How to protect your clients from new scams targeting US trademark applicants
Clients are increasingly expressing concern about the proliferation of scams targeting trademark applicants in the United States. Among other things, there has been a rise in fraudulent platforms claiming to deliver the undeliverable, as well as fraudulent filers submitting fake evidence of use. According to this year’s WTR Global Leaders, these surges are posing a huge problem. Many are calling on the USPTO to do more to combat the issue. Until then, it falls on practitioners to help their clients identify and report potential fraudsters.
How to mitigate risk
Practitioners are getting ahead of the problem
One unfortunate side effect of the growing importance of trademarks is the significant increase in scams and fraud committed by “unscrupulous actors that try to cash in on trademark owners’ rights”, says Max Vern of Amster Rothstein & Ebenstein. “The key is strategy and diligence, regardless of whether we are dealing with spoofers trying to lure trademark owners to ‘file’ or ‘renew’ brands through them, more sinister hijackers trying to fraudulently get marks assigned to them to get a foothold in the marketplace or outright copycats flooding the market with counterfeits.”
In some cases, bad actors are posing as cheap trademark service platforms or even the USPTO itself. “This is a huge problem,” Kimberly Herman of Sullivan & Worcester admits. She is making clients aware of these scams by including a detailed scam warning in written communications, while Andrew Price of Venable generally warns clients about this problem at the beginning of representation. “They tend to send us any scam notices so we can confirm that they should not pay them,” he says.
Christopher Schulte of Merchant & Gould has been very aggressive in taking action against scammers. “Our clients were recently solicited by purported trademark attorneys claiming that a third party was considering filing an application for their company name, which would then bar our clients’ trademarks,” he reveals. “The claim was false and the ‘attorneys’ turned out to be offshore actors.” Schulte’s partner, Danielle Mattessich, took the lead on reporting them to the USPTO, the California Bar and the FBI. She also submitted suspension demands to the parties’ website hosts; the parties’ accounts were subsequently suspended.
Brand owners must be assertive in their efforts
Elsewhere, many fraudulent filers are filing applications based on fake evidence of use in the United States. “Sometimes the same specimen can be found on multiple applications where only the trademark has been changed,” Ann Dunn Wessburg of Fredrikson & Byron reports. “When we investigate these, our investigators often find no actual use in the United States at all.” Unfortunately, there is little that can be done but to avoid selecting to use the marks that fraudulent applicants claim to own, given budget constraints and tight timelines that clients are operating under to find new trademarks, she says.
Vern disagrees; there are various steps that rights holders can – and should – take to mitigate risk, and brand owners should be assertive in implementing these measures as scams are a constant threat to intangible assets. He recommends that brand owners register their marks, put status alerts and watch services in place, engage online brand protection services, proactively police their rights and cooperate with authorities. This includes not only the USPTO, but also US Customs and Border Protection, which has “helpful programmes that can sometimes be overlooked”, Vern says.
USPTO in need of change, experts claim
However, the USPTO is facing criticism when it comes to its effectiveness in combatting certain fraudulent activities.
“The USPTO could do a better job of policing scam artists, which have been a problem throughout my career,” Price says. “Today, the USPTO overall… is slower than it has ever been in my 26 years of practice,” he adds. “As an aside, the USPTO’s recent changes to its search platform are a step backward.”
Wessburg agrees. “The letter-of-protest system is too subjective. Opposition proceedings are too slow,” she says. “While good changes have been made recently – including the reduced time to respond to office actions and the audits on applications – a more systematic process needs to be established.”
The US trademark registration system is built around the use requirement, and it is unlikely that this deep-rooted regime will change, Vern acknowledges. However, looking at prosecution in general, he says that US trademark owners – and their counsel – “would love to see” more expeditious processing and handling of examinations and registrations, as well as enhanced cooperation between the USPTO’s various trademark division units and a more user-friendly online database.
Fortunately, “we can see the light at the end of the tunnel when it comes to the latter of the three”, he says, but more work needs to be done.
Global Leaders is WTR’s annual opportunity to showcase some of the world’s top private practice trademark experts, allowing them space to share valuable insight into the most pressing issues dominating the IP space and their thoughts for the future. The 2024 edition is available now.