Last week, I enjoyed the privilege of returning to Iowa City (where it all began) for Executive Leadership Board Meetings at the University of Iowa College of Pharmacy. Great meetings there!

During a stroll through downtown, I was reminded of Deadwood, a legendary Iowa City tavern, so I snapped a few photos, having long forgotten the creative tagline — Institute of Higher Learning:

Deadwood has special meaning in the trademark world. A federally-registered mark no longer in use and legally abandoned, is considered deadwood, making it ripe for and subject to cancellation.

We’ve written before — here and here — about the challenges of trademark deadwood that face brand owners, and we’ve also highlighted the USPTO’s proposed help on the way, here and here.

Yet, until there is perfect alignment between every federal registration and corresponding actual use, the problem of deadwood will remain, even if it is less frequently seen by brand owners.

What we haven’t discussed much before is how to guage whether a registration is deadwood. The most common approach is to have a routine, professional, factual investigation conducted.

Turns out though, even reputable, professional investigations that reasonably seem to point to non-use and abandonment are not perfect, nor are they a guarantee of all the relevant facts.

For example, years ago, we received a petition to cancel our client’s federal trademark registration on abandonment grounds. Petitioner’s counsel was overly-confident in the assertion of non-use.

The investigation even noted that the mark no longer appeared on our client’s product packaging and labeling. Sadly for the Petitioner though, the mark was still in use on point of sale materials.

As a result, the matter resolved very differently than expected for Petitioner. Our client ended up selling the registered mark and receiving a royalty free license back to continue using the mark.

Back to the Deadwood mark shown above, technically it is not deadwood at all, first, because it is not federally-registered, and second, it is very much in use, posing a very different kind of issue.

Undoubtedly there are unregistered rights in the Deadwood mark, and the owner could come out of the woodwork to oppose or cancel another’s registration even up to five years after issuance.

Given the uncertainty of when and if the owner of an earlier unregistered mark wakes up to the importance of federal registration, it is pretty risky to ignore these kinds of uses during clearance.

Finally, given the uncertain and imperfect nature of trademark investigations, it’s best to think ahead and have some alternative leverage in mind before chopping at wood assuming its dead.

It’s about that time of year, when you may be thinking about tax season. Tax day is still a few months away, but you may already have received your W-2, or 1099, (or other various assortments of mysterious numbers and letters), which will determine how much you’ll owe Uncle Sam (or perhaps a nice refund is on the way?). You might also be thinking about the possibility of an audit. Depending on your particular business or personal income situation, the chances of an audit may be quite small, but it’s hard not to think about.

What you’re probably not thinking about, however, is an audit by the U.S. Patent and Trademark Office (USPTO), regarding any trademark registrations that you own. It can happen. Luckily, a trademark registration audit is not nearly as onerous or time-consuming as a tax audit. For any trademark owners or practitioners out there, who may receive an audit this year, here’s a quick overview and some tips.

In March of last year, following a two-year pilot program, the USPTO implemented new rules, establishing a random audit program for trademark registrations. The audit program is targeted at the required maintenance filings (“Declarations of Use”) for any registrations with more than one good or service per class. The goal of the audit program is to randomly request additional verification, that the registered mark is actually being used in commerce with the identified goods or services (which is required to maintain a valid trademark registration). Specifically, each year about 10% of all trademark registrations with recent maintenance filings will be randomly selected for an audit.

The rationale for the program is that under current rules, registration maintenance filings (every 5 years for the first 10 years, then every 10 years after that), only require the registrant to submit proof of use (a “specimen”) for one of the identified goods or services in each class, rather than all identified goods or services. Therefore, this can lead to invalid (or partially invalid) registrations sitting on the register for years (referred to as “deadwood” registrations), that identify goods or services for which the mark is no longer being used in commerce. The goal of the audit program, therefore, is to “to assess and promote the accuracy and integrity of the register” (Trademark Rule 2.161(h), as amended) by cleaning up the deadwood.

When a registration is randomly selected for an audit, the USPTO will issue a “Post-Registration Office Action,” stating, “Registration Selected for Audit.”  This Office Action will require the registrant to submit additional specimens for two goods or services, which are randomly selected among all the goods and services identified in the registration. Linked here is a sample of such an audit Office Action–this should look the same for everyone, other than the registration data.

The electronic response form is straightforward, which requires the registrant to submit acceptable specimens of use according to the applicable specimen rules (see TMEP §§ 904, 1301.04), and a verified statement of use. However, if it turns out that the registrant was not using the mark in commerce for the selected goods/services, the next step is to request deletion of those goods or services from the registration.  If deletion is requested, the USPTO, unfortunately, will then expand the audit to require specimens for all remaining goods or services identified in the registration.

