Updates from the USPTO and OED: The intersection of U.S. Trademark Applications filed by Foreign Domiciled Applicants and Fraud Enforcement.

The United States Patent and Trademark Office (“USPTO”) with the