Earlier this year, in late May, Patexia released its Trademark Intelligence 2022 Report analyzing the trademark prosecution landscape during the past five years. One of the highlights of this report was covered in Patexia 137, analyzing an overall increase in filing activity which was shown to come mostly from Chinese entities. Trademarks coming from China have seen an ongoing increase during the last decade;however, the growth of 143% during 2020 was a record. Growths in trademark filings are a sign of innovation, new products, and market expansion; however, this didn't seem to be the case. As a result, USPTO investigated the growth coming from Chinese entities and the motives behind it, publishing a study in January 2021.

China is reported to have adopted more than 70 subnational trademark subsidy measures, available for domestic and foreign applications. Since these subsidies exceeded the cost of registering a trademark, many Chinese firms sought to register trademarks without any intention to really use them in commerce. Applicants acting in bad faith trying to register trademarks to ransom legitimate trademark owners or sell similar products were another possibility behind the increased Chinese-originating trademark applications.

As part of its measures, UPSTO anticipating the growing trend, made several changes in mid-2019 to the trademark prosecution practice requiring all applicants who were not domiciled in the United States to engage US licensed attorneys to file and prosecute trademark applications. Unfortunately, these changes didn’t seem to have a great effect, resulting in one of the most active attorneys in trademark prosecution being suspended for two years in 2022. He was approached by multiple Chinese entities and didn't set a limit to his volume of work resulting in his words, “rushed and sloppy applications, sometimes spending from 2.5 to 10 minutes to review the applications and determine the legitimacy of the information.”

USPTO Director Kathi Vidal has highlighted the importance of reducing trademark pendency so that people, with great ideas can secure their trademarks and start investing in their company and brand. One of the ways to ensure a low trademark pendency is to limit the number of fraudulent applications. The battle seems to be ongoing, with USPTO releasing two show cause orders two weeks apart. On August 25, 2022, USPTO sent a show cause order to Shenzhen Haiyi Enterprise Management Co., Ltd., Haiyi Enterprise Service (Shenzhen) Co., Ltd., Haiyi Co., Ltd., and Haiyi Group Co., Ltd., accusing them of violating USPTO Rules for trademark applications. These entities have been using USPTO.gov accounts that appear to have been improperly created in the names of others to submit thousands of trademark-related documents in a manner that suggests Respondents were routinely and improperly practicing before the USPTO in trademark matters. Furthermore, there were document filings that included false, fictitious, or fraudulent information, including but not limited to names and electronic signatures of US-licensed attorneys, applicants, and fictitious individuals. In one occurrence, the details of a decease US-based attorney were used for the fraudulent filings.

On September 7, 2022, another show cause order followed and was sent to Shenzhen Seller Growth Network Technology Co., Ltd., Shenzhen Qianhai Bishengdao Network Technology Co., Ltd., and Shenzhen Qianhai Be-Victory Network Technology Co., Ltd. The above respondents are accused of improperly entering the signatures of others and providing false, fictitious, and/or fraudulent information in trademark submissions to the USPTO to willfully conceal their unauthorized practice of law.

The battle against fraudulent filings isn't going to be an easy one, considering that most of the fraudulent filings are coming from entities based in Shenzhen, dubbed China’s Silicon Valley. Many legitimate companies operate there and have been responsible for remarkable innovation and economic development growth. However, it appears that USPTO is doing a fine job distinguishing legitimate companies from those responsible for fraudulent filings.

What are some ways in your opinion to detect the fraudulent trademark applications?