Expedited Cancellation Pilot Program

USPTO random audits of post registration maintenance filings for registrations suggested that over half of active registrations include some goods or services for which the registered mark is not actually being used. Registered trademarks that are not actually in use in commerce may block other trademark owners from registering their marks. Stakeholders have voiced interest in making challenges to such registrations faster and less burdensome than in existing cancellation proceedings that may take many months to resolve, depending on the filings and conduct of the parties.

The TTAB discussed with stakeholder groups and the public the possibility of developing rules for a specific "streamlined cancellation" proceeding for handling of only abandonment and nonuse claims. In general, the model discussed was anticipated to require:

• The plaintiff’s initial submission to include supporting evidence and brief
• The defendant’s response to include counter evidence and brief
• The opportunity for the plaintiff to reply
• No discovery, except for a minimal amount of discovery with respect to plaintiff's entitlement to a statutory cause of action (previously referred to as "standing")

Following public comments that included some reservations about the potential utility of "streamlined cancellation" proceedings, the Board launched the expedited cancellation pilot program. The cancellation proceedings identified as potential candidates for the pilot program met certain criteria discussed below and commenced between March 2, 2018 and February 28, 2020.

Part of a larger effort

The expedited cancellation pilot program was only one component of the USPTO's efforts to ensure the accuracy and integrity of the Trademark Register. Other initiatives include: the random audits of post-registration maintenance filings; the enhanced readability of the use declarations filed with the applications and post registration filings; and the requirement that foreign-domiciled applicants, registrants and parties to a proceeding be represented by U.S.-licensed attorneys. The USPTO continues to explore other options.

Under the pilot, the TTAB identified newly-filed cancellation proceedings limited to abandonment or nonuse claims, and which did not result in default judgment, to engage with and encourage the parties to agree to some form of the Board's existing Accelerated Case Resolution (ACR) procedures. The TTAB has an established practice of offering ACR in inter partes proceedings to simplify and speed up proceedings, allowing the parties to save time and expense. The standards of proof in an ACR proceeding remain the same as those in a traditional proceeding, and a final decision rendered under ACR may be appealed in the same manner and under the same time frames as non-ACR decisions.

Selection for the pilot

Between March 2018 and February 2020, the TTAB identified instituted cancellations involving only abandonment or nonuse grounds as potentially eligible for the program. In such cases, once an answer was filed, the assigned TTAB interlocutory attorney informed the parties that the TTAB would participate in their mandatory settlement and discovery planning conference (discovery conference). The interlocutory attorney also advised the parties that they should familiarize themselves with ACR in advance of the conference (such as by reviewing TBMP §§ 528.05(a)(2) and 702.04) and should be prepared to discuss any specific ACR measures to which they might agree.

The discovery conference

Both the interlocutory attorney and one of the administrative trademark judges supervising the pilot program joined in the conference. The judge who joined in the conference would not later be assigned to the panel of judges that would be responsible for deciding the case on the merits. In addition to the usual subjects covered in a discovery conference, these conferences explored potential stipulations of fact, evidentiary stipulations, ways to limit discovery, and the possible use of the "summary judgment ACR model" to abbreviate the proceeding by having the Board treat summary judgment motion filings and accompanying evidence as the final record and briefing, and decide disputed factual issues.

The decision

The TTAB makes every effort to issue final decisions in ACR cases within 50 days once they are ready for decision. By reducing the length and complexity of the case, ACR provides a more efficient and economical alternative to the traditional full cancellation proceeding.

For each case identified as a potential candidate for an expedited proceeding, no preliminary judgment was made as to the likely outcome of the case. Rather, the case was identified as a candidate for inclusion in the pilot because it involved only claims of nonuse and/or abandonment and because use of ACR was seen as likely to save the parties time and expense, and lead to a quicker resolution of the case.

The pilot measured or assessed:

• The rates of default judgment for all cancellation cases and those with specific claims.
• The frequency of parties' willingness to agree to ACR in some form.
• Concerns expressed about ACR.
• The types of ACR measures preferred.
• How effective such measures were in developing the record and issues.
• The progress and timing of ACR pilot cases.
• Withdrawals and settlements.

Cases selected for the pilot were commenced between March 2, 2018 and February 28, 2020. This two-year period provided the Board with sufficient information to assess the utility of early intervention by Board personnel in the discovery conference and the interest of parties in using ACR or some other form of expedited proceedings in abandonment and nonuse cases. The pilot helped identify the type of cancellation petitions most suitable for an expedited proceeding and the most effective procedures.

Collecting information on the default judgment rate

Obtaining a default judgment in a TTAB cancellation proceeding is an efficient way to remove registrations challenged through abandonment or nonuse claims. The overall default judgment rate (44%) is fairly high, and the pilot program yielded information about the default rate specifically for abandonment and nonuse claims.

