- Posted on: Feb 9 2021
By: Tom Dunlap
The Trademark Modernization Act (TMA) is an amendment to the Lanham Act concerning trademark disputes, signed on Dec. 27, 2020. The TMA includes a number of changes and enhancements to trademark disputes. The changes concerning actions at the USPTO are tremendous and the subject of another article. These few paragraphs concern the major change to the law as it affects litigation of trademark claims in Federal Court with the resolution of a Federal Circuit split. The TMA creates new law, such that a trademark owner is now entitled to a rebuttable presumption of irreparable harm upon a showing of trademark infringement. This gives trademark owners substantially more power and certainty when enforcing trademarks and will limit forum shopping. Before launching into the details of the TMA, it is important to explain the history and the state of the law before the TMA was passed.
Filing a trademark infringement case to enforce a trademark is expensive. While, uniquely in the world of registrable intellectual property, you can file a claim in either state or Federal court, most cases are filed in Federal court. In a trademark case, damages are generally difficult to prove as, unlike patent and copyright claims, there are no statutory damages for infringement. The focus on trademark cases is under the Lanham Act is “injunctive relief”, i.e., that one of the parties is forced to change their use of a trademark. The Lanham Act includes five types of possible monetary compensation for trademark infringement: (1) recovery of the money an infringer made from infringing, (2) money the owner lost due to the infringement, (3) a reasonable royalty, (4) attorney’s fees (only in exceptional cases, which are rare), and (5) costs, like filing fees.
In order to win injunctive relief in any case, which is the primary goal of most trademark, patent, and copyright cases, a plaintiff has to prove four basic things: (1) it has suffered an irreparable injury for which (2) money damages are not adequate to satisfy, and (3) that the “balance of hardships” favors the injunction, and (4) that the injunction does harm the public interest. Usually, the most important and difficult of these factors to prove is “irreparable injury” or, put another way, “irreparable harm,” harm that cannot be repaired. Much as it sounds, this is a very hard thing to affirmatively prove to a court, requiring careful and expensive work putting together extensive evidence on how the infringer’s actions have harmed the trademark owner.
Prior to the passage of the TMA in December of 2020, whether or not you had to affirmatively prove irreparable harm by presenting this evidence was largely dependent on where you filed your trademark case (or where you were sued). This required plaintiffs to affirmatively prove irreparable harm following The U.S. Supreme Court decision in the 2006 eBay Inc. v. MercExchange LLC case that patent owners had to affirmatively prove irreparable harm and despite having proved infringement. Some circuits, including the very large 9th Circuit, which includes California, took this logic and applied it to trademarks, and some did not. Thus the resulting “Circuit split,” such that trademark owners did not have a single standard of proof, but rather the standard depended on where the case was filed.
The result was that trademark owners seeking to enforce trademarks rarely won any significant monetary damages or recovered attorneys fees expended in bringing trademark claims. The consequence to this point has been that suing for trademark infringement has generally been a net dollar loss in most cases. Likely, that will change with the amendments to the Lanham Act under the TMA with new “rebuttable presumption” of irreparable harm.
Presumably, the words “rebuttable presumption” speak for themselves; however, to be clear, in the legal context, a “rebuttable presumption” is a fact that a court must take as truth unless the opposing party presents evidence to the contrary. In the case of the TMA, this means that the court must now automatically agree with a trademark owner that they have been irreparably harmed by the other party, the defendant in a trademark case, so long as the trademark owner can show infringement, stating:
A plaintiff seeking any such injunction shall be entitled to a rebuttable presumption of irreparable harm upon a finding of a violation identified in this subsection in the case of a motion for a permanent injunction or upon a finding of likelihood of success on the merits for a violation identified in this subsection in the case of a motion for a preliminary injunction or temporary restraining order.
This new law makes it both less expensive and easier for trademark owners to obtain injunctions against other companies that are not in direct competition with the trademark owner. The changes to the law under the TMA are consistent with a trademark owner’s obligation to police infringers and will likely make trademark lawsuits a better bet for trademark owners going forward.
Second, the provision will make it easier for large companies to protect their brand against a multitude of smaller infringers. Such cases are not filed to garner damages. They are filed to police the use of confusingly similar trademarks. In these cases, it can be difficult to demonstrate that any particular infringer selling a small quantity of goods caused the larger company to lose control over its business reputation or goodwill.
The act should make trademark enforcement actions more attractive by presuming irreparable harm and placing the burden on the infringer to show the infringement caused no irreparable harm. As a result, trademark enforcement actions may be more attractive for larger companies pursuing smaller infringers. The provision is consistent with a trademark owner’s duty to police its marks so that the trademark continues to identify a single source of goods or services.
To learn more about trademarks, visit our Trademark Infringement page.
About the Author
Tom Dunlap is a partner at Dunlap Bennett & Ludwig. His practice focuses on patent, trademark, trade secret, commercial, entertainment law, business, government contracts disputes, litigation, and transactions.
In addition to the state and federal courts of D.C., VA, and M.D., he is a member of the Federal Courts in Puerto Rico, Colorado, and Texas, as well as the Court of Federal Claims, the Federal Circuit, where he has recently argued and won three appellate matters, the Veteran’s Court of Appeals, and the United States Supreme Court, where he was lead counsel on a False Claims Act case (See United States ex rel. Carter v. Halliburton Co.) and in the T.C. Heartland LLC v. Kraft Foods Group Brands LLC (U.S. May 22, 2017) (No. 16-341) case involving jurisdiction in patent infringement cases. Other recent litigation victories where Tom served as lead trial counsel include a $12,317,500 verdict in Zuru v Telebrands et al. (EDTX 2017) (patent infringement) and a $2,600,000 verdict in DPX Gear v Prince et al. (Loudoun Circuit Court 2017) (breach of contract & fraud).
To learn how Mr. Dunlap can assist with your legal needs, click here.
Posted in: Trademark