Author: Matthew D. Asbell | Practices:

Chipping Away at the Dead Wood and Other Registered-But-Unused Marks

An ongoing issue faced by the United States Patent and Trademark Office (USPTO) has been the number of trademark registrations granted or retained for over-inclusive identifications of goods and/or services where the registrants do not actually use or intend to use the marks on all of the goods and services listed in the registration. Indeed, some registrations remain in effect even though the owner may no longer use the marks on any of the goods or services. These registrations, referred to as “dead wood,” as well as another category in which the marks were registered without ever having been used, are a concern because they block others from legitimately registering and using similar marks for similar goods or services. Those parties then need to take a substantial risk and initiate cancellation proceedings that can be costly over time if contested. The goal of the USPTO is to ensure the accuracy and preserve the integrity of the Trademark Register by certifying that all registered marks are in use in relation to all of the specified goods and/or services.

The “dead wood” problem arises in part because of the perception of many foreign trademark owners and practitioners that the registration must include a comprehensive list of all of the goods and services in use or intended to be used as well as those that might be of concern if registered by another party using a similar mark. Many foreign jurisdictions operate on a first-to-file basis without requirements to commence or prove use, and some even allow registrations covering entire classes of goods or services. Foreign owners are permitted to file applications in the United States based on their broad foreign rights, and need not always prove use to obtain a registration. Moreover, some of those jurisdictions in which examination includes relative grounds of refusal can be very rigid in considering the similarity of goods or services between a prior registration and a pending application. These aspects in combination with the specificity required by the USPTO in describing goods and services and a lack of clarity, especially among non-English speakers, as to the exact scope of any one particular acceptable description such as those appearing in the USPTO’s ID Manual create an environment where foreign applicants include many more goods and services than may be needed in their applications.

Domestic applicants may also apply for unnecessarily broad lists of goods or services, and in devoting less attention to the trademark registration process than their attorneys might want, they may unwittingly disregard guidance to limit identifications of goods and services or to collect and retain use evidence. There may also be registered marks in which not all goods and services are in use arising from a tendency of owners to try to grab more than is needed as a defensive buffer against competitive use of similar marks. The latter especially has been the focus of adjudication over the last decade.

The issue has come before the USPTO Trademark Trial and Appeal Board (TTAB) and the courts in cases where the opposers of trademark applications and petitioners to cancel trademark registrations have alleged that the owners fraudulently applied for or registered their marks in that they made material misrepresentations regarding use of their marks in relation to some or all of the identified goods and services. In Medinol Ltd. v. Neuro Vasx, Inc., Neuro Vasx, when filing an amendment to allege use of their trademark NEUROVASX for “medical devices, namely, neurological stents and catheters” in order to obtain their registration, failed to delete “stents” from their identification, when the mark was used only in relation to “catheters.” In a decision that has been criticized for being unduly harsh, the TTAB canceled the entire registration on grounds of fraud because Neuro Vasx knew at the time it alleged use that such use was limited to “catheters” and its failure to delete “stents” was a material misrepresentation in violation of the sworn oath it submitted. Following Medinol for a period of about six years, numerous registrations were canceled in their entirety or in relation to entire classes of goods or services on grounds of “fraud before the USPTO.”

Then, in In re Bose Corp., the U.S. Court of Appeals for the Federal Circuit raised the standard for proving fraud to such an extent that it became nearly impossible to cancel a registration on this ground. When Bose opposed an application for HEXAWAVE by Hexawave Inc. based on Bose’s prior registration for WAVE, Hexawave counterclaimed for cancellation of the registration on the ground that Bose committed fraud in its renewal application by claiming use on all of the goods listed in the registration, when in fact it no longer manufactured or sold the audio tape recorders and players listed in the registration. The court held that fraud requires proof of “willful deceit.” As the court determined that Bose’s renewal in relation to all of the goods was based on a mistaken belief, Hexawave failed to show the requisite intent. Following In re Bose, the assertion of fraud on the USPTO as a ground for opposition or cancellation was considered unavailable in most cases because of the difficulty of showing an intent to deceive. Essentially, fraud was thought “dead,” and as a partial result, “dead wood” and many other registrations for unused marks were able to remain on the register and “live on” as it became more difficult to cancel them.
While cancellation of a registration in whole or in part on the ground of “nonuse” remains available, petitioners face a risk and potentially significant cost in pursuing such proceedings. For example, if the USPTO cited a “dead wood” registration against an application, the registrant might contest the cancellation, and even if a partial cancellation were ultimately successful, the applicant could not be sure that the USPTO would withdraw its refusal upon consideration of the remaining portion of the registration. Moreover, as applications based on foreign registrations are not subject to a requirement to commence use of the marks prior to obtaining the U.S. registrations, a non-use cancellation action would likely be unavailable. With the fraud ground also generally unavailable, petitioners have pursued claims based on a registrant’s lack of bona fide intent to use as an alternate means of removing “dead wood” registrations that block their applications, but that option is also not always viable.

