New Trademark Fees in Effect on Jan. 2, 2021

On January 2, 2021, the USPTO’s new trademark filing fees went into effect, applicable to trademark application prosecution matters, as well as proceedings before the Trademark Trial and Appeal Board. See prior post, entitled “USPTO Issues Notice of Proposed Rulemaking on Revised Trademark Filing Fees,” Privacy and IP Law Blog (June 19, 2020).

Among the notable changes (for electronic filing only*) are the following:

Application Filing Fees

Description Prior Fees New Fees (eff. Jan. 2, 2021)
TEAS Standard Application, per class $ 275 $ 350
TEAS Plus Application (37 C.F.R. §2.22), per class $ 225 $ 250
Application under the Madrid Protocol [15 U.S.C. § 1141f, or “Section 66(a) of the Act”], per class $ 400 $ 500

Maintenance Filing Fees

Description Prior Fees New Fees (eff. Jan. 2, 2021)
§ 8 or § 71 declaration (through TEAS), per class $ 125 $ 225
[NEW] Deleting Goods or Services [or classes] from a registration after submitting a § 8 or § 71 declaration, but before the declaration has been accepted [filing through TEAS, per class] N/A $ 250
[NEW] § 7 amendment before filing a § 8 or § 71 declaration, and only deleting goods, services or classes N/A $ 0 fee
§ 7 Amendment (at any time – for any reason other than simply deleting goods or services or classes) $ 100 $ 100

Trademark Trial and Appeal Board Fees

Description Prior Fees New Fees (eff. Jan. 2, 2021)
Initial 30-day Request for Extension of Time to File a Notice of Opposition, through ESTAA, per class $ 0 $ 0
Initial 90-day or the Second 60-day Request for Extension of Time to File a Notice of Opposition, through ESTAA, per class $ 100 $ 200
Final 60-day Request for Extension of Time to File a Notice of Opposition, through ESTAA, per class $ 200 $ 400
Notice of Opposition through ESTTA, per class $ 400 $ 600
Petition for Cancellation through ESTTA, per class $ 400 $ 600
Ex Parte Appeal to the TTAB through ESTTA, per class $ 200 $ 225
[NEW] Filing a Brief in an Ex Parte Appeal to the TTAB through ESTTA, per class N/A $ 200
[NEW] Initial Request for Extension of Time to File an Appeal Brief in ex parte appeal cases, per class N/A $ 0
[NEW] Second and Subsequent Requests for Extension of Time to File an Appeal Brief in ex parte appeal cases, per class N/A $200
[NEW] Requests for oral hearings, per proceeding N/A $ 500

Miscellaneous Fees

Description Prior Fees New Fees (eff. Jan. 2, 2021)
Petition to the Director under 37 C.F.R. § 2.146 or § 2.147 $ 100 $ 250
[NEW] Petition to the Director under 37 C.F.R. § 2.66 (to revive an abandoned application) N/A $ 150
[NEW] Letter of Protest under 37 C.F.R. § 2.149, per subject application N/A $ 50

* Technically, there are still fees posted for paper filings, but given that the USPTO now mandates electronic filing in all instances (see prior posts), there will only be very narrow instances where these might apply. In the interests of brevity for purposes of this post, we have omitted the paper-filing fees in the charts above. If these are relevant to your situation, you can find the comparison here: https://www.uspto.gov/sites/default/files/documents/Trademark-Fees-Current-Final-Unit-Cost-2020.xlsx.

Note also that the list above is not a comprehensive recitation of all of the applicable filing fees for trademark filings with the USPTO or proceedings before the Trademark Trial and Appeal Board. For a complete list, see the USPTO’s Current Trademark Fee Table.

Sources for Additional Information:

How Not to Genericize Brands: “ZOOM” Calls During COVID

Ever present in our business communications are requests for conference calls to be held using video conferencing platforms. However, these requests are generally not quite so long-winded when our colleagues describe them.

