USPTO Issues Sanctions to Order 15,000 Chinese Marks Cancelled

USPTO Issues Sanctions to Order 15,000 Chinese Marks Cancelled

On Friday, December 10, 2021, the USPTO issued a final order for sanctions requiring Senzhen Huanyee Intellectual Property Co., Ltd. and its executive director Ms. Yusha Zhang (collectively “Respondents”) for filing 15,000 trademark applications in contravention of the U.S. Trademark Rules of Practice (“Rules”). The sanctions imposed include: (1) permanently precluding Respondents and their employees from submitting trademark-related documents at the USPTO; and (2) terminating all ongoing proceedings containing submissions filed Respondents, including abandoning applications and cancelling registrations filed by Respondents. In total, the USPTO included a list of 15,000 marks under Respondents’ care that it will abandon or cancel. This represents fees of more than $3.5 million that will not be refunded to Respondents or its clients.

U.S. local counsel rule

Respondents violated various Rules including the unauthorized practice of law, providing a false domicile address, impermissibly entering signature of others, and misusing the accounts. On August 3, 2019, the USPTO updated its rules requiring all foreign entities to be represented by foreign counsel. The reason for this rule was very straightforward. It is impossible for any foreigner to be well-versed in the nuances of U.S. trademark law. Without the benefit of U.S. legal counsel, it is difficult to navigate the U.S. system, thereby increasing the burden both on the foreign trademark owner and the USPTO, which led to the adoption of the rule. However, since the adoption of the rule in February 2019, there has been a flurry of shady and borderline ethical activity, where foreign filers reach out to U.S. attorneys asking to borrow their bar number (a requirement under the new rules), try to review the USPTO database records trying to secure bar information wherever they can, and/or try to entice younger attorneys into giving them their bar information for a low wage. None of these practices are allowed under the Rules, and with last week’s decision, this should be a warning shot to any attorney (U.S. or foreign) engaging in such activity. The Rules are in place to protect the integrity of the Trademark Registry and trademark owners. When trademarks are cancelled en masse like they are under this Sanctions Order, clients suffer the consequences.

Providing a domicile address

As part of the rule above, all applicants must provide a domicile address. This was especially true for any foreign-domiciled trademark owner to determine whether it needed to be represented by foreign counsel. It is against the Trademark Rules of Practice to provide any false, fictitious, or fraudulent information in a trademark submission to the USPTO for any purpose. Any person who files documents before the USPTO is presumed to be aware of the Rules.

All USPTO documents must be personally signed

USPTO Rules require that all documents submitted to the USPTO must be personally signed by the named signatory. A paralegal or assistant cannot sign their attorney’s name; this violates the Rules. The USPTO has a very sophisticated system set up to address these exact scenarios. The person who is signing the application is doing so often under penalty of perjury, and without personal knowledge of the facts in the application, cannot verify the statement in the application or other document. Applications must be signed in pen and ink or the signatory’s electronic signature must be affixed. No person may sign their name for another’s. This can be grounds for fraud and registrations have been cancelled for this action alone.

Do we need a trademark bar?

It has been suggested by me and others, that we need a trademark bar in the United States. Many countries already require attorneys to study and pass a trademark specific exam before they can become “qualified” trademark attorneys. This seems a reasonable hurdle given all that is at stake when client’s apply to register their marks. Further, it seems odd the United States does not already have such a mechanism in place considering the size of its trademark registry. Any U.S. licensed attorney, whether they know anything about trademark law or not, can represent trademark clients before the USPTO. And in this regard, those U.S. attorneys who intentionally practice without understanding the Rules are no different than these foreign attorneys who are deliberately and flagrantly violating our Rules of Practice.

This Sanctions Order is a good first step by the USPTO.  There are other violators out there, and they are not all foreigners, taking advantage of and preying upon trademark owners. The USPTO is now aware of and has issued Orders to Show Cause against them. Eventually, these practices that skirt the Rules will catch up with those looking to take advantage.

The Trademarkabilities Masterclass is the solution

It is for this reason, that we created the Trademarkabilities Masterclass for any U.S. practitioner looking to learn more and ensure they are practicing ethically and properly before the USPTO. Trademarkabilities is a comprehensive, rules-based training program for attorneys. We cover all of these Rules and more to ensure that you can confidently represent attorneys before the USPTO, no matter what your experience level with trademarks. Plus, we provide all the strategic and practical guidance you need to help ensure you practice with a healthy respect for the Rules, and most importantly, ensure your client’s rights are secured and protected, which is why they hired you (as opposed to going it alone) in the first place.

If you want to learn more,  join our mailing list, and download our free e-guide “5 Tips for Trademark Attorney Success.” Or, consider joining Trademarkabilities® Masterclass to elevate your trademark knowledge.