In 2014, the TTAB quelled the beliefs that fraud was essentially “dead” when it resurrected the grounds for the first time since In re Bose. In Nationstar Mortgage LLC v. Ahmad, the TTAB held that when determining fraud, culpable intent can be found where the accused’s party’s testimony is so lacking in credibility that it supports the inference that the party’s statements to the USPTO are also not credible. Still, the circumstances in which a determination of fraud will be made remain limited, and thus the problem of “dead wood” has not been resolved through an adjudicative solution.

The USPTO has sought to develop a non-judicial solution by conducting a pilot program between June 21, 2012 and June 21, 2014. During the pilot, the USPTO tested the outcome of requiring additional specimens of use at the time that affidavits of use under Section 8 or 71 of the Lanham Act became due. The USPTO normally requires the trademark owner to provide a single specimen of use for each class of goods or services at the time of filing a maintenance affidavit or renewal of a registration. As part of the pilot, the USPTO required the owners of 500 randomly selected registrations due for maintenance or renewal to provide evidence of use for two additional goods and/or services per class. The USPTO specified the two goods or services for which the registrant needed to provide specimens, and in the event that the registrant did not respond or could not provide acceptable evidence of use for those goods or services, the items were deleted from the registration and specimens for additional goods or services were requested. The initial results of this program were published on June 30, 2014, and a subsequent status report was issued on October 15, 2014.

Of the 500 registrations chosen, 253 (slightly over 50 percent) failed to meet the requirements to prove use. The 253 registrations that failed comprised those registrants that either deleted goods and/or services in response (173 registrations, approximately 35 percent) or failed to respond and/or address issues raised by the USPTO (80 registrations, approximately 16 percent). The results show there is a significant number of registrations with identifications covering more goods and/or services than are actually in use.

The USPTO proposed four options to address the continued “dead wood” problem, and sought practitioner and stakeholder input on them in a public meeting held on December 12, 2014. The proposed options were:

  1. To create a streamlined nonuse expungement procedure;
  2. To increase the solemnity of the declarations accompanying evidence of use;
  3. To conduct random audits of Section 8 and 71 declarations; and
  4. To require specimens for all goods and/or services listed in a registration when the first Section 8 or 71 declaration is filed.

The consensus of the participants at the December 12, 2014 meeting was that the first proposal was the only one that would be feasible and acceptable. This proposal seeks to create a streamlined nonuse expungement procedure similar to what is available in Canada whereby any third party who believes that a trademark owner is not using its mark on some or all of the goods and services in a registration can file a request with the Trademark Office to require that the trademark owner prove use. Under this model, if the trademark owner is able to prove use, the proceeding ends. If the trademark owner is not able to prove use on all goods or services specified in the registration, it would be required to delete them. This option seems to be the least onerous on the USPTO because it relies principally on third parties to take action. However, it may also be limited in efficiency because the USPTO would have to wait for a third party to raise the issue of nonuse before making a determination. This may help to improve accuracy of some identifications of goods and services, but it would not capture all of the offenders.