Instead, it’s more common to see a request for a “Zoom Call” or a “Meeting By Zoom” – but most recently, I received an email from a secondary school teacher regarding a calendar invite for “The Zoom” and from a fellow lawyer, who offered to circulate “a Zoom.” (In both cases, I assume that what they meant to say was that they were sending a “calendar invite for a video conference being set up through Zoom’s platform”.) But I get it. That’s a lot of words.

As a trademark attorney, however, every time I see one of these quickly-worded references to trademarks owned by others, I cringe. I know there’s no intent to undermine someone else’s trademark rights, or to devalue hard-won brands. And, at the same time, it’s clear that brands like “ZOOM” are quickly becoming household names, especially given this “it’s-quarantine-we’re-all-working-from-home” environment.

Becoming a household name is good . . . right? In the trademark world, I humbly suggest that “no, not all press is good press” and certainly not when used like that. If a carefully developed, original brand name suddenly becomes the generic term for a broader type of product or service, what happens to that investment in the development of this brand from its inception? Short answer – the value of that investment could be completely eliminated.

Former Trademarks – Now Generic Terms

Consider the following former trademarks, which have lost their unique association with the specific source for the goods/services delivered under the marks, prohibiting the original owners from excluding others from using these terms to describe their own (similar) goods or services:

  • MIMEOGRAPH – Reg. No. 356,815 – Registered as a “coined word” on May 10, 1938 in connection with “flexible writing plates” with a first use date of March, 1932. This registration expired on February 26, 1986 when it was not renewed by the owner of the mark, A.B. Dick Company. Note: There is a notation in the TSDR record that a cancellation action was filed December 5, 1983, but the records are old enough that they are not available electronically through TTABVUE. For an interesting history of the development of the machine sold under the MIMEOGRAPH mark, see “A.B. Dick Company, est. 1884,” Made in Chicago Museum Blog (available as of Sept. 1, 2020).
  • ZIPPER – Reg. No. 399,503 – Registered on January 12, 1943 in connection with “conveyor or transmission belting composed chiefly of fabric and/or natural rubber or synthetic compounds having the characteristics of rubber.” This registration expired on January 10, 1986 when it was not renewed by its owner, B.F. Goodrich & Co. Notably, the USPTO lists the location of the file history for this registration as “file destroyed” on June 1, 1989.
  • ESCALATOR – Reg. No. 34,724 – Registered as an “arbitrary word” on May 29, 1900, to Charles D. Seeberger, assigned to the Otis Elevator Company, and renewed May 29, 1930, in connection with “passenger elevators”. The Registration was cancelled in 1950 because the word had become generic for moving staircases instead of an indicator of the source of these staircases; the Registrant itself even used the term generically in its patent applications and magazine advertisements to refer simply to the types of stairs, not to its own brand of these stairs. Haughton Elevator Co. v. Seeberger, 85 U.S.P.Q. 80 (Comm’r Pat. 1950) (mark cancelled after being registered for 50 years).
  • ASPIRIN – In use in the U.S. since 1899 as an “artificial trademark” associated with a patent for the drug, acetyl salicylic acid. Bayer started to sell the product directly to the public beginning in 1915, under the label “Bayer – Tablets of Aspirin.” The patent expired in 1917; a patent examiner thereafter declared the trademark no longer valid and ordered its cancellation on November 30, 1918. Bayer did not appeal the cancellation, but instead sued United Drug Company for trademark infringement relating to its use of the name “Aspirin” in connection with sales of a competing product (same formulation). The district court concluded there was no infringement because “ASPIRIN” was the generic name for the drug and Bayer had no exclusive rights in it after the patent expired and given its own generic use of the term. Bayer Co. v. United Drug Co., 272 F. 505 (S.D.N.Y. 1921) (Learned Hand, J.); accord In re Bayer Aktiengesellschaft, 488 F.3d 960 (Fed. Cir. 2007) (“Aspirin is generic for analgesics and has been generic for this class of pharmaceuticals for over eighty years.”).
  • TRAMPOLINE – Reg. No. 402,868 issued August 17, 1943 in connection with “tumbling devices, consisting of canvas sheet stretched by springs in a rigid framework”, with a first use date of March 27, 1935. In a thorough discussion of the common uses of the term “TRAMPOLINE” in the marketplace in connection with these types of devices, a district court concluded that the term was generic for these goods, invalidated the trademark registrations and dismissed a complaint for trademark infringement that the Registrant had filed against a competitor. Nissen Trampoline Co. v. Am. Trampoline Co., 193 F. Supp. 745, 748, 749 (S.D. Iowa 1961) (“The court finds that the term ‘trampoline’ is completely generic for the type of goods here involved; that the plaintiffs have no secondary meaning in the term ‘trampoline’ and the purchasing public does not understand the term to mean the plaintiff’s product or to represent the equipment of only a single manufacturer.”).

