Public Comments on Amending the First Filing Deadline for Affidavits or Declarations of Use or Excusable Nonuse: John B. Farmer

From: John Farmer []
Sent: Tuesday, September 04, 2012 10:55 AM
To: TM FR Notices
Subject: Comment on the Proposal to Change Section 8 Filing Times

Last revised September 4, 2012

In response to the "Request for Comments Regarding Amending the First Filing Deadline for Affidavits or Declarations of Use or Acceptable Nonuse," I submit the following comments.

Overall, while moving forward the time for making a section 8 filing might produce a very small reduction in deadwood, it is an in adequate measure. As discussed below in greater detail, applicants and registrants should be required to prove the usage (or, as applicable, continued usage) of the mark on every item of claimed goods and services.

While I am a former chairman of the Trademark Public Advisory Committee, the comments I submit are only my own and do not represent the views of any other past or present member of that committee.

John B. Farmer's Thoughts on Deadwood Issue

  1. Definitions.

    1. "Deadwood" means coverage in a federal mark registration of goods and/or services on which the mark was not in use as of the filing of the last use declaration.
    2. "G/S" means the goods and/or services claimed in an application or registration.
    3. "Owner(s)" means owners of federal mark registrations and people/entities applying for federal mark registrations.
  1. I. Overall Philosophy on Deadwood. I recommend turning the dial toward requiring Owners to prove usage of marks on all G/S. In other words, the burden of proving/disproving mark usage on G/S should be shifted away from opposition/cancellation petitioners and to Owners. I do so for these reasons:
    1. Reduce Deadwood. We should reduce Deadwood on the Register to a minimum, so marks are available when they should be for use and possible registration.
    2. Lowest Cost Actor. Owners can address mark usage far more cheaply, easily and quickly than an outsider who has concerns about the scope of claimed G/S. Owners know, possess and control such proof.
    3. Who Should Bear the Cost?
      1. The IP Right Claimant Should. The cost of keeping the Register free of Deadwood should be borne by Owners, because they are claiming the benefit of federal registration of a valuable IP right.
      2. Presently Deadwood Cost is Shifted Unfairly to Others. Some complain that raising the burden of proof on Owners will increase their costs. It will, and that's fair. What's at stake is who bears the cost of Deadwood, which includes but is not limited to the cost of eliminating it. Deadwood cost exists now. Presently Deadwood cost is largely borne by parties who are seeking new trademarks (they are blocked improperly and have to pay to achieve removal) and by society as a whole. The ultimate question is whether the cost of Deadwood prevention should be shifted from non-Owners to Owners.
    4. USPTO Fees Might Rise. Filing fees, section 8 fees and section 9 fees might need to rise, or fee reduction might not occur when it otherwise would. That's worthwhile to achieve a Register that's accurate.
      1. Balances Out. While filing fees might rise, expenditures by those trying to find marks available for use and registration would fall. Again, this isn't the case of creating a new cost but, instead, it's shifting the cost to the proper party.
      2. Owners of Substantial Mark Portfolios Should Consider All of Their Costs and Benefits. Most Owners of substantial portfolios of marks ("Large Owners") also are frequently looking to adopt and register additional marks. While a change of this type may increase the expense of registration and registration maintenance, Large Owners also would have lower costs and increased benefits:
        1. More prospective marks would be available for future selection due to Deadwood reduction.
        2. Owners rarely would have to spend time and resources to determine if blocking marks were just Deadwood, because Deadwood would arise almost exclusively from post-declaration abandonment.
        3. Owners would rarely have to use more expensive procedures (cancellation and opposition) to clear away Deadwood registration obstacles when seeking new mark registrations.
    5. More TMEAs? What will this mean for the USPTO? It will mean more work for trademark examining attorneys ("TMEAs") and perhaps will require hiring more TMEAs. This would require adjustment of compensation benchmarks for TMEAs. NTEU and TMEAs should like a change that enhances the job security of present TMEAs (we face a substantial possibility of a double-dip recession; RIF's have happened before) and that might increase the number of TMEAs.