There may also be some procedural limitations on the USPTO’s ability to implement this solution. For example, the USPTO would have to address the requirement of standing to bring the action rather than allow it to be open to any party, and it would need to reduce the possibilities that third parties could bring frivolous claims or otherwise abuse the system and drive up costs for the USPTO and registrants. Having to comply can be both cost- and time-burdensome for legitimate owners that use their trademarks on all of the goods and services listed in their registrations as they will likely have to pay attorneys’ fees and possibly official fees, as well as devote substantially greater efforts to collecting and managing evidence of use. It would also be advisable for the USPTO to consider whether it would allow multiple proceedings by different parties against the same registration, and if these could be concurrent or consecutive without some period of time during which the registration could not be contested on these grounds. If multiple proceedings were allowed, the burden on the legitimate trademark owner could be greater, as it may constantly need to devote efforts and funds to defending its registration. In considering a streamlined nonuse expungement option, the USPTO would also need to address whether third parties could bring a proceeding only challenging the entire registration, or if partial expungement for specifically listed goods and services would be available. Challenges for only a specific good or service could also increase the burden on legitimate owners and the USPTO.

The second proposal was to increase the solemnity of the declarations by either “requir[ing] the trademark owner to check a box stating that he/she understands the seriousness of the oath,” or “requir[ing] statements accompanying Section 8 and 71 declarations detailing steps taken to verify use with the goods and/or services in the registration.” This option seems to be the least effective of the four, but takes the least amount of effort by the trademark owner. Registrants are already required to sign a declaration, and it is doubtful that a further step at the time of filing would make them rethink a decision not to delete goods and services not in use. However, increasing the solemnity of the declaration by including specific statements about the registrant’s intent may make it easier to assert fraud under the current In re Bose standard.

The third proposal was to conduct random audits of the maintenance and renewal filing documents (Section 8 and 71 declarations). This would require the USPTO to expend more resources to conduct these audits, essentially continuing its practices under the pilot program indefinitely. It may also prove to be more costly for trademark owners, as they will likely incur additional fees while attempting to address the requirements of the USPTO when their registration is selected. These additional fees would likely include attorneys’ fees or the cost associated with filing a Section 7 request in the event the trademark owner is required to delete any goods and/or services for failure to provide evidence of use. In addition, this proposal creates a measure of uncertainty for trademark owners who will not be able to anticipate that their registration may be subjected to additional, nonstandard requirements.

A final proposal by the USPTO was to require specimens for all goods and/or services listed in the registration when the first Section 8 or 71 declaration is filed, and possibly also require that the specimen be a photo showing use of the mark in relation to the claimed goods and/or advertisement for the services. In theory, this option seems to be the most convenient and predictable for trademark owners. If a trademark owner is in fact using its mark on all of the goods and services specified in the registration, it should not be difficult to gather and provide specimens of use. However, it does not take into account differences in the ability within a given industry to obtain acceptable specimens, especially if what is considered acceptable by the USPTO is even further limited. It also disregards the struggles of many foreign trademark owners to understand the U.S. use requirement, which is really more of a requirement to show use as a source indicator because the USPTO generally accepts the registrant’s claims that the use was in U.S. commerce as of a particular date without further investigation. Whether the implementation of such a requirement will actually address the “dead wood” problem is questionable as it will only affect registrants five to six years after registration, when the registrant makes its maintenance filings. Practically speaking, an applicant at the time of filing often does not devote a lot of attention to a requirement that will not come into effect until five or six years later.
Whichever direction the USPTO decides to turn in addressing the issue of accuracy of identifications of goods and services in registrations, the impact on the Trademark Register will hopefully be positive. It opens up the possibility for others to obtain rights for goods and services that were previously blocked by over-encompassing registrations by removing the “dead wood” and other unused marks from the Trademark Register and encourages applicants to file truthfully. No decision, as of yet, has been made about which proposal the USPTO will adopt. However, based on the pilot program and subsequent stakeholder meeting, it appears that U.S. trademark practitioners should expect new proposed legislation in the near future to allow for the possibility of a streamlined nonuse expungement proceeding.

While changes in law and practice are likely, the advice to prospective applicants will likely remain the same: file applications with identifications that cover goods and services actually in use or intended to be used, retain and update documentation of such use as it commences and continues, and delete items for which there is no use. By doing so, trademark owners can avoid the potential of incurring additional costs or suffering a penalty for failing to show use of their mark on the goods or services specified in their registration.

This article was first published in the July/August 2015 edition of Landslide, a publication of the American Bar Association Section of Intellectual Property Law.

The author wishes to thank Christina Simpson for her contributions to the research and editing of this article.

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