Do you associate these terms with a single source of the goods or services with which they used to be associated? Certainly not. These once-unique brands have now become generic. They can no longer be used to identify the single company that is known to provide these specific goods and services branded under these specific marks.

How to Properly Use a Trademark

Rather than turning these unique brands into common terms that can no longer function as trademarks (i.e., can no longer function as a source indicator for a single source of goods or services), brand owners and consumers alike should be looking at brand names as adjectives, not as nouns.

To avoid delving into a boring grammar lesson, consider this: if you walk into a store and say “I’m looking for facial tissue” or “where can I find copy paper” – are you asking for a certain brand? No. You’re looking for a specific type of product, regardless of what brand it is.

In contrast, what if you saw a sales circular and found out that a particular brand name of facial tissues were on sale – would you want to ask for them by brand name? Sure – if you want the sale price. Would you be happy with getting a box of facial tissue of any brand for this purpose? Probably not – particularly if there were a big price difference, and you were shopping specifically for that item at that price.

Trademarks can also help companies (and the ultimate consumers) differentiate their goods from the goods of others – particularly if there’s a significant difference in qualities or features of the brand name product. For instance, perhaps a particular brand of dishwasher is the only one to include a garbage disposal or is particularly well known for its quiet operation. Or perhaps a specific brand of photo printer paper is well known for its color saturation or the clarity and long-life of the image printed onto it. These are features that consumers might shop for specifically – and being able to request that specific product by its unique trademarked name provides additional value to consumers and allows manufacturers to distinguish its goods from those of its competitors.

As a result, even among the sea of ZOOM calls we are participating in or merely watching, we should endeavor to use trademarks correctly: to refer to a single source of particular goods or services and to avoid genericizing those valuable brands.  For instance:

  • Use marks as adjectives to describe the actual source of goods or services, followed by the generic product name (e.g., KLEENEX facial tissue or MAYTAG dishwashers).
  • Never use the mark as a verb (e.g., Say “I’m going to use a Xerox copier . . . ” but not “I’m going to xerox that document.”).
  • Never use the mark as a noun or make it plural (e.g., Say “BAND AID bandages” but not “BandAids”).

Other Resources

USPTO Issues Notice of Proposed Rulemaking on Revised Trademark Filing Fees

Today the USPTO published a Notice of Proposed Rulemaking for Trademark Fee Adjustment that sets or revises certain filing fees before the Trademark Office. This process follows up on the presentation made by the USPTO to the Trademark Public Advisory Committee on September 23, 2019. (Transcripts of the TPAC meeting and comments received in response are available at http://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting.)

The fee changes proposed during the September 2019 TPAC Meeting at that time can be found at Table of Trademark Fee – Current, Proposed and Unit Cost – or one could review the USPTO’s Table of Trademark Fee Adjustments for a more detailed view of what would change under the earlier proposal. The USPTO Director’s letter to TPAC transmitting the earlier fee proposal can also be found on the USPTO’s Fee Setting and Adjusting page. When these amendments were proposed, the anticipated effective date was August 2020.

