BY BRIAN LEWIS
2020 was full of surprises, but few would have anticipated that 2021 would bring three pivotal developments in intellectual property that every practitioner should know about. The new year brought us: (1) the Copyright Alternative in Small- Claims Enforcement (CASE) Act; (2) the Trademark Modernization Act of 2020; and (3) trademark consequences from Brexit. This article highlights the key elements of each of these new legal frameworks and suggests key practice pointers.
1. The CASE Act—A Copyright Forum for the Masses and Possibly a Tool for Trolls
Passed as part of the COVID-19 economic recovery bill, the CASE Act establishes a new small claims court under the U.S. Copyright Office. Supporters praise the Act because it makes it financially possible for independent creatives to enforce their copyrights and combat piracy, while skeptics worry that trolls could weaponize it to extract settlement dollars from unsophisticated targets engaging in commonplace online behavior like posting memes. A newly formed Copyright Board will oversee and adjudicate disputes in which either: (1) the creator is asserting infringement; (2) a content user requests a ruling of non-infringement; or (3) a Digital Millennium Copyright Act (DMCA) takedown notice contains misrepresentations.
The goal of the CASE Act was to create a relatively low-cost administrative venue for plaintiffs and defendants to secure a binding ruling over a copyright dispute. As such there is no requirement that either party be represented by counsel and, in fact, the Copyright Claims staff is obligated to assist forum participants. However, just how comprehensive that assistance will be is uncertain. One of the key features of the CASE Act is that any respondent can opt out of a dispute if they do so within 60 days of service of process.
Copyright Pointer 1: If your client is a respondent, opting out forces the plaintiff to either abandon the action or bring the action in federal court at much higher cost for them. Skilled counsel will likely use this key decision to create strategic advantage for their clients.
The remedies under the CASE Act are severely limited, with a maximum award of $15,000 per work and $30,000 in the aggregate. These amounts are wildly lower than the customary copyright infringement remedy limit of $150,000 per work with no aggregate cap. Additionally, the prevailing party in a CASE Act action cannot recover attorney fees unless the claim is filed in bad faith, and even then attorney fees are generally capped at $5,000.
Copyright Pointer 2: If your client is likely to be found to have infringed a work, a default judgment limits their downside risk to dramatically less than their legal costs alone for a full-throated defense. Sometimes accepting a CASE Act defeat will be the smart strategy.
Copyright Pointer 3: If multiple works are infringed, your plaintiff client may want to file a different CASE Act complaint for each two works (up to the cap) to maximize their aggregate potential recovery.
Practically speaking, as virtual legal services become a commodity business, the CASE Act creates a business opportunity for a volume specialist to handle low-cost, fixed-fee representation services for CASE Act participants. Now would be the perfect time to prepare to launch such a practice because the first cases are expected to be heard in June 2022.
2. Trademark Modernization Act of 2020—New Weapons for Trademark Practitioners
A second bill passed as part of the COVID-19-related economic stimulus legislation was the Trademark Modernization Act of 2020 (TMA). The TMA created three interesting tactical weapons for trademark owners and a potential docketing headache for paralegals. These weapons formalize techniques for disrupting pending applications, invalidating certain recent registrations, and strengthening enforcement actions for trademark owners.
When a trademark application is pending, the TMA allows any third party to introduce evidence on the record that the pending mark should not be allowed to register. Examiners have an enormous workload and screening marks accurately is a challenging art, so this assistance could be important to helping them more efficiently arrive at the correct conclusion. Previously, an attentive trademark practitioner could informally do this by knowing how to reach out directly to specific examiners at the right time. The interesting twist is that such a request was not part of the record. If the examiner decided to allow the pending application over such evidence, there was no prejudicial record against the submitting party. If they disagreed with the examiner’s conclusion, they could later file an opposition to have the evidence independently reviewed by fresh eyes at the Trademark Trial and Appeals Board (TTAB). The new system leaves a potentially adverse record if the examiner rejects the request, because that creates evidence supporting the applicant and making any potential opposition more challenging.
Trademark Pointer 1: With more reason than ever to watch key marks, the savvy trademark practitioner may want to use the new pending application objection process strategically when they have a very strong case and stick with the traditional opposition process when they will benefit from the fresh perspective of the TTAB to consider close cases.
The second tool the TMA created is an enhanced ability to remove unused registered trademarks from the registry during the first three years following registration. While it was always possible to remove such marks, it previously required more robust (and costly) pleadings before the TTAB. The new process is a direct petition handled by an examiner, which should be faster and more cost-effective. This tool will be useful when applicable, but it represents a fairly specialized fact pattern where the mark at issue was never used (rather than having been used but abandoned), so the utility of this particular tool is quite narrow.
The third tool created by the TMA is very useful for trademark owners undertaking infringement enforcement action. In infringement proceedings, the TMA creates a new rebuttable presumption that infringement causes irreparable harm to the registrant—paving the way for more robust remedies. This saves registrants significant time and money, improves the probability of a successful infringement action, and creates an additional incentive to register their trademarks.
The final change made by the TMA was created in the interest of shortening the trademark prosecution process, but the new change creates a potential liability for law firms that lack robust docketing systems. Previously, except for suspensions, every step in trademark prosecution allowed the applicant six months to respond. The new rule allows the examiner to reduce this window to as little as 60 days, which creates new variable date docketing requirements that firms will need to address. One benefit of the old system was that a cagey trademark practitioner could effectively use these six-month response windows to extend the prosecution period for marks their clients intended to use in the future if the product-development cycle was taking longer than expected. On the whole, the TMA’s new flexible response window should allow trademarks to mature to registration sooner.
Trademark Pointer 2: Practitioners should review their docketing systems to assure that they will conform to the flexible docketing deadlines in trademark prosecution matters.
3. Trademarks Across Brexit
Brexit came into effect Jan. 31, 2020 (“Exit Day”). For each EU trademark registration in existence on or before Exit Day, a clone U.K. registration is automatically created. There is no direct fee for this, although clients may face some administrative expense to identify the U.K. registration number and docket this additional record. When the clone U.K. mark is created, the “child” registration in the U.K. will need to be separately renewed at the next renewal date. These automatically created U.K. child trademarks are the easy part.
It gets more complex for EU trademark applications that were filed prior to Exit Day but had not yet registered. These pending EU applications are not automatically cloned into the U.K., and applicants have exactly nine months following Exit Day to file an equivalent U.K. application (and pay U.K. fees). Where an EU pending application exists and a U.K. application is filed within the nine-month window, the U.K. child application will have the same priority date as the EU parent application.
Brexit Trademark Pointer: Review your client’s EU trademark portfolios for pending trademark applications and work with your clients to decide whether they want cloned U.K. trademarks before September 2021.
Another curious wrinkle of Brexit is that for five years following Exit Day, use of a trademark in commerce inside the EU (but outside of the U.K.) will be treated as if the trademark was used inside the U.K. and will allow both the EU and child U.K. mark to mature to registration. Following this fiveyear window, clients will be required to use the trademark in commerce inside the U.K. to allow the U.K. mark to mature to registration.