USPTO Continues Efforts to Battle Fraud and Improve Trademark Register Integrity

Amid a 40-percent surge in U.S. trademark applications during the pandemic, the U.S. Patent and Trademark Office (USPTO) has been working on several fronts to improve the security of the trademark filing system and protect trademark owners from fraud, theft, and abuse.

While applicants previously enjoyed an examination process in which a first Office Action or approval for publication was issued in less than three months, the historic rise in the number of applications has increased average wait times to seven to eight months during the USPTO’s fiscal quarter ending March 2022. (See the USPTO’s data dashboard). In addition, the mounting number of applications has caused delays in other areas, such as renewals and overall pending application inventory, as well as an increase in fraudulent applications.

The volume of fraudulent applications has raised a range of issues. One significant focus is on fake specimens and allegations of actual “use in commerce” found in applications and post-registration renewals. Other concerns include invalid attorney and applicant signatures, false addresses, and false, hijacked, or “rented” U.S. attorney credentials on applications and affidavits of use. The U.S. Department of Commerce, Office of Inspector General (OIG) audited the USPTO’s trademark fraud risk framework (looking at applications filed between October 2, 2019, and April 30, 2020) and in August 2021 reported that new controls were needed to combat this increase in suspicious filings.

At the time, USPTO leadership stated that it had earlier recognized this trend and that it initiated steps to deal with suspicious filings beginning several years before the OIG’s report. In 2019, the USPTO created—and now has stated it is expanding—a special fraud task force comprised of attorneys, analysts, cyber investigators, and IT personnel to investigate suspected violations of U.S. filing rules.

To improve trademark register integrity, the USPTO implemented a rule in 2019 requiring foreign domiciled applicants to be represented by U.S.-licensed attorneys for the purpose of increasing compliance with U.S. trademark law and USPTO regulations. Further, identity verification for all U.S. trademark filers—a step the USPTO has said is intended to safeguard the trademark registry—will become mandatory on August 6, 2022.

The Trademark Modernization Act of 2020 (TMA) is also beginning to assist the USPTO in its efforts to battle fraud. As required under the TMA, and implemented on December 27, 2021, the USPTO has begun receiving petitions from third parties to cancel registrations believed to never have been validly used, through new non-use expungement and reexamination proceedings.

At INTA’s 2022 Annual Meeting Live+, on May 1, 2022, USPTO officials reported on the status of the new non-use proceedings to members of INTA’s Trademark Office Practices Committee, USPTO Subcommittee. They noted that the proceedings have direct links to the USPTO’s anti-fraud efforts, including petitions that provide valuable information to the USPTO fraud task force on patterns and sources of fraudulent filings for referral to the USPTO’s Office of Enrollment and Discipline (OED), which handles U.S. attorney disciplinary matters, as well as evidence for USPTO Director-initiated non-use and sanctions proceedings.

Further, both the USPTO and the OED have deepened anti-fraud efforts. The USPTO has issued numerous show-cause orders in recent years for suspected violations and final orders for sanctions if responses are inadequate. These orders have terminated tainted applications and blocked fraudulent filers’ access to the U.S. trademark filing system.

In one notable recent order on January 25, 2022, In re Abtach, Ltd., the USPTO barred several entities and their parent companies from further communication with the USPTO. Their accounts were permanently deactivated and thousands of pending trademark applications handled by the respondents were terminated. In another show-cause order issued on June 30, 2022, the USPTO alleged that respondents Yanhua Chen and Huang Yuchen falsely designated certain U.S. licensed attorneys for more than 350 applications. The USPTO discusses its efforts and lists show-cause and sanctions orders here.

The USPTO does not have law enforcement authority to penalize or prosecute specific attorneys in response to evidence of fraud, but it works with the OED on U.S. attorney misconduct issues. The OED has prosecuted and issued numerous disciplinary orders relating to patent and trademark practitioners. Among the most notorious, the OED suspended Jonathan Morton for two years for serving as attorney of record for more than 32,000 applications prepared by Chinese trademark services, including 400 in a single day, without his appropriate U.S. attorney review.

The Trademark Office Practice Committee, USPTO Subcommittee continues to monitor these developments and is working with the USPTO to enhance these efforts.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. 

© 2022 International Trademark Association