The latest NPRM seeking to revise the fees proposes that the earliest that new fees could go into effect would be October 2020, and specifically states that before the Final Rule is issued, “the USPTO will consider the state of the U.S. economy, the operational needs of the agency, and public comments submitted pursuant to this NPRM. The USPTO will make adjustments as necessary to the substance and timing of any final rule based on all of these considerations.” Trademark Fee Adjustment, 85 Fed. Reg. 37040 (proposed June 19, 2020).

Generally, the USPTO proposes to increase the fees for all application filing types – with higher fees assessed for paper filings. (Now that the USPTO mandates electronic filing throughout the application process, one would expect that the increase in paper filing fees would only apply in very limited circumstance and not actually result in a substantial change for most filers.)

Notably, the Proposed Rulemaking provides a multi-layer fee relating to amendments to the goods or services covered by a registration around the time the registrant is required to file its Section 8 (or 71) declaration of continued use of the mark in commerce to maintain the registration. Specifically, if the amendment is filed by a Section 7 amendment prior to the submission of the Section 8 (or 71) declaration, then there would be no filing fee to delete goods or services from the registration. There would also be no additional fee incurred if the registrant were to delete goods or services from its registration when it filed its Section (or 71) declaration at the outset.

However, if the registrant submits a Section 7 amendment request, responds to an Office Action or otherwise voluntarily amends the goods or services after the relevant Section 8 (or 71) declaration was filed, then the fee to make the change would be $250 per class (if filing electronically – if filing on paper, the fee increases to $350 per class). 85 Fed. Reg. 37040 at 37041-37042.

Clearly the Office is trying to persuade registrants to clean up their registrations in the normal course – and not wait until after they’ve signed a declaration that the mark is used in connection with all of the goods, and have thereafter received an audit request seeking proof, before realizing that they no longer actually use the mark in commerce in connection with certain goods or services, and therefore must delete them.  It is this latter circumstance which would incur the sizable filing fee per class to delete goods or services from a registration during maintenance.

Interested parties have until August 3, 2020 to submit comments in response to the Notice.

More details can be found on the Federal Register’s summary page.

CARES Act Permits Extensions of Statutory Deadlines for Patent, Trademark and Copyright Matters

The “Coronavirus Aid, Relief, and Economic Security Act” (or the “CARES Act”) has been approved by both the House and Senate, and was signed by President Trump on March 27, 2020.

While the Act significantly impacts employers, employees and individuals alike, this article will address only the impacts of the Act on the U.S. Copyright Office and the U.S. Patent and Trademark Office (“USPTO”), and the newly granted authority of the Register of Copyrights and the Director of the USPTO to amend certain timeframes to deal with the coronavirus and the effects of business closures around the country.

USPTO’s Initial Response to COVID-19

At the beginning the coronavirus outbreak, the USPTO released a statement that confirmed it considers the effects of COVID-19 to be an “extraordinary situation,” but rather than putting a moratorium on official deadlines or suspending current activities before the USPTO, the USPTO would simply “waive petition fees” relating to inadvertently abandoned or cancelled patents or trademark applications/registrations due to the coronavirus. The USPTO further acknowledged that it would not grant waivers, extensions of deadlines or any relaxation of requirements set by statute. We practitioners have heard many times that in the absence of any delegation of specific authority by the legislature, the USPTO cannot amend any statutory deadline.

According to the “Official Notice” in its March 16 statement, the USPTO would waive the filing fees for trademark applicants or registrants to petition the Director to revive an application or a registration that was abandoned/cancelled due to the inability to respond to an Office communication “due to the effects of the Coronavirus outbreak,” provided that such requests were filed within two months after the issuance of the notice of abandonment/cancellation and provided that these petitions included a statement about how the applicant/registrant was affected by the outbreak. (Official Notice at 2).

