The holidays are upon us — and so too are holiday advertising campaigns. With an unusual holiday season last year, many retailers are gearing up for what they hope to be a robust holiday season. Even with concerns over supply chain issues, retailers and brands are doubling down on holiday advertising campaigns this year and pushing out festive, eye-catching content to lure customers. To stop the Legal Grinch from stealing the gifts from these campaigns, here’s a quick refresher on a few important legal considerations:
E-commerce was already booming when the pandemic struck, and now it feels ubiquitous. Consumers spent $861.12 billion online with U.S. retailers in 2020, up 44.0% from $598.02 billion in 2019, representing 21.3% of total retail sales last year compared with 15.8% the year prior.2 The statistics only underscore what we’re all witnessing — technology stocks appreciating rapidly, a steady drumbeat of brick-and-mortar retailer bankruptcies, shopping mall closings, conversion of massive properties to logistics centers, catch-up efforts by traditional retailers to offer online sales and curbside pickup, and our own increasingly online shopping habits. Even when the sale of goods and services are not executed online, brick-and-mortar sellers are nonetheless utilizing the internet like never before to reach potential customers, educate them about their products, and coax them into stores. Whatever the world looks like after the pandemic ends, these e-commerce gains are likely here to stay.
It has never been more important therefore for brand owners to monitor and protect their brands online. E-commerce is a counterfeiter’s paradise, as explained succinctly by the OECD, “E-commerce platforms represent ideal storefronts for counterfeits and provide powerful platform[s] for counterfeiters and pirates to engage large numbers of potential consumers.”3 Why is this? E-commerce enables counterfeiters to send cheap knockoffs, which garner high margins, to unwary purchasers across the globe with little risk of legal repercussions.4 The first obstacle to legal enforcement is the anonymity afforded by both the internet generally and e-commerce platforms specifically. ICANN’s interpretation of Europe’s GDPR privacy legislation has generated a blackout of Whois information, making it more difficult to identify the perpetrators behind many illicit webshops.5 Moreover, e-commerce platforms do not operate by the same “know your seller” obligations burdening brick-and-mortar retailers. Whereas a brick-and-mortar retailer could be found liable for selling a counterfeit product in its store, and therefore presumably conducts diligence on and obtains contractual protections from each of its sellers, e-commerce platforms are considered mere intermediaries connecting sellers with buyers, ignorant of and without liability for the nature or quality of the products transacted. As summarized by the U.S. Department of Homeland Security, “While the U.S. brick-and-mortar retail store economy has a well-developed regime for licensing, monitoring, and otherwise ensuring the protections of intellectual property rights (IPR), a comparable regime is largely non-existent for international e-commerce sellers.”6
In 2016, Unicolors, Inc., sued H&M for selling clothing that infringed a Unicolor design. The group registration that Unicolors relied on included designs that had not been published as of the publication date set forth on the registrations. A copyright registration certificate is invalid if the registrant obtained it via the submission of false information that, if known to be false, would have resulted in a refusal to register. 17 U.S.C. §411(b)(2) requires that “the court shall request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse the registration.”
Since the SARS-CoV-2 pandemic began, many companies have continued to develop antimicrobial products and devices to address health and safety concerns. Many of those companies are surprised to learn that the way in which they are marketing their products may subject them to regulation by EPA under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).
The fourth blog post in our continuing series on The Trademark Modernization Act of 2020 (TMA) comes on the heels of the July 19, 2021, deadline for the public to submit comments on the proposed rules. As discussed by our TCAM blog here, here, and here, the majority of the TMA is to take effect on December 27, 2021, with the flexible response period provisions following in 2022. This blog post highlights some of the proposed rules relating to attorney recognition, revocation, and withdrawal.
The new ex parte expungement and reexamination proceedings, introduced by the Trademark Modernization Act, are intended to be efficient ways of removing improper trademark registrations from the register.
But will expungement or reexamination always be the best strategy for challenging a trademark registration?
Before a mark can become registered in the United States, a trademark applicant must usually provide evidence that its mark is in use. Furthermore, to maintain the trademark registration the registrant must periodically show it is still using the mark in commerce. Unfortunately, the federal trademark registers are cluttered with marks that are not actually in use, and which potentially block legitimate trademarks from becoming registered. To address these issues, Congress enacted The Trademark Modernization Act of 2020 (TMA) as part of the coronavirus relief bill. See our discussion here. The TMA is to take effect on December 27, 2021, and the U.S. Patent and Trademark Office (USPTO) published its proposed rules to implement provisions of the TMA on May 18, 2021. The USPTO is accepting comments about the proposed rules until July 19, 2021.
Some of the proposed new procedures to streamline the removal of unused trademarks from the register are discussed here. The TMA also provides for flexible office action response periods during the prosecution of a trademark application, which the USPTO expects to go into effect on June 27, 2022. Currently, if an office action issues during the examination of a trademark application, an applicant must file a response within six months. The TMA, however, allows the Examiner to set a response period between 60 days and 6 months, with extensions available. For example, an Examiner may set a shortened period to respond to formalities such as amendments to identifications of goods and services or mark descriptions. To respond, however, to a more complex issue such as a likelihood of confusion refusal, an Examiner may set a longer response period to allow an applicant to investigate and gather evidence.
The Nuts and Bolts of Expungement and Reexamination
You may remember our blog post here, discussing the Trademark Modernization Act of 2020, which became law at the end of last year. To implement the Trademark Modernization Act, the United States Patent and Trademark Office (USPTO) has proposed changes to the trademark rules of practice, which we begin to explore in the following post. Over the coming weeks and months, stay tuned for further commentary, insights and practice tips on these proposed changes!
According to Commissioner for Trademarks David Gooder, during a recent USPTO virtual roundtable event, “protecting the integrity of the US trademark register is, and will remain for some time, one of our top priorities.” Keeping the register clear of improperly obtained trademark registrations helps ensure that legitimate businesses can register their marks with the USPTO, and enforce those rights against infringers.
While the legal industry is typically not known as being cutting edge when it comes to adopting innovative technologies, the U.S. Patent and Trademark Office (USPTO) is taking big steps forward on seeing whether artificial intelligence (AI) may be used during patent and trademark examination to create greater efficiency and consistency with respect to certain routine, high-volume tasks. AI, a technology that refers to “smart” machines that simulate human intelligence, is being examined in many industries to potentially eliminate redundant and routine tasks, and the USPTO is trying to determine whether AI is right for it. Does this mean that future USPTO examiners will be more like C3PO? No. But AI could handle more-routine tasks, which would allow examiners to focus on more-substantive matters related to the examination of trademark and patent filings.
Based on a recent restitution submission prepared by Faegre Drinker, a federal judge in Harrisburg, Pa. awarded Eli Lilly and Company $1.9 million in restitution from an individual convicted of trafficking in drugs bearing counterfeit trademarks of Lilly and other pharmaceutical companies. The defendant in this matter was sentenced to 70 months in prison and ordered to pay $3.6 million in restitution, the remainder split between the other companies based on the defendant’s conduct involving their trademarks. In this instance, crime clearly didn’t pay for the defendant and success was achieved by partnering with our client to fight counterfeiting and illegal importing. So how does this work?