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Wednesday Aug 18, 2021

USPTO’s comprehensive strategy to fight trademark fraud

Blog by Drew Hirshfeld, performing the functions and duties of the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, and David Gooder, Commissioner for Trademarks at the USPTO

Registered trademark image

Businesses at home and abroad are becoming more and more aware of the value and benefits of a U.S. trademark registration. Unfortunately, along with the historic surge of new trademark filings over the past year (see our blog on the surge), the USPTO has also seen an increase in suspicious submissions ranging from inaccurate to fraudulent. The Department of Commerce’s Office of Inspector General, after analyzing a snapshot of data (applications filed between October 2, 2019 and April 30, 2020), found that we need to enhance controls aimed at combatting this increase in suspicious filings. We agree, and have been actively enhancing our register protection efforts to meet this challenge for some time now (as described in Appendix B of the report, titled Agency Response). The integrity and accuracy of our trademark register is more important than ever to our economy, to businesses everywhere, and to the USPTO. 

The rise in fraudulent trademark filings and trademark-related scams has driven us to implement new strategies and tactics to intensify our attack against those who would seek to undermine the value and legitimacy of this important intellectual property right. A change of approach, which we embarked on several years ago, was necessary to confront an unprecedented threat, one that is common among industries dealing with the scourge of counterfeits, fakes, illicit trade, and even piracy. We believe the best way to fight trademark application fraud and scams and to aggressively safeguard our trademark register is to pivot to a comprehensive brand protection-type strategy and starting last fall, we did just that.

As of this writing, the USPTO has experienced a 40+% increase in trademark applications over the past year, representing the greatest number of new trademark applications in history. This increase in applications has been driven by a number of factors during the pandemic, including the growth of cross-border e-commerce, foreign government subsidies, and a tremendous rise in new business formation. Thousands of foreign manufacturers that want to sell directly to U.S. consumers have been told that they need a U.S.-registered trademark for their products to receive priority position on e-commerce sales platforms. Even though this is not necessarily true, the phenomenon has spawned new low-cost filing mills, multi-national scams, and even created a secondary market for buying and selling U.S. trademark registrations.

As a result, low-cost trademark filing companies claiming to specialize in the acquisition of U.S. trademarks have aggressively been marketing their services to potential and unsuspecting clients. Most foreign manufacturers and sellers have little or no experience with U.S. trademark laws and registration procedures so they don’t know whether or not these services are legitimate. 

Conversely, many foreign agents are aware of the USPTO rules, yet try to find ways to circumvent them. For example, they hijack the credentials of attorneys licensed in the U.S. or they enter into relationships with questionable U.S. attorneys who rubber-stamp whatever paperwork they provide. The U.S. trademark registration system has historically relied upon the good faith intentions of its customers and their counsel.  These illicit operators, however, are trying to game the system in order to illegally obtain U.S. registrations.

Traditionally, our examining attorneys have been on the front lines of this fight, but conducting investigations instead of examinations only does a disservice to legitimate applicants seeking trademark registrations. Moreover, the examination process does not always efficiently lend itself to discovering wider patterns of fraud and improper behavior that often taint many applications at a time. 

Because multiple applications are often filed by a single entity using the same data elements but owned by multiple applicants, it is by tracking those common data points through our IT systems that we identify and fight back against these schemes. To achieve this result on the scale we need, in 2019 we created – and are now expanding – a special task force of attorneys, analysts, cyber investigators and IT personnel to investigate submissions that we suspect are violating U.S. rules of practice, representation rules, or USPTO’s terms-of-use.

The USPTO does not have law enforcement capability, so we leverage what we do have: the ability to enforce our rules against those seeking to circumvent them. Further, when an investigation uncovers attorney misconduct, we refer them to our Office of Enrollment and Discipline. And when an investigation involves suspected criminal activity, we engage with law enforcement authorities.

For those suspected of violating the USPTO’s rules, we issue show-cause orders requiring them to establish that their filings and behavior are legitimate. If they respond inadequately, or if we find that applications were filed with the intent to circumvent our rules, then we issue a final order for sanctions, including terminating the tainted applications and blocking the filer’s access to our trademark system. Additionally, we are increasing our database security through login, identity authentication, and role-based access controls. Doing so will help prevent bad actors from submitting any future applications.

The USPTO has other new tools we are now employing against inaccurate or fraudulent submissions. For example, in our Post-Registration Proof of Use Audit Program, we implemented a fee penalty in January for those filing inaccurate claims-of-use in their filings to maintain their registrations. And this is starting to have a positive impact on accuracy. Also, the soon-to-be implemented Trademark Modernization Act of 2020 will allow third parties to challenge registrations they believe are not or have never been validly used. These new cancellation proceedings will help clear our register of inaccurate and unused registrations which clutter the register and diminish its value to our country and the trademark ecosystem.

The surge of trademark filings has created challenges, but those challenges also highlight the significant value of U.S. trademark registrations.  Brands that are registered at the USPTO command more respect than ever before, and their growing status is a direct result of the U.S. trademark system that is constantly evolving. And as we forge ahead, we welcome every opportunity to work with our stakeholders both foreign and domestic to protect our register and issue trademarks that have true and lasting value.

Comments:

My service mark name was hi-jacked by godaddy, Inc. Can you help me take action to hold them accountable?

Posted by Edward C. Knox Jr. on August 18, 2021 at 04:37 PM EDT #

I'm pleased the USPTO recognized an increase in suspicious trademark submissions ranging from inaccurate to fraudulent. Also, that the Department of Commerce’s Office of Inspector General, found that they need to enhance controls aimed at combatting such increases in suspicious filings. In 1984 my inventions, The Baby On Board Sign was stolen by Michael I. Lerner while he was working on my behalf at America Idea Management & via his company Safety First. He registered, patented, trademark etc. my invention in his name instead of mine, made 100's of millions dollars. See you in court Michael I. Lerner. I need a great lawyer, otherwise I will represent myself!

Posted by Walter Wilson on August 18, 2021 at 07:31 PM EDT #

This is a serious issue. Intellectual property law, International copyright law and trademark laws are not enough to stop the patent/copyright work theft. These laws should be improved.

Posted by Techsevi on August 30, 2021 at 05:25 AM EDT #

This is a great step forward against fraud. This will help reputed companies to grab their own trademarks strongly and efficiently. It will decrease suspicious submissions ranging from inaccurate to fraudulent.

Posted by Codingface Team on October 12, 2021 at 12:37 PM EDT #

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