With respect to patent filings, the USPTO placed even more restrictions: the petition fee would be waived, but only if the patent applicant or patent owner was unable to respond (or was delayed in responding) to an Office communication “because the practitioner, applicant, or at least one inventor, was personally affected by the Coronavirus outbreak such that they were unable to file a timely reply.” (Id. at 1). The petition filed must include a statement that the delay in filing the reply to the Office’s communication was due to the impacts of coronavirus on the filer.

In both cases, the USPTO made it clear that statutorily-set deadlines – such as (a) the deadline to file a nonprovisional application based on a prior-filed foreign patent application, (b) the full 36-month period in which to file a statement of use for a trademark application, (c) the deadline to file declarations of continued use under Section 8, or (d) the deadline to oppose a trademark application – could not be extended by the USPTO and would remain in force. (Id. at 3)

CARES Act – Copyright Office Deadline Extensions

The Copyright Office did not announce any suspension of deadlines for applications filed with the Office as a result of the coronavirus – but instead simply announced on March 13, 2020 that the physical Office would be closed to the public and all applications and other filings could still be made through the Copyright Office’s online systems.

The Senate’s March 25, 2020 amendment to the prior House version of the CARES Act includes a delegation of authority to the Register of Copyrights to permit extensions of deadlines under certain circumstances, under a provision entitled, “National Emergency Relief Authority for the Register of Copyrights.”  Specifically, Senate Amendment 1578 (Section 19011 at p. 84 of 96) permits the Register of Copyrights to extend certain deadlines with the following caveats:

  • The Register must determine that a national emergency “generally disrupt[s] or suspend[s] the ordinary functioning of the copyright systems, or any component thereof”.
  • The “national emergency” must be declared by the President under the National Emergencies Act (50 USC § 1601 et seq.).
  • A national emergency that disrupts or suspends the copyright systems on only a regional basis could still qualify as a “national emergency” permitting the extension of deadlines.
  • The extensions of deadlines could include a toll, waiver, adjustment or modification of “any timing provision including any deadline or effective period” provided that these extensions are only temporary and last no longer than the “Register reasonably determines to be appropriate to mitigate the disruption caused by the national emergency”.
  • The Register’s authority to amend deadlines can be retroactive, provided that the “deadline has not already passed before the declaration of a national emergency described in subsection (a) of this Section.

The Amendment clarifies that statutes of limitation (by which civil actions must be commenced or federal court actions filed) cannot be extended by this provision. Id. § (d).

CARES Act – USPTO Deadline Extensions

The temporary authority given to the USPTO Director to respond to an emergency is more narrowly defined than that under the Copyright Office section. In a section entitled “Temporary Authority of Director of the USPTO During COVID-19 Emergency,” Senate Amendment 1578 (Section 12004 at p. 66 of 96) permits the USPTO Director to “toll, waive, adjust or modify any timing deadline” established by the Patent Act (Title 35), the Trademark Act (15 U.S.C. § 1051 et seq.), Section 18 of the America Invents Act (35 U.S.C. § 321) “or regulations promulgated thereunder” if the Director determines that an “emergency” (as defined under subsection (e)) has the following effects:

  1. “materially affects the functioning of the” USPTO;
  2. “prejudices the rights of applicants, registrants, patent owners, or others appearing before the Office” (which presumably would include litigants in inter partes proceedings before the Patent Trial and Appeal Board (PTAB) or the Trademark Trial and Appeal Board (TTAB)); or
  3. “prevents applicants, registrants, patent owners or others appearing before the Office from filing a document or fee with the Office.”

Id. § (a). Item 3 is not broad enough to allow the Director to extend deadlines simply due to computer system failures at the USPTO (unless they happen to occur during the COVID-19 outbreak, during the national emergency declared by the President on March 13, 2020 or during any other emergency covered by this Section). Id.

