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The collective expertise of our global team distinguishes OBWB in the field of Intellectual Property Law. We align our best resources to meet each client's specific needs and we treat each matter with the highest degree of attention and care.

The USPTO's Efforts against Fraudulent Trademark Filers and Options for Affected Victims

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During the pandemic, U.S. trademark application filing has surged by about 40 percent. The mounting number of applications accompanies an increase in fraudulent applications. Amid such a rapid surge, the U.S. Patent and Trademark Office (“USPTO”) has been working on several fronts to reduce or prevent trademark fraud, theft, and abuse.

During the pandemic, U.S. trademark application filing has surged by about 40 percent. The mounting number of applications accompanies an increase in fraudulent applications. Amid such a rapid surge, the U.S. Patent and Trademark Office (“USPTO”) has been working on several fronts to reduce or prevent trademark fraud, theft, and abuse.

Among those fraudulent trademark applications, large volumes involve Chinese trademark firms. One type of fraudulent practice may relate to fake specimens or fake statements of actual use in commerce. Another type of fraudulent practice widely used by Chinese trademark firms is the use of invalid attorney signatures, false addresses, or false, hijacked, stolen, or “borrowed” U.S. attorney credentials on applications and affidavits of use. The large volume of fraudulent trademark filings conducted by Chinese trademark firms may be related to implementation of the USPTO’s new rule in 2019 requiring foreign domiciled applicants to be represented by U.S.-licensed attorneys and the high demand of e-commerce during the pandemic.

During the pandemic, many Chinese manufacturers saw the opportunity to directly sell their products to customers through various e-commence platforms, and to transform themselves from being OEM/ODM manufacturers to brand owners. Nevertheless, one requirement to open an on-line shop on most of the major platforms, such as Amazon, is to obtain a U.S. trademark application number. However, after the USPTO’s new rule requiring foreign domiciled applicants to be represented by U.S.-licensed attorneys was implemented, the cost and the resulting bar of compliance of filing U.S. trademark applications have been significantly heightened. To illustrate, Chinese trademark firms will offer to file one U.S. trademark application for a fee ranging from $300USD to $800USD including the USPTO official fee, and covering the entire prosecution cycle. By involving a U.S.-licensed attorney to file a U.S. trademark application, the cost will necessarily increase, and the volume of the cases may decrease in view of discouraging higher fee charges.

To maintain their U.S. trademark business, Chinese trademark firms had to be “creative” to circumvent the USPTO’s new rules and regulations. In re Zhaoyu Luo relates to a Chinese trademark firm that falsely designated a U.S. attorney as the attorney of record and arbitrarily used the victim attorney’s signature without agreement or engagement. The fraudulent conduct was caught by the victim attorney.[1] In re Shenzhen Haiyi Enter. Mgmt. Co., Ltd., Haiyi Enter. Serv. (Shenzhen) Co., Ltd.., Haiyi Co., Ltd., and Haiyi Group Co., Ltd. relate to a Chinese trademark firm and its subsidiaries that used the name of a deceased U.S. attorney and a fictitious attorney created by them to file more than 10,000 trademark applications.[2] In re Shenzhen Seller Growth Network Tech. Ltd., et al. relates to a Chinese trademark firm that paid U.S.-licensed attorneys and used their names and bar credentials to file more than 13,000 fraudulent trademark applications -- which allegedly shocked the attorneys participating in the fraudulent scheme.[3] Unfortunately, due to lack of education and transparent information, most of the Chinese applicants or registrants are not aware of these fraudulent arrangements which taint their trademark applications and registrations until they learn that their right to file has been suspended.

It should be noted that in Shenzhen Seller Growth case at least three disciplinary orders issued by the USPTO’s Office of Enrollment and Discipline (“OED”) detail the Chinese firms’ practices of improperly entering the names and signatures of U.S.-licensed attorneys. The participating attorneys settled the disciplinary action with the USPTO by agreeing to suspensions of their licenses to practice before the office for a certain period of the time, and agreeing to meet all requirements and responsibilities addressed in the final order.   This is a very serious issue for the involved US.-licensed attorneys because most state licensing authorities impose reciprocal discipline, meaning that the attorney’s license to practice law generally will also be suspended for the same period that the license to practice before the USPTO is suspended.