    6. The Reality of Mark Availability. While in theory a cancellation proceeding can be used to attack Deadwood, it's rarely practical. For example, if you're doing preliminary clearance for a new branding, the existence of a registration covering G/S that are too close will usually cause you to discard that mark candidate.
      1. Rarely will you take the time to investigate whether the mark is actually in use on those G/S.
      2. Even if you do, rarely will it be worthwhile to try to work past that hurdle by negotiating with the registration Owner or by a cancellation proceeding. Usually you just move on.
    7. Reduce Registration of Trivial Mark Uses. If you require proof for each element of G/S, it encourages applicants to not seek registration on G/S for which the entity uses the mark only rarely and insignificantly.
    8. Reduce or Eliminate Blunderbuss Registrations. The USPTO has provided statistics showing a spike in trademark registrations that are over 600 characters in length ("Blunderbuss Registrations"). Certainly many if not most of those registrations contain substantial Deadwood. Such a change would prevent or wipe away many Blunderbuss registrations.
    9. Increased Value of Registrations. Such a proven-use regime would increase the value of federal mark registrations by reducing doubts as to their validity.
  2. II. Tier 1 Measures. I recommend adopting each of these methods (these are "Tier 1 Measures"):
    1. Registration - Prove All Uses. For registrations issued based upon declarations of use, require proof of usage on each item of G/S.
    2. Renewals - Prove All Uses. For all renewals - both section 8 and section 9 ("Renewals") - require proof of usage for each item of G/S.
    3. Proof of Usage Methods.
      1. For goods, encourage use of digital photos of the mark on the goods or on a tag attached to the goods.
      2. Find a technologically easy way to submit a webpage as a specimen. Ideally, you would be able to fill an electronic form in which you provide the address of a web page for an item of G/S and the USPTO would take a snapshot of that page and archive it. You would be able to break down a class by G/S if you have to use differing pages for differing G/S.
    1. BFITU - Document Intent. For registrations based upon bona fide intent to use ("BFITU"), require submission of documents evincing a bona fide intent to use.
      1. Create a procedure to keep these documents confidential, because they usually will contain trade secrets.
      2. This creates a fair playing field with use-based applications while not breaching any treaty obligations.
    2. Expungement Procedure. Establish a truncated expungement procedure ("Expungement Procedure") that would be akin to Canadian section 45. This would allow a means to eliminate registrations for marks that have been abandoned in whole or in part between the times when declarations of use must be filed.
      1. The Canadian process is too long for a party making an initial branding decision. We could require the Owner to submit proof of usage in 45 days of petition filing.
        1. You also would have to accept a written excuse for temporary non-use, plus documentation of that excuse.
      2. It would be useful mainly for:
        1. A party issued a 2(d) refusal.
        2. A party committed to a mark such that rebranding is difficult.
      3. This could it be a substitute for some cancellation proceedings.
        1. Thus it would be a tool for removing some blocking marks in applications.
        2. The petition should be allowed to challenge either some or all elements of the G/S and to require specimen proving use on each challenged G/S.
  3. V. Tier 2 Measures. If the Tier 1 Measures are not adopted entirely, then I recommend adopting each of these methods ("Tier 2 Measures"):
    1. Inaccuracy Revocation. Instate a rule that a misrepresentation in a declaration identifying the G/S in use will result in cancellation (or non-issuance) of the entire class of the registration that is affected.
      1. This would be a specialized form of opposition (for use-based applications) and cancellation proceeding.
      2. Don't call this "fraud" as it was under Medinol, as that name implies things and carries baggage this is unnecessary here. Perhaps call it "Inaccuracy Revocation."
      3. Because many registrations were gained in more relaxed times, Inaccuracy Revocation procedure will be available to attack use declarations signed only after the effective date of this new rule. For declarations occurring beforehand, current law would apply (i.e., Bose and its progeny).
      4. Inaccuracy Revocation would not require that the petitioner prove anything about the state of mind of the declarant. Thus, the petitioner would not have to prove that the Owner "should have known" or "must have known" of non-use. The petitioner would prove only standing and non-use.