Note that the “emergency” to which this Section applies “includes” (but does not appear limited to) the emergency declared by President Trump “pursuant to the National Emergencies Act on March 13, 2020 as a result of the COVID-19 outbreak (and any renewal thereof)” and continues for a 60-day period following such declaration. Id. § (e). The authority granted by this Section expires two years after the date of its enactment. Id. § (g).

Unlike the Copyright Section, this Section does not explicitly preclude the Director of the USPTO from retroactively impacting a deadline that has already passed, although one might interpret the timing of the emergency period as beginning “on or after the date of enactment of this Section” as limiting the Director to only change current or prospective deadlines. Compare Section 19011(b) (Copyright Office provisions) with Section 12004(e) (USPTO provisions).

NEXT STEPS

Now that the final bill has been signed into law, one would expect to see official announcements from both the USPTO and the Copyright Office to identify particular extensions to be expected for specified periods of time.

One confusing provision in both the Copyright Office and the USPTO provisions is that the Register/Director is required to submit a Report to Congress no later than 20 days after the termination to change the deadlines under this Act is made – but only if the extension of time is “in effect for a consecutive or cumulative period exceeding 120 days”. Id. § (c). Assuming the timing glitch is adjusted appropriately, then the Report must contain a description of the action taken, relevant background and a rationale for why the adjustment was made. Id.

(Once the Public Law version of the bill is available, this post will be updated with a link to it.)

New House Bill Introduced to Combat Online Sales of Counterfeit Goods

On March 2, 2020, Representative Nadler, on behalf of himself, Reps. Collins, Roby and Johnson, introduced a new bill directed to holding U.S.-based e-commerce websites (“US Platforms”) accountable for policing the use of their sites for potential misuse by third-party counterfeiters, and ensuring that these counterfeiters have fewer opportunities to distribute their counterfeit products in the U.S. market.

The SHOP SAFE Act of 2020 (H.R. 6058) – which stands for Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce – seeks to create “incentives” for US Platforms to verify the legitimacy of participating third-party sellers and the authenticity of their products before allowing them to use these US Platforms as distribution channels for their goods. See Press Release, “Collins, Nadler, Roby, Johnson Introduce SHOP SAFE Act to Protect Consumers from Dangerous Online Counterfeits,” Mar. 2, 2020 (“The bill incentivizes platforms to engage in a set of best practices to curb the presence of counterfeits on their sites.”) (emphasis added).

The full text of the bill was posted by the House Judiciary Committee, although this copy does not reflect the assigned bill number. See also Section-by-Section Summary (also posted by the House Judiciary Committee); Public Bills and Resolutions, 166 Cong. Rec. 41, H1437-H1438 (daily ed. March 2, 2020) (brief statement of Rep. Nadler introducing the bill).

In particular, the Bill proposes to amend 15 U.S.C. § 1114 by imposing contributory liability for trademark infringement on a US Platform that allows a third-party seller to traffic in counterfeit goods that “implicate health and safety” through the platform, unless the following conditions are met:

