Over the past several months, the Trademark Trial & Appeal Board (TTAB) has implemented significant changes to the rules governing procedure in opposition and cancellation proceedings. The purpose of the changes is to increase efficiency of inter partes proceedings by providing the non-initiating party with prompt notification of the commencement of an action and by requiring the discovery process to more closely mirror that in the federal courts governed by the Federal Rules of Civil Procedure.
Notable rule changes include:
- The party initiating a cancellation or opposition proceeding must now serve a copy of the Notice of Opposition or Petition to Cancel on the defendant or the domestic representative thereof.
- The parties now need to attend a mandatory discovery and settlement conference held after the answer is filed and before–or as–discovery begins.
- The parties are now required to disclose relevant witnesses and documents supporting their claims within 30 days of the opening of the discovery period. A party cannot serve written discovery or make a motion for summary judgment until it has made these initial disclosures.
- The parties must now make expert witness disclosures for testifying experts to each other and the TTAB. Not only are the parties required to identify expert witnesses prior to the close of discovery, but also serve copies of expert reports prior to trial. It is worth noting that these requirements pertain only to testifying experts, not consulting experts.
- As required by the Federal Rules of Civil Procedure, the parties must now serve pretrial disclosures 15 days before the opening of the testimony and rebuttal periods. This requirement pertains predominantly to witnesses expected to testify, not materials submitted in a notice of reliance (a means for introducing evidence in a TTAB proceeding in writing).
- A standard TTAB protective order is automatically instituted in all TTAB proceedings. The parties can agree otherwise or one party can move to modify the standard terms.
Specific Immediate Considerations
The initial disclosure requirement is a significant burden. Prior to the new rules, parties had until approximately 8 months after the initiation of an opposition or cancellation proceeding to complete discovery. Now, parties have a significant discovery deadline to meet a few months after the proceeding commences. Plaintiffs would be well advised to begin collecting relevant materials before filing a Notice of Opposition or Petition to Cancel, and defendants would be well advised to be mindful of the initial disclosure requirement and make efforts to collect materials subject to the requirement shortly after being served with the complaint.
When serving a Notice of Opposition or Petition to Cancel on the applicant or registrant, the plaintiff has the option of serving either the listed owner or the domestic representative. Accordingly, it is increasingly important to update owner and domestic representative contact information or risk late notice of the commencement of an action against one’s trademark application or registration. A registration could become cancelled or, though much less likely, an application successfully opposed and become abandoned, before the owner is even aware of the proceeding.
The new procedures, particularly the settlement and discovery conference and initial disclosure requirements, bring substantial additional expenses to early phases of TTAB proceedings. Therefore, it is worthwhile to consider acceptable settlement terms internally and engage in earnest settlement negotiations early in the proceedings. Even if the dispute is not settled in these early negotiations, the TTAB has indicated that it will not suspend proceedings at the request of the parties once an answer is filed unless the parties have had an initial settlement conference. Meeting this obligation early allows for the possibility of the TTAB granting a request to suspend the proceeding early as well.
Finally, every effort should be made to comply with the new rules completely, especially early in their adoption. The rules do not expressly state the penalty for failing to comply with some of the new procedural requirements and, obviously, there is not yet any decision penalizing or sanctioning a party for failing to comply with such either intentionally or accidentally. Penalties could be harsh, and failing to comply with the new service, disclosure or discovery requirements could seriously jeopardize a party’s position in the proceeding.
General Overall Effects
The additional formalities created by the rule changes should encourage settlement in opposition and cancellation proceedings. Parties are forced to meet and confer on the prospect of settlement early in the proceedings, and forced settlement discussions are settlement discussions nonetheless. The initial and expert disclosures compel the collecting, consideration and sharing of information, which could conceivably result in a party realizing the shortcomings of its case and settle or otherwise terminate the proceeding. Similarly, the automatically imposed protective order obviates a frequent obstacle during the discovery process. Perhaps most importantly, the costs associated with the settlement/discovery conference and initial disclosures are expenses that will be borne by the parties toward the beginning of the proceedings and further encourage early resolution of the conflict between the parties. Together, the additional early costs and forced exchange of information will likely promote settlement of TTAB disputes.
Conversely, where settlement between the parties is not a possibility, the new procedures not only increase the expense associated with opposition and cancellation proceedings, but also create additional opportunities for–potentially fatal–error. A common motivator for a trademark owner’s selection of the TTAB as a venue for asserting trademark rights is often the decreased costs and formalities in comparison to an action in federal court. Clearly, these benefits of TTAB proceedings are reduced under the new rules.