, particularly in circuits were irreparable harm was not previously presumed.

Copyrights

Copyright Alternative in Small-Claims Enforcement Act of 2020 (“CASE Act”).  The CASE Act establishes a Copyright Claims Board (“Board”) within the U.S. Copyright Office to serve as an alternative forum to the U.S. district courts where parties may seek to resolve certain copyright claims.18 The Board will consist of three full-time Copyright Claims Officers who are attorneys with at least seven years of legal experience, including at least two officers with substantial experience with copyright infringement claims.  The Copyright Claims Officers will be assisted by two Copyright Claims Attorneys who each must have at least three years of substantial experience in copyright law.

Participation in a Board proceeding is on a voluntary basis for respondents without waiving any right to instead pursue a claim in a U.S. district court.19  This means a respondent may opt out, forcing a claimant to pursue its claim in a U.S. district court instead.  Claims brought before the Board may involve any category of copyrighted work, and the Board may award actual damages and profits or statutory damages of $15,000 for each timely-registered work infringed or $7,500 for each work infringed if not timely registered.20 However, the maximum damages (exclusive of any attorneys’ fees and costs) that may be awarded to a party in any proceeding may not exceed $30,000.21

This new forum could be a significant cost-effective alternative to costly U.S. district court litigation, particularly for professional creators and small businesses that may not be able to afford to enforce their rights when someone infringes their copyrighted works.  Stay tuned for more details over the next year as the Copyright Office will conduct rulemaking proceedings to implement regulations needed to make the Board operational.

Unauthorized Streaming.  The Consolidated Appropriations Act, 2021, also amends the Copyright Act to close a “commercial streaming” loophole.22 This legislation introduced by U.S. Senator Thom Tillis (R-NC), Chairman of the Senate Judiciary Subcommittee on Intellectual Property, seeks to punish large-scale, for-profit streaming services that illegally stream copyrighted material.23  Such streaming reportedly costs the U.S. economy nearly $30 billion every year.24  Previously, only criminal infringement of a copyright via reproduction and distribution could be charged as a felony.25  Now, however, under new Section 18 U.S.C. § 2319C, criminal infringement via streaming is punishable as a felony and may result in fines and/or up to three years of imprisonment.26 The maximum time of imprisonment increases to five years if the offense was committed in connection with a work being prepared for commercial public performance and to ten years for subsequent offenses.27

Patents

Biological Product Patent Transparency.  The FDA’s Purple Book contains information about biological products, including biosimilars and interchangeable biological products, such as vaccine, approved or licensed by the FDA under the Public Health Service Act.  Unlike the FDA’s Orange Book for generic drugs, patents covering biological products have not been included in the Purple Book.  This is set to change later this year when a biological product sponsor is required to disclose its patent information to the FDA and the FDA, in turn, is required to include that information in the Purple Book.28  The expectation is that this disclosure requirement will promote competition among biological products like it has for generic drugs.

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These changes, while potentially minor, span all areas of intellectual property law and in time could have more significant impacts as practitioners adapt to and use them.



1 Consolidated Appropriations Act, 2021, H.R. 133, 116th Cong., Div. Q, Title II § 223 (2020).

2 See 37 C.F.R. § 2.149.

3 Consolidated Appropriations Act, 2021, H.R. 133, 116th Cong., Div. Q, Title II § 223 (2020).

4 Id. at § 224.

5 Id.

6 Id.

7 Id. at § 225(a).

8 Id.  There is one limited exception as a gap measure: for a three-year period following enactment of the TM Act, petitions to expunge may be filed on registrations that have been registered for more than ten years.  Id.

9 Id. at § 225(c).  Depending upon the filing basis, the relevant date may be the date on which the application was initially filed or a later date of alleged use in connection with the application.  Id.

10 Id.

11 Id. at § 225(a), (c).

12 Id. Alternatively, the Director may, on the Director’s own initiative, institute an ex parte expungement or reexamination proceeding if the Director discovers information that supports a prima facie case for either proceeding.  Id.

13 Id.

14 Id.
15 Id. at § 225(f), (g).

16 Some circuit courts, for instance, the Fifth and Sixth Circuits, have endorsed a presumption of irreparable harm upon a showing of success on the merits.  See, e.g., Abraham v. Alpha Chi Omega, 708 F.3d 614, 627 (5th Cir. 2013); PGP, LLC v. TPII, LLC, 734 Fed. App’x. 330, 332 (6th Cir. 2018).  Other circuit courts, for example, the Third, Ninth, and Eleventh Circuits, have rejected a presumption of irreparable harm.  See, e.g., Ferring Pharms., Inc. v. Watson Pharm., Inc., 765 F.3d 205, 217 (3d Cir. 2014); Herb Reed Enters., LLC v. Florida Entm’t Mgmt., Inc., 736 F.3d 1239, 1250 (9th Cir. 2013); Commodores Entm’t Corp. v. McClary, 648 Fed. App’x. 771, 777 (11th Cir. 2016) (per curiam).  Still other circuit courts, like the First and Second Circuits, acknowledged the issue but declined to address it.  See, e.g., Mercado-Salinas v. Bart Enters. Int’l, 671 F.3d 12, 19 n.7 (1st Cir. 2011); U.S. Polo Ass’n, Inc. v. PRL USA Holdings, Inc., 511 Fed. App’x 81, 85 (2d Cir. 2013).

17 Id. at § 226.

18 Consolidated Appropriations Act, 2021, H.R. 133, 116th Cong., Div. Q, Title II § 212 (2020).  Such claims include: (1) infringement claims; (2) declarations of noninfringement; (3) misrepresentation claims under § 512(f) of the Digital Millennium Copyright Act; (4) related counterclaims asserted only against the claimant in the proceeding; and (5) legal or equitable defenses available under the law.  Id.

19 Id.

20 Id.

21 Id.

22 Consolidated Appropriations Act, 2021, H.R. 133, 116th Cong., Div. Q, Title II § 211 (2020).

23 https://www.tillis.senate.gov/2020/12/tillis-releases-text-of-bipartisan-legislation-to-fight-illegal-streaming-by-criminal-organizations.

24 Id.

25 See 18 U.S.C. § 2319; 17 U.S.C § 506(a).

26 Consolidated Appropriations Act, 2021, H.R. 133, 116th Cong., Div. Q, Title II § 211 (2020).

27 Id.

28 Consolidated Appropriations Act, 2021, H.R. 133, 116th Cong., Div. BB, Title III § 325 (2020).

 

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