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Effective earlier this year, <a href="https://www.gpo.gov/fdsys/pkg/FR-2017-01-19/pdf/2017-00317.pdf">recently amended 37 C.F.R. §§ 2.161(h) and 7.37(h)</a> empower the USPTO to require a registrant to submit additional documentation as “reasonably necessary” to prove use of the mark in connection with each and every good or service identified in the registration.  This is to ensure that the register “accurately reflects marks that are in use in commerce in the United States for all the goods/services identified in the registrations, unless excusable nonuse is claimed in whole or in part.”  (Emphasis added.)

Because the USPTO only requires submission of a specimen of use for a single good or service per class, a registrant filing a Section 8 or Section 71 declaration typically submits one specimen per class, but then declares under penalty of perjury that it has continued to use its mark on all of the covered goods or services.

This new audit rule comes as no real surprise.  Some registrants historically have declared goods and services to be currently in use, when they were not.   The USPTO calls them “dead wood.”   Trademark examining attorneys must cite dead wood marks simply because they are on the register, thus requiring applicants to respond to Office Actions, abandon applications, or in certain cases petition to cancel a cited mark.  Whether maintained through ignorance, error or intentionally, the dead wood registrations impugn the integrity of the registration system.

In 2012, the USPTO first announced the <a href="https://www.gpo.gov/fdsys/pkg/FR-2017-01-19/pdf/2017-00317.pdf">Post Registration Proof-of-Use Pilot Program</a> to address this issue.   During the three years that followed, the UPSTO selected 500 registrations for which Section 8 and Section 71 affidavits were filed to require these registrants to produce additional use evidence.  The USPTO found that in 51 percent of the registrations selected for the pilot, the trademark owners could not substantiate use on particular goods and services covered by the registration.  Of this 51 percent, 35 percent of the owners requested that some goods or services initially claimed be deleted.  Registrations were cancelled if the trademark owners failed to respond at all to the Office Actions.

How Will the New Audit Work? 

The USPTO now wields audit power and may randomly require a mark holder post-registration to furnish certain information upon request demonstrating that the mark is in use for each of the identified goods and services.  Trademark owners should thus be prepared to prove use of their trademarks in connection with each and every good or service covered in the registration when executing a declaration of use filed under Section 8 or Section 71 of the Lanham Act.  Like the Pilot, the regulation only calls for a random audit.

The USPTO anticipates it will audit up to 10 percent of the combined total of Section 8 and Section 71 declarations filed annually for marks registered for more than one good or service per class.

If audited, a registrant would be notified by Office Action and given a six-month opportunity to provide additional proof of use.  The Registrant will then be required to submit a declaration and further evidence of use on the highlighted goods and services.  See 15 U.S.C. §§ 1058(a)(3), 1141k(a)(3); 37 C.F.R. 2.163, 7.39.

If the registrant is able to prove use in commerce for each good or service identified in the audit, the Section 8 or Section 71 declaration will be accepted as to all of the goods or services.  If the registrant cannot substantiate use on the cited goods or services, but responds to the office action, the registration as to the cited goods or services only will be cancelled.  Failure to respond at all within the prescribed time period will result in cancellation of the registration, unless time remains in the grace period for filing a new affidavit.  37 CFR 2.163(c), 7.39(b).

Going Forward - Advice to Practitioners 

Registrants will need to ensure that they conduct an internal audit to identify specimens of use for each and every good or service covered by a registration.  While this has always been the case, registrants may now have to submit such specimens in addition to declaring that they use the mark in connection with all of the goods or services.

Proof of Life: USPTO Ushers in New Audit Power for Proof-of-Use