Here are a few tips for dealing with the new audit system, for both trademark owners and practitioners:

  • Carefully Confirm Use for All Goods and Services; Amend Registration as Needed: When it comes time for filing the Declaration of Use, confirm use in commerce of the registered mark for all identified goods and services (even though only one specimen is required), and if use has ceased for any goods and services, they should be deleted from the registration. That way, there won’t be any hiccups when it comes time for an audit.
  • Get Ready for Expansion of the Audit if Deletion Is Requested: If you must delete any of the goods or services selected in the audit for non-use, the audit will expand to all goods or services identified.  Therefore, if any deletion is required, you should comb through all identified goods/services and make any necessary deletions at the same time–don’t just delete those currently selected in the audit. Otherwise, after the audit expands, it will further delay the process if you need to request more deletions.
  • File a Timely Response to the Post-Registration Audit, or Entire Registration will be Cancelled: There is a six-month deadline for responding to the audit issued in the Post-Registration Office Action. One might think that without a timely response, only the audited goods/services would be deleted by the USPTO. But unfortunately, the consequence is harsher than that–if a response is not submitted by the six-month deadline, the entire registration will be cancelled.

What do you think about the new audit process? Is it worth it having the deadwood registrations cleaned up, which can be beneficial from both a prosecution and enforcement perspective? Or are the benefits outweighed by the additional administrative time and cost associated with gathering more specimens and responding to these Office Actions? Perhaps that answer might depend on whether you fall within the audited 10% this year–so, good luck to all!

Section 2(d) of the Trademark Act is the statutory basis for refusing registration based on likelihood of confusion with another mark. It is invoked on an ex parte basis by USPTO Examining Attorneys, and it is also raised in the context of inter partes cases between adversaries.

When an applicant seeking to register its mark is refused registration based on Section 2(d), it is not uncommon for applicant’s counsel to immediately argue for coexistence, explaining all the reasons why no likelihood of confusion exists, and sometimes that strategy will work.

My preference is to pause after receiving the refusal, to assess the strength of the refusal, to examine the cited mark and registration or application, to consider the relative priority positions, and determine the real necessity for and consequences of arguing no likelihood of confusion.

For example, if it could be determined that the cited registration is actually “deadwood,” the mark no longer in use and abandoned, wouldn’t it be better to hit the pause button on the refusal while the deadwood registration is removed through the filing of a petition to cancel?

Using this approach could prevent the narrowing of applicant’s trademark rights and protect the applicant from taking public positions that could be used against it by adversaries in a future enforcement matter. This strategy is frequently used by sophisticated trademark counsel.

What if the cited prior registration is not “deadwood” though, and the applicant actually has priority of use — if so, and the cited registration is not yet five years old, then it’s fair to ask why arguing for coexistence makes any sense at all, at least as an opening strategy.

Many experienced trademark attorneys with those facts would recognize the leverage given by the refusal and, at a minimum, reach out to counsel for the owner of the cited mark to discuss the multitude of options available to applicant as the senior user of the mark in question.

A tool infrequently used by trademark counsel is the option of a petition for partial cancellation, by invoking the remedy found in Section 18 of the Trademark Act. This can be a powerful tool when an applicant lacks priority and/or the cited registration is more than 5 years old.

Under Section 18, the TTAB may modify or partially cancel a cited registration by limiting and narrowing the specified goods or services. This can be a particularly powerful tool, when an applicant’s options are otherwise quite limited, without priority, or if facing an old registration.

To properly employ this tool, applicant’s counsel must plead and prove that the proposed narrowing in the cited registration would avoid a likelihood of confusion, and that the proposed narrowing of the goods/services description is consistent with the actual marketplace usage.

Think of it as a way to narrow a blocking registration enough to allow for coexistence of applicant’s mark on the Principal Register — it is a way to cure the problem of an over-broad registration, making room for your client’s pending application, if the facts support coexistence.

Even if an applicant may not have the appetite for seeing a Section 18 petition for partial cancellation through to conclusion, it can be a powerful attention-getting device that may level the playing field and spur a dialogue between the parties to explore the possibility of consent.

On a related note, in the context of possible strategies ripe for an applicant whose mark has been opposed by a registration owner having an over-broad description of goods/services, you may recall that we wondered out loud whether Section 18 might become a creative solution:

“I’m looking more forward to hearing about what in-house, corporate trademark counsel think about the decision and how it will influence their trademark enforcement strategies. . . .

But, in the meantime, what no one seems to be talking about (yet) is how the Supreme Court’s B&B Hardware decision might impact the lingering concerns surrounding trademark bullying. (I haven’t seen anyone talking about Section 18 counterclaims as a creative response strategy either, but we’ll save that topic for another day).

Although trademark bullying concerns were not before the Supreme Court, it seems likely this decision scored a victory for those who might fall into the category of trademark bullies. And, as you may recall, a couple of years ago, the Supreme Court didn’t allow trademark bullying concerns to influence its interpretation of the laws in question there: Supreme Court Upholds Nike’s Promise to “Break the Wrist, and Walk Away”.”

To the extent you’re in the Twin Cities or can get here fast, we’ll explore this topic more in tomorrow’s continuing legal education program called “Mastering U.S. Trademark Registration Practice,” during my session at 2:35 PM session entitled: “Strategic Use of Trademark Trial and Appeal Board Proceedings to Advance Trademark Registration Goals.

We hope to see you there, for details on registration, here is the link to the Minnesota Continuing Legal Education site. If you can’t make it tomorrow, the video replay of tomorrow’s live session is Monday March 7, 2016.