      5. Yet, the Owner should have an affirmative defense under which it may prove by a preponderance of the evidence that it followed all of the requirements of the declaration and nevertheless made the misrepresentation due to a specific, exculpatory reason. The declarant would have to prove the particulars of that exculpatory reason. A general and undocumented claim of mere inadvertence would not suffice.
        1. The Owner should bear this burden because of its possession of and control over the relevant evidence.
    2. Financial Penalty. Provide for recovery of a fixed-sum monetary penalty by the prevailing petitioner (opposition, cancellation or inaccuracy) from the Owner in cases where a mark registration is cancelled or redacted (i.e., G/S are removed due to non-use of the mark on those G/S) because of a false statement of use in a declaration of use.
      1. The penalty would be per class.
      2. The penalty should be large enough to shape behavior but not so large that it would swamp a typical small entity. Perhaps $10,000/class? You could perhaps have two penalty sizes - small entity and non-small entity.
      3. Retraction Option to Avoid Penalty. Provide these means for an Owner to avoid a penalty, to encourage good behavior:
        1. If the petitioner writes to Owner at its USPTO correspondence address (by a means proving delivery, such as FedEx) demanding that it voluntarily cancel specified G/S from a registration due to apparent non-use/abandonment, warns of the financial penalty, and if the Owner complies within 30 days, that ends the matter and there is no financial penalty.
        2. If the petitioner did not send such a pre-petition letter, then, once the Owner is served with the petition, there would be no penalty if the Owner voluntarily cancels all G/S for which there was non-use/abandonment. If the Owner voluntarily cancels from some G/S but the petitioner presses on and obtains cancellation of other G/S, then the penalty still will be imposed.
        3. There would need to be a mechanism to encourage voluntary penalty payment. Ideas include:
          1. Suspending the affected registration until the penalty is paid.
          2. Until the penalty is paid, bar that Owner from filing any new applications; any section 8, 9 or 15 affidavits; any SOU or amendment to allege use; and any extension request.
    3. A Warning Screen. Add additional, stand-alone screen in the online application process, before the declaration, giving a warning.
      1. Sample Language: "By signing the declaration on the next screen, you will be stating that the mark applicant/owner is PRESENTLY using the mark on each and every item of goods and services in your description of goods and services. Signing a false declaration can have certain negative consequences for the registration, such as cancellation and financial penalties. Also, if you are an attorney, signing a false declaration also can result in ethical sanctions against you."
        1. The filer would have to click a button labeled "I understand" to proceed.
        2. The language "declaration" would be a link to the language of the declaration.
        3. The language "on each and every item of goods and services" would be a link to an explanation of this requirement - perhaps to the relevant TMEP section.
        4. The language "negative consequences for the registration, such as cancellation and financial penalties" would be a link to information about what such consequences may be.
          1. "and financial penalties" would be included only if we adopt the financial penalty, above.
        5. The language "ethical sanctions" would be a link to information about the trouble an attorney can get into for signing a false declaration.
        6. All such links above would open the linked explanation in new web browser windows.
    4. Random Audits. Conduct random audits of issued registrations for which proof of usage has been accepted.
      1. If and when possible, randomize the audit based upon individual G/S. If that is impossible or impractical, randomize it based upon the number of characters in the G/S description.
        1. For example, you could audit every registration that contains the 500th good/service that goes past the post of registration, or every registration that contains the 10,000th character in the G/S description that goes past the post of registration.
        2. Thus, the longer your G/S description, the more likely you are to be audited.
      2. The audit would require proof of usage at the time of the declaration signing for each item of G/S.
      3. Perhaps utilize the same financial penalty and penalty-avoidance scheme outlined above.
      4. If such audits frequently find Deadwood, this should reopen discussion of whether the Tier 1 options should be adopted.
    5. Respectfully submitted,

      John B. Farmer

      Leading-Edge Law Group, PLC

      804.343.3221 -- direct voice

      Wilton Park

      4905 Dickens Road

      Suite 100

      Richmond, Virginia 23230