In March, 2010, President Obama signed the Trademark Technical and Conforming Amendment Act of 2010 into law as Public Law 111-146. One of its requirements obligated the Department of Commerce to study "the extent to which small businesses may be harmed by abusive trademark enforcement tactics," that is, trademark bullying. As reported in this space last Fall, as part of the process, the U.S. Patent and Trademark Office ("USPTO") invited stakeholders from the IP community to provide comments on the issue. The study has since been completed and the final Report has now been released.
The 28 page Report provides a basic primer on trademarks and discusses various strategies and tactics that are used by trademark owners and others that can be employed by accused infringers to deter unwarranted bullying. In the end, however, it essentially finds that even after a careful review of available information, it still remains "unclear whether small businesses are disproportionately harmed by enforcement tactics that are based on an unreasonable interpretation of the scope of an owner’s rights." Only 79 interested parties provided comments and only a few of them "explicitly addressed whether and to what extent unreasonable enforcement of trademark rights is a significant problem." Moreover, it recognized that
A trademark owner must walk a fine line between being too zealous in enforcing its rights and not being zealous enough... [and that] when it comes to the reasonableness of enforcement efforts, what is considered reasonable will usually depend on which side of the action an entity sits. While those on the receiving end of enforcement actions may view them as coercive or an unjustifiable exercise of the mark owner’s rights, the mark owner typically views these actions as legitimate and necessary to protect its rights.
It did point out that only approximately 1.5% of all trademark cases actually reach trial and that a majority of trademark disputes are disposed of before a case even reaches the pretrial phase, and thus commented that abusive litigation tactics do not appear to constitute a "significant problem." On the other hand, this may indicate that unreasonable or unwarranted tactics may be a greater problem before the dispute reaches the level of litigation. However, the Report recognized that there are a myriad of additional reasons why certain information may be unavailable. Access to reliable information about that aspect of the problem is more limited given that most of those efforts are not made public. Nor are there reliable statistics about the number of cease and desist letters that are being sent by trademark owners.
The Report concludes that:
Ultimately, because trademark enforcement is a private property rights litigation issue, if abusive tactics are a problem, such tactics may best be addressed by the existing safeguards in the litigation system and by private sector outreach, support and education relating to these issues.
Still, given the limited information available, the Department of Commerce agreed to take some steps to help protect small business owners in light of the potential problem. The Report acknowledges that small business owners may be disproportionately impacted by trademark bullying and that they are more likely to lack the ability to fund litigation or hire counsel to defend them. Thus, the Department of Commerce, in consultation with the Intellectual Property Enforcement Coordinator, has agreed to undertake the following steps:
The full Report is available here.
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