  1. The “third-party seller is available for service of process” in the U.S.;
  2. Before any (allegedly) infringing act occurred, the US Platform took the following steps to prevent its site from being used that way:
    1. Verified “through governmental identification and other reliable documentation”, the identity, principal place of business and contact information of the third-party seller;
    2. Required a verification and attestation of the “authenticity of goods on or in connection with which a registered mark is used”;
    3. Required the third-party seller to sign a contract that included the following mandatory terms:
      1. The “third-party seller agrees not to use a counterfeit mark in connection with sale, offering for sale, distribution, or advertising of goods on the platform”; and
      2. The third-party seller consents to jurisdiction of US Courts with respect to claims relating to the third-party seller’s participation on the US Platform;
    4. Displayed “conspicuously on the platform” the verified contact information for the third party seller (i.e., “verified principal place of business, contact information and identity”) as well as the country of origin and manufacture of the goods and the location from which the goods would be shipped;
    5. Required the third-party seller to only use images of the products that the seller “owns or has permission to use” and that “accurately depict the actual goods offered for sale on the platform”;
    6. Implemented proactive technical measures for pre-screening of goods against the marks registered through the USPTO (at no cost to the registrant of the registered trademarks) before the goods are displayed to the public – to ensure that the third-party seller is not using a counterfeit mark;
    7. Implemented a program to expeditiously disable or remove a third-party seller’s product listing that reasonably could be determined to have used a counterfeit mark – again at no cost to the registrant of the registered trademarks;
    8. Terminated use of the platform by any third-party seller that has engaged in more than three instances of using counterfeit marks in connection with goods offered through the US Platform;
    9. Implemented a program to ensure that terminated sellers do not rejoin or remain on the platform under a different seller identity or alias – again, at no cost to the registrant; and
    10. Provided the information verified under Section (a), above, for any third-party seller who used a counterfeit mark on goods offered through the platform, to relevant law enforcement and (upon request) the registrant.

One could read these conditions as requiring a US Platform not only to have effective screening mechanisms in place to prevent counterfeiters from using its site in the first place, but also to have taken the full laundry list of steps to avoid its own liability.  In other words, it appears that the US Platform must also have identified this potential counterfeiter before the alleged counterfeiting activity occurred, kicked it off the US Platform before the accusation was made, turned the contact information of the counterfeiter over to law enforcement, and prevented the counterfeiter from participating in the platform again, even under a different name. It is not unreasonable to believe that at least one of these steps will be missed, or that the programs implemented by the US Platforms will not be sufficiently robust enough to effectively identify and prevent counterfeiters from using their platforms for illegal activities. Unless they simply stop doing business with third-party sellers – which could completely change the business model of sellers like Amazon, eBay or Walmart.

This Bill essentially requires US Platforms to refuse to allow third-party sellers who fail to meet these criteria to sell their products on their platforms – presumably on the theory that if US Platforms refuse to allow these sellers to use their sites to further their counterfeiting schemes, then the potential avenues for distribution of such counterfeit goods would evaporate. At least in theory.

While the Bill does not eliminate the perennial “whack-a-mole problem” by preventing known counterfeiters who are blocked from a site from simply creating a new identity and resuming their counterfeiting activities under a different name – it does shift the burden for combatting this problem onto the US Platform who would be hosting these sellers and (theoretically) receiving a portion of the sales, or at least a listing fee, in exchange. The recordkeeping and pre-screening requirements this might impose on entities like Amazon or eBay could be significant – particularly since a large portion of their current business model incorporates offering products for sale by third-party sellers.

Damages Available under Current Statute for “Counterfeiting”

Recall that courts are required to award “three times the profits or damages, whichever is higher, along with a reasonable attorney’s fee”, upon a finding of counterfeiting, although a plaintiff can elect to recover statutory damages between $1,000 and $200,000 per counterfeit mark, or up to $2 million in the case of willful counterfeiting. 15 U.S.C. § 1117(b), (c). Sharing in the statutory damages as a contributory infringer could be extremely expensive for the ecommerce platforms, and this possibility could certainly “incentivize” them to engage in more robust policing of potential counterfeiting using their services – but it would undoubtedly also dramatically increase the cost of doing business under their current business models.

Potential Commercial Impact of this Bill

The screening program contemplated by the Bill may also cause US Platforms to simply close down the third-party seller aspect of their business – particularly if they determine that implementing an effective program to evaluate their current pool of third-party sellers is simply too expensive to undertake. As a result, perhaps this Bill would effectively put an end to third-party sellers offering their products for sale through large ecommerce sites because of these ramp-up costs alone.

