Trade Marks 2021

Even as much of the world slowed down in 2020, trade mark law changed and developed in dramatic ways, across the world. As discussed below, many countries passed new laws to combat long-standing concerns with the accuracy of their trade mark registers, and courts interpreted existing doctrines in meaningful ways. Trade mark practitioners will need to stay on their toes to continue working effectively for their clients as statutes redefine trade mark procedures and doctrines evolve.

Clearing Registers of Unused and Fraudulent Marks

Several jurisdictions adopted new laws that offer more avenues to cancel invalid or unused trade mark registrations. These laws are intended to decrease fraudulent applications and clear away registrations for marks that are no longer valid. Businesses and organisations rely on national registers to make decisions about marks they may adopt, and numerous jurisdictions have become increasingly concerned about misuse of registration systems and the resulting inaccuracies. Prior to this year, countries such as China and Malaysia already had systems in place that allowed third parties to seek the cancellation of registrations based on absolute grounds such as lack of use, lack of distinctiveness, or misleading nature. (China Law & Practice (5.2 Legal Grounds for Filing an Opposition and 5.3 Ability to File an Opposition); Malaysia Law & Practice (4.9 Refusal of Registration )). France has adopted the PACTE law, introduced in April 2020. The law creates new grounds for trade mark office actions refusing or invalidating trade marks, such as bad faith. It also created new opposition proceedings. Although third parties in opposition proceedings still must have prior rights, rather than challenging the registrations on their inadequacy alone, the PACTE law provides an express list of the possible prior rights which afford sufficient grounds for an opposition. (France Law & Practice (4.5 Consideration of Third-Party Rights in Registration)). The law also does away with the previous five-year statute of limitations period on actions involving invalidity, bringing French law into alignment with EU law. (France Law & Practice (7.1 Timeframes for Filing Infringement Lawsuits)). In November 2020, Mexico’s Federal Law for the Protection of Industrial Property entered into effect, establishing a clearer definition for bad faith in registrations. It also clarified the requirement for trade mark owners to declare use and indicate specific goods and services in connection with the mark within three years of filing; failure to make a timely declaration will result in cancellation. (Mexico Trends & Developments (Nuances on Trade Mark Registrations).

At the end of 2020, the United States passed the Trademark Modernization Act. (USA Trends & Developments (Congress Passes the Trademark Modernization Act of 2020)). This law introduced new ex parte paths to cancel unused trade marks after registration as an alternative to inter partes proceedings before the trade mark Trial and Appeal Board. A petitioner can now use these procedures to request expungement of a mark based on an assertion that the mark was never used in commerce in connection with the registered goods or services, or can request reexamination of a mark based on an assertion that the mark was not used in commerce by the date asserted in the application or statement of use. The Director of the US Patent & Trademark Office also may decide that a prima facie case of nonuse exists without a third-party petition.

Trade Marks and Free Expression

The tension between trade mark rights and free expression remained a point of interest and inquiry in the last year. In the United States, constitutional free speech rights give rise to many doctrines that can limit trade mark rights, such as parody, descriptive fair use, and nominative fair use. Notably, the Second Circuit established the Rogers v Grimaldi test in 1989, which requires a trade mark holder to show that the use of their mark in an expressive work’s title either:

• is not artistically relevant to the underlying work; or
• explicitly misleads consumers as to the source or content of the work.

Although the Rogers doctrine originally was developed to address titles of works, subsequent courts have expanded this test to the content of expressive works in cases such as E.S.S. Entertainment 2000, Inc. v Rock Star Videos, Inc. and Mattel, Inc. v MCA Records, Inc. This year, the Ninth Circuit examined the Rogers test in VIP Products LLC v Jack Daniels’ Properties, Inc. The court held that the plaintiff’s dog toys were expressing a point of view about defendant’s Jack Daniel’s whiskey brand and that the district court should evaluate the use of defendant’s bottle and packaging design under the Rogers test. Jack Daniel’s sought review from the Supreme Court, but certiorari was denied on 11 January 2021. The Rogers standard also was explicitly acknowledged in the House Report that accompanied the Trademark Modernization Act, which indicated that the doctrine is a balancing principle that would limit the newly restored presumption of irreparable harm in suits seeking injunctions (discussed below).

Free expression principles also come into play when jurisdictions address the registration of marks which may be offensive or promote ideas that some find immoral.

