New Changes to IP Law Affecting Business

Important changes to intellectual property law were enacted into law as part of a bipartisan spending and coronavirus relief bill as 2020 drew to a close. The legislation includes appropriations for the United States Patent and Trademark Office (USPTO) as well as various updates to U.S. patent, trademark, and copyright law. The following is a brief summary of some changes that should be of particular interest to business owners.

Changes to Trademark Law

The Trademark Modernization Act of 2020 includes measures aimed at clearing out “deadwood” registrations. These are registrations of trademarks that are not being used in commerce or that are used on different goods or services than those identified in the registration. The problem with deadwood registrations is that they can prevent businesses from registering marks that should otherwise be eligible for protection.

Among other things, the Act allows third parties to submit evidence of nonuse or fraud to the USPTO during the trademark application process. It also permits third parties or the USPTO Director to initiate proceedings to expunge or re-examine an existing registration where there is evidence that the registrant never used the trademark in commerce or did not use the mark with the identified goods or services before a certain date.

The Act thus provides important tools for businesses that are—as any business should be—proactive about policing their trademarks and protecting their brands. Conversely, it is now more important than ever for businesses to review and manage their trademark applications and registrations to ensure they are on proper footing.

On the litigation front, the Act also includes a significant change for trademark owners seeking to enforce their rights in court. Specifically, it codifies a rebuttable presumption of irreparable harm once a trademark owner has proven infringement. Irreparable harm is an essential element to obtaining an injunction, and proving it adds an evidentiary burden for trademark owners seeking relief. In the past, many courts applied a presumption of irreparable harm, but the Supreme Court called that presumption into question in eBay, Inc. v. MercExchange.

By reestablishing a presumption of irreparable harm, the new legislation will make it easier for a trademark owner to convince a court to issue a preliminary injunction to stop an accused infringer from using the trademark at issue at the outset of a case.

Changes to Copyright Law

The new legislation includes changes to copyright law, as well, in the form of the Copyright Alternative in Small-Claims Enforcement (CASE) Act..

The CASE Act creates a Copyright Claims Board in the U.S. Copyright Office with authority to adjudicate claims of copyright infringement in certain cases. The Board will decide copyright claims worth up to $30,000, plus will have the power to issue declaratory judgments and other relief. Referred to as a “small claims court” for copyrights, the CASE Act is designed to provide an economical alternative to pursuing a copyright claim in federal court. Given the substantial costs of litigating in federal court, copyright owners previously often had no practical recourse for pursuing smaller claims.

The CASE Act has long been debated and is a subject of some controversy. Proceeding before the Copyright Claims Board, as opposed to a regular court, is voluntary. However, to preserve the right to have one’s case heard in court, an accused copyright infringer must affirmatively “opt out” of the proceeding within 60 days of being served with notice. A defendant that does not opt out waives its right to not only to a regular court proceeding but also a jury trial.

While larger corporations will likely develop systems for responding to CASE Act notices and opting out if they so choose, one concern is that ordinary individuals accused of illegally posting or sharing music, videos, or memes may inadvertently waive their rights. On the flipside, actions to enforce copyrights are likely to increase, as content owners of all sizes will have a cheaper, more streamlined process for adjudicating smaller disputes.

Another important change is the Protect Lawful Streaming Act, which closes what some have described as a “loophole” for streaming piracy. Previously, while it was a felony to engage in unauthorized acts of reproduction and distribution in certain instances, an unauthorized “public performance”—which can include streaming—came only with misdemeanor penalties. The Act has now made certain acts of streaming a felony offense.

Importantly, the increased penalties do not generally apply to individuals who access pirated streams for personal use, but rather to those who willfully stream pirated content for “commercial advantage or private financial gain.” Proponents have praised the legislation for protecting creators and benefiting the U.S. economy by providing law enforcement better tools to fight piracy.

Intellectual property laws are constantly changing. Businesses need to stay apprised of relevant changes. Intellectual property attorney Maxwell Goss provides guidance regarding all aspects of IP law and litigation.

Maxwell Goss Law represents clients in trade secret, intellectual property, and business litigation cases in Michigan and nationwide.