To combat fraudulent trademark filings, the USPTO has issued numerous show cause orders in recent years for suspected violations and final orders for sanctions.  In one notable order issued in January 2022 in In re Abtach, Ltd., thousands of pending trademark applications handled by the respondents were terminated.  In the most recent show cause order issued on September 7, 2022, the USPTO alleged that the respondents Shenzhen Seller Growth Network Tech. Co., Ltd., et al. conducted unauthorized practice before the USPTO in trademark matters, providing false, fictitious, or fraudulent information in trademark submissions with the intent to circumvent these rules. The order requires the respondents to show cause why the USPTO should not sanction the respondents. Among the potential sanctions posted by the USPTO, three items will severely affect the rights of the respondents’ clients:          

(1) Strike or otherwise give no weight to all trademark-related documents submitted by the respondents;

(2) Terminate all ongoing proceedings containing submissions filed by the respondents;

(3) Consider giving no weight to post-registration maintenance submissions.

Interestingly, facing such harsh censure and potential sanctions from the USPTO, the respondents released a statement in Chinese on September 9, 2022 stating “the USPTO is currently conducting a ‘routine review’ of the trademark agency industry in China. As the largest international intellectual property SaaS platform in China, our company has been listed in the first batch of inquiries to undergo routine review.  It is currently undergoing a ‘normal review’, and there is no so-called sanctions by the USPTO...” However, the statement did not disclose that three U.S.-licensed attorneys who lent their bar credentials to the respondents for filing trademark applications have admitted the misconduct and have already received disciplinary orders from the USPTO. Apparently, the respondents want to play down the seriousness of the USPTO’s show cause order against them and their Chinese clients.     

Victims affected by fraudulent trademark filers should consider their options, as follows:

For Pending Trademark Applications Included in a Show-Cause Order

(1) The applicant should check the status of the application (using the USPTO’s Trademark Status & Document Retrieval (“TSDR”) system) to see if it is suspended. If so, the applicant will not be able to make changes to the application.

(2) Should the applicant want to obtain registered trademark protection, the applicant will have to retain a qualified U.S.-licensed attorney to file a new application which will receive a new serial number, new filing date, and which cannot expedited.

(3) To prevent the prior suspended application having any negative impact to the new application, it may be advisable to file an express abandonment of the prior trademark application.

For Trademark Registration Included in a Show-Cause Order

(1) The USPTO has not yet acted to cancel a registration included in the show cause order while the USPTO has put the application in a suspended status pending administrative review.   However, the following could happen:

a.      If there is a pending renewal, it could be disrupted due to fraudulent declarations;

b.      If there are sanctions, then it may not be possible to file the Section 15 Declaration of Incontestability; and

c.      Reexamination or expungement proceedings may be appropriate (whether filed by the USPTO or third parties).

(2) The registrant should consider immediately filing a request to change the attorney of record to a legitimate U.S.-licensed attorney.

(3) The registrant may consider filing a new application in the same class with slightly different description to secure a new trademark registration, to distance itself from the alleged fraudulent filing. 

Which of these above-mentioned options, or indeed still others, should be decided after consultation with a legitimate U.S.-licensed attorney.

If it is believed that inclusion of an application or registration in a show cause order is in error, the applicant or registrant may file a petition to the Director requesting removal of the application or registration from the scope of the show cause order (and any subsequent sanctions). For example, if a trademark application was filed by a foreign-domiciled registrant in good faith before the implementation of the USPTO’s new rule effected on August 3, 2019, the trademark registration may not involve unauthorized practice before the USPTO,[4] and thus, the registrant should be entitled to request that the Director remove it from the show cause order and subsequent sanctions.

Finally, to avoid any problems caused by fraudulent trademark filers, brand owners seeking trademark counsel should carefully analyze and investigate solicitations from individuals and firms advertising low-cost application and registration-related legal services. If the offer looks too good to be true, it probably isn’t legitimate. 



[4] “If a document submitted by a foreign applicant or registrant prior to the effective date of this rule requires no further action by the applicant or registrant, the USPTO will not require appointment of U.S. counsel as to that filing.” the USPTO response to proposed rules, Federal Register Publication dated July 2, 2019 at https://www.federalregister.gov/documents/2019/07/02/2019-14087/requirement-of-us-licensed-attorney-for-foreign-trademark-applicants-and-registrants