• In 2017, the US Supreme Court determined in Matal v Tam that rules prohibiting “disparaging” marks were unconstitutional, and then in 2019, it struck down similar rules against “immoral” and “scandalous” marks in Iancu v Brunetti.
• This year, in November, Mexico’s Federal Law for the Protection of Industrial Property withdrew the previous prohibition on registrations of “immoral” marks as legislators felt that the term was ambiguous and was applied incorrectly, inhibiting business development (such as by preventing the registration of cannabis-related marks). (Mexico Trends & Developments (Morality bar against registration)).
• In February 2020, the Court of Justice of the European Union also confronted this issue when it reversed a denial of trade mark registration on morality grounds in Constantin Film Produktion GmbH v. European Union Intellectual Property Office. The applicant sought to register the mark “Fack Ju Göhte,” the name of a popular comedy film in Germany, but was refused because the mark was “contrary to public policy or to accepted principles of morality.” The Court determined that because morality was determined by the present culture, the positive public reaction to the film showed that the relevant culture did not find the mark immoral. Again, European Union law does not provide the same expansive free expression right found in the United States’ First Amendment, but the Court of Justice’s decision explicitly recognised the need to take freedom of expression into account when defining trade mark rights. Though refusals based on public morality are still allowed under European Union law, this decision may foretell changes in line with the recent updates to Mexican and United States law.

Functionality and Trade Dress

Companies increasingly look to trade dress as a means of protecting their products. Such efforts sometimes conflict with the principle that trade dress must not be functional, as brands may adopt trade dress that serves as a source identifier but also provides a commercial advantage. This invites challenges from competing brands, which can result in litigation. This year the US saw two prominent trade dress functionality cases at the circuit level:

• In Ezaki Glico Kabushiki Kaisha v Lotte Int'l Am. Corp., the Third Circuit found that the plaintiff’s Pocky cookie trade dress – a stick-shaped cookie, dipped in chocolate or another candy coating with one end left uncoated – was functional. As the court noted, the uncoated end could be used to hold the cookie without getting the coating on one’s hands, and the slim shape made the cookie easier to eat and package. The court determined that functionality should not be determined “at the level of the entire product or type of feature, but at the level of the particular design chosen for feature(s),” implying that each feature will be evaluated separately.
• Conversely, in Blumenthal Distributing, Inc. v Herman Miller, Inc., the Ninth Circuit determined that the plaintiff’s chair design was nonfunctional because “a product’s overall appearance is necessarily functional if everything about it is functional, not merely if anything about it is functional.”

In a similar vein, the Court of Justice of the European Union wrestled with whether a trade mark registration should be granted for the Gömböc, a three-dimensional self-standing object that always returns to its initial position without the need for a counter-weight. The Hungarian Intellectual Property Office initially refused registration under Article 2(2)(b), which prohibits registration of a mark that exclusively consists of a shape that is necessary to obtain a technical result or that gives substantial value to the goods.

The Court determined that public perception was relevant in determining what the essential features of the product are and what aspects influence a purchasing decision. The Court also found that the bare fact that the mark in question only consists of a shape does not mean it can be automatically refused; the evaluating body must consider other possible factors which could influence consumers, such as its back story, material, or method of production.

Clarifying Trade Mark Litigation Remedies

Much of the value of trade marks is their enforceability in litigation. To that end, jurisdictions have made changes to their laws that change the available litigation remedies that are available and the ease of procuring them. In the United States, the trade mark Modernization Act reestablished a presumption of irreparable harm in trade mark suits where the trade mark owner seeks injunctive relief. In 2006, the Supreme Court had ruled in eBay Inc. v MercExchange LLC that there was no presumption of irreparable harm in patent cases, and some courts then applied this principle in trade mark cases as well. With the passage of the Act, if a trade mark owner can establish a likelihood of success on the merits (for a preliminary injunction) or success on the merits (for a permanent injunction), it is entitled to a presumption that the infringement would cause irreparable harm.

Although that presumption can be overcome, it is unclear whether the presumption shifts the burden of proof on the issue to the defendant or if instead it shifts the burden of production of evidence, but keeps the burden of proof on the plaintiff. That issue likely will be the subject of future trade mark litigation. (USA Trends & Developments (Congress Passes the Trademark Modernization Act of 2020)).In China, the Supreme People’s Court of the People’s Republic of China issued a guideline in July 2020 to offer more certainty to litigants. The Guideline provides a detailed hierarchy of authority for courts to review during trade mark cases and requires judges to make written records of the authority they rely on. (China Trends & Developments (The Guideline on Search of Similar Cases)). Around the same time, the National Intellectual Property Administration issued guidelines for trade mark enforcement actions. These guidelines offer greater transparency for established administrative procedures and formalises newer rules. For example, the guidelines clarify the concept of confusion, which should allow trade mark owners access to greater enforcement power through the Administration of Market Regulation. (China Trends & Developments (New Directives for Administrative and Criminal Enforcement)). China has also worked to strengthen trade mark protection by offering higher statutory damages, clarifying the necessary factors for punitive damages to encourage their use, and crafting discovery rules to make it easier for plaintiffs to prove damages. (China Trends & Developments (Strengthened Degree of Protection)).

Mexico has also redesigned its litigation procedures, offering optional conciliation proceedings and a revised, more efficient administrative proceeding that has new authority to determine damages. (Mexico - Trends and Developments: Litigation Proceedings). For more information about litigating trade mark rights, see 8 Litigating Trade Mark Claims, in each jurisdiction’s Law & Practice chapter.