It is also possible that this new construct would negatively impact smaller businesses based in the U.S. who do not engage in “counterfeiting” as we typically think of it – but instead merely adopt a trademark of their own that is confusingly similar to an already registered mark – and thus would cause the small business to be excluded from these US Platforms. Perhaps rather than engaging in the kind of fraud we think of when someone says “counterfeit,” these smaller business simply did not conduct a pre-use trademark clearance search before adopting a mark and using it in connection with manufacturing sufficient quantities of a product to have enough to sell once orders started coming in. Assuming the US Platforms develop a screening model that runs that trademark clearance search against the USPTO’s database before allowing a third-party seller to offer their goods through their platforms, one could foresee that these infringers would be blocked from the platform. Does this now impose an obligation on third-party sellers to conduct trademark clearance searches before launching their products or trying to get on these US Platforms?

Finally, what if the third-party seller has indeed created a low-quality knockoff of a well-known branded product – and uses its own trademark on the product. Arguably, this seller would not be excluded from the US Platform under the program required by the Bill because they are not using a counterfeit mark. If the user of that particular US Platform simply searches for the generic product name (such as “smoke detector” or “cellphone charger cable”) and sees products that are cheaper than the brand-name product – they are not protected against purchasing low quality goods that look the same and appear to offer the same basic functions. As a result, perhaps this Bill would not actually protect consumers from purchasing low-quality knockoffs through these US Platforms.

Department of Homeland Security’s Report

Notably, the Department of Homeland Security recently released a report detailing the breadth and scope of the availability of counterfeits proliferation. DHS Report, “Combating Trafficking in Counterfeit and Pirated Goods: Report to the President of the United States,” Jan. 24, 2020. Two of DHS’s primary recommendations were to “Ensure Entities with Financial Interests in Imports Bear Responsibility” (at 5) and require entities with financial interests to engage in “Significantly Enhanced Vetting of Third-Party Sellers” (at 6). This Bill appears to directly respond to these recommendations.

Bill Status

Immediately upon introduction, the Bill was referred to the House Committee on the Judiciary – but it appears that a related hearing was held before the House Committee on Energy & Commerce – “Buyer Beware: Fake and Unsafe Products on Online Marketplaces,” on Wednesday, March 4, 2020 at 10:00am. While this hearing was not directly tied to the Bill, it covered the same subject. See Pre-hearing memorandum submitted by the Chair of the Subcommittee on Consumer Protection and Commerce, Rep. Pallone, on February 28, 2020. Witnesses who testified at this hearing included representatives from Amazon, eBay, Apple, Consumer Reports and Public Citizen. Id.

2014 ABA IPL Section White Paper Directed to Online Piracy and Counterfeiting

In 2014, the ABA’s Section of IP Law proposed that U.S.-based intermediaries (such as payment processors, advertising networks, ISPs or search engines, among others) be incentivized to help stop the proliferation of counterfeit products directed to U.S. consumers. See A Section White Paper: A Call for Action for Online Piracy and Counterfeiting Legislation, 2014. A principal target of the analysis at the time were “Predatory Foreign Websites” (id. at 8) – on the theory that these sites would be stand-alone online locations for U.S. consumers to purchase counterfeit products. In particular, the Task Force working on this White Paper explained that the term “Predatory Foreign Website” was used to refer to a

limited category of foreign-originated websites engaged in large-scale piracy of U.S. copyrighted content (in this case, any work created in the U.S., covered by the Copyright Act, capable of dissemination through electronic means) or counterfeiting of U.S. trademarks (in this case, intentional use of a spurious trademark that is identical to or substantially indistinguishable from an authentic trademark, in connection with products that are not [offered for sale] by the trademark owner or its agent). In particular, while the conduct itself may be identical to that prohibited under existing law, these specific actions are not readily subject to adjudication in the U.S. because the website is either beyond the jurisdiction of U.S. enforcement authorities entirely or, even if technically subject to such jurisdiction, is beyond the reach of such authorities to enforce a judgment against them. This limited scope of illegal conduct is the focus of this White Paper.

Id. (emphasis added).   For more on this topic, see earlier posts on this blog.

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