Brand Management During a Pandemic: Preserving Your Trademark Rights While Temporarily Shuttered Due to COVID-19

Brand Management During a Pandemic: Preserving Your Trademark Rights While Temporarily Shuttered Due to COVID-19

Apr 10, 2020

Client Alert

Brownstein Client Alert, April 10, 2020

Amid the COVID-19 pandemic, many businesses are now temporarily closed, either due to necessity or government mandate. Inevitably, these closures have caused a multitude of unprecedented issues touching nearly every aspect of business—and brand management is no exception. Because trademark rights are developed and maintained through use of the mark, shuttered businesses are understandably concerned about how this period of forced nonuse could affect their rights. Read on to learn how to preserve your trademark rights if your business was forced to close as a result of COVID-19.

Use in Commerce: The Cornerstone of Trademark Rights

Trademark rights are created and maintained through use in commerce—meaning, you must actually use a trademark in connection with the sale of goods or services to legally protect it. Likewise, use in commerce is required to obtain trademark registrations at both the federal and state levels—and, while not a prerequisite to trademark protection generally, registrations provide trademark owners with expanded benefits and remedies.

To secure and maintain federal trademark registrations, owners are required to prove use in commerce through routine and mandatory filings with the United States Patent & Trademark Office (USPTO). These filings are made under strict statutory deadlines and must be accompanied by a declaration that the trademark is currently in use. As a result, even short periods of nonuse may interfere with a trademark owner’s ability to preserve federal trademark applications and registrations.

If your business is closed due to COVID-19 and you are facing a filing deadline with the USPTO, you should take care to avoid making a false declaration of use. Doing so could amount to fraud and jeopardize the validity of your trademark application or registration. Instead, you should utilize available mechanisms for delaying your filing until your business reopens and your mark is once again in use.

USPTO Extends Filing Deadlines, Providing Some Relief

Fortunately, the USPTO recently announced extensions of certain trademark filing deadlines for those affected by COVID-19 (see our alert discussing the USPTO’s announcement). Deadlines to file Statements of Use (for intent-to-use applications) and Declarations of Continued Use (for existing registrations) are among those being extended—both of which require declarations of current trademark use. This is certainly welcome news to trademark owners whose businesses have been shuttered. However, the relief is fairly narrow in scope and is unlikely to be an all-encompassing solution. Notably, the extensions only apply to deadlines between and inclusive of March 27, 2020, through April 30, 2020, and only extend deadlines for 30 days. If businesses remain closed longer than the applicable extension period (whether by government mandate or otherwise), trademark owners will need to employ other strategies to preserve their trademark rights.

Statutory Safeguards: Grace Periods and Excusable Nonuse

If you are facing a deadline to file a Declaration of Continued Use, there are two available safeguards to avoid cancellation of your registration. First, the USPTO provides a six-month grace period to file a Declaration of Continued Use after the filing deadline. Arguably, this is the easiest course of action for trademark owners who anticipate their businesses will reopen within the next few months. However, if you want to take advantage of this option, you’ll have to pay an additional surcharge for each class of goods/services in your registration.

Another option? You can file a Declaration of Excusable Nonuse in lieu of a Declaration of Continued Use. The Declaration of Excusable Nonuse offers a safeguard preventing cancellation of a trademark registration due to temporary nonuse outside of the owner’s control. While we cannot say with absolute certainty that business closures due to COVID-19 qualify as excusable nonuse, we believe they likely do given that the USPTO has deemed the pandemic an “extraordinary situation.” Moreover, government-mandated nonuse due to a public health emergency falls in line with other circumstances the USPTO has found excusable, including nonuse due to illness, trade embargoes, catastrophe and Acts of God.

Maintaining Trademark Applications and Preserving Priority

Unfortunately, trademark applicants have fewer options to preserve pending applications and avoid abandonment. An applicant who files a federal “intent-to-use” application has six months to file a Statement of Use with up to five six-month extensions (so long as the applicant pays the prescribed fee). Applicants are not afforded any grace period beyond the three-year window nor do they have the option to declare excusable nonuse.

If you are facing a Statement of Use deadline and cannot truthfully declare current use of your trademark, you should seek an extension if available. However, if all extensions have been exhausted, you may need to restart the application process. While you can wait to file a use-based application when your business reopens, we believe the better course of action is to refile another intent-to-use application. Presuming a registration is secured, the priority rights associated with the registration will date back to your original filing date. (For that same reason, if you failed to file a use-based application before your business closed, consider reserving your priority rights by filing an intent-to-use application.)

To recap, keep these filing tips in mind if your business is closed due to COVID-19:

  • Declaring current use of your trademark while your business is temporarily closed could constitute fraud and jeopardize the validity of your trademark application/registration.
  • If your filing deadline falls between March 27, 2020, to April 30, 2020, inclusive, you likely have an additional 30 days to file.
  • A six-month grace period is available to file Declarations of Continued Use (or Excusable Nonuse).
  • The USPTO will likely accept a Declaration of Excusable Nonuse in lieu of a Declaration of Use if your business is closed due to COVID-19.
  • If your business remains closed beyond all available extensions to file a Statement of Use, consider refiling an intent-to-use application to preserve a priority filing date.

The trademark attorneys at Brownstein are available to help you navigate these rapidly evolving developments and preserve your rights during this challenging time. Please contact a member of our trademark team if you have questions or need assistance.

Information is changing daily and some of the content included in this alert may have changed or been updated since publication.

Click here to read more Brownstein alerts on the legal issues the coronavirus threat raises for businesses.

This document is intended to provide you with general information regarding preserving trademark rights during the COVID-19 pandemic. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

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