Identifying the type of cancellation petitions most suitable for an expedited proceeding

Through the pilot, the TTAB gained insight on how best to identify early-on which cases can appropriately be expedited. On the opposite end of the spectrum from cases in which default judgment is entered, some abandonment and nonuse cancellation claims are hard fought through trial, with large evidentiary records. These latter cases likely would not be suitable for an expedited proceeding. See, e.g., Tao Licensing, LLC v. Bender Consulting Ltd., 125 USPQ2d 1043 (TTAB 2017) (Cancellation No. 92057132); Exec. Coach Builders, Inc. v. SPV Coach Co., 123 USPQ2d 1175 (TTAB 2017) (Opposition No. 91212312). 

Results of eligible cases

• The total number of cancellation proceedings eligible for the pilot (with only abandonment and/or nonuse claim(s), no default judgment, and in which an answer was filed that included no counterclaims) was 205.
• The Board participated in 115 discovery conferences in pilot-eligible cases. In the remaining cases, the proceedings either terminated or were suspended prior to the conference, or the case was rendered ineligible by an amended petition or answer that raised claims in addition to abandonment and nonuse.
• In a total of 21 cases, the parties agreed to some type of ACR measures.
  • In 15 cases, the parties agreed to ACR that included the summary judgment model. In 9 of these cases, the parties also agreed either to informally exchange documents and information, or to accelerate the schedule for discovery. Of those 9 cases, 6 reached settlements soon after discovery or the information exchange.
  • In an additional 4 cases, the parties did not agree to other ACR measures but agreed to an early exchange of documents or information. In all of those cases, the petitions to cancel subsequently were withdrawn.
  • In 2 other cases, the parties agreed to exclude expert testimony and made other stipulations to streamline the proceedings.
• Only three cases in the pilot reached a final decision on the merits (two of the three were precedential). They were: TV Azteca, S.A.B. de C.V. v. Martin, 128 USPQ2d 1786 (TTAB 2018) (Cancellation No. 92068042 and Wirecard AG v. Striatum Ventures B.V., 2020 USPQ2d 10086 (TTAB 2020) (Cancellation No. 92069781; and Method Pharmaceuticals, LLC v. Pharma 101, LLC, Cancellation No. 92068970 (TTAB August 17, 2020).
• Of the 205 cases eligible for the pilot, 166 of the proceedings terminated prior to readiness for a final decision, mostly as a result of withdrawal and/or settlement, and 9 of the cases currently are suspended either for settlement discussions, pending motions, or pending disposition of a civil action.

Overall results

• Abandonment is the most common claim in cancellation proceedings, included in 34% of them.
  • Likelihood of confusion is the second most common, in 27%.
• The default judgment rate for all cancellation proceedings is 44%.
• The default judgment rate for cancellation proceedings that include a nonuse or abandonment claim is 49%.
• The default judgment rate for proceedings in which abandonment is the only claim is 60%.

The expedited cancellation pilot program confirmed that TTAB cancellation proceedings in general provide an effective means for challenging registered marks that are not in use and may prevent others from registering their marks. Cancellation proceedings play an important part in ensuring the accuracy and integrity of the Trademark Register. With a high default judgment rate overall, and a much higher default judgment rate where the only claim is abandonment, cancellation proceedings are efficient tools for removing registrations for marks that are not in use and have been abandoned. Outside of default situations, counsel in cancellations based on nonuse and abandonment typically expressed a need for discovery to explore the nature and degree of use in commerce, and in the case of abandonment, information about subjective intent. The perceived need for discovery on those matters significantly lessened opportunities to streamline proceedings through an early commitment to ACR. However, some parties showed a willingness to cooperate in exchanging information on an accelerated schedule, facilitating a quicker and easier resolution of the matter either through settlement or the narrowing of issues in dispute.

Through the 115 pilot program discovery conferences conducted, the Board found that parties were interested in learning about ACR options but were reluctant to commit to ACR at the early stage of the discovery conference. Instead, parties preferred to exchange some discovery, investigate possible settlement through the informal exchange of information, and discuss ACR options only if the proceeding would move forward. While some parties followed up after the conference to explore ACR further, many more subsequently settled without further TTAB involvement.

Going forward, the Board recommends that the parties be encouraged to prepare for and conduct their discovery conferences in a constructive way, including giving more meaningful consideration to early exchanges of information or documents, and of ACR options in connection with the required discussion of ACR in the discovery conference. The parties then should take some time to discuss possible settlement and exchange discovery and information, as appropriate. Once it appears the parties are going forward with the cancellation, they are invited to contact the assigned interlocutory attorney to arrange a conference to discuss stipulations and ACR options that may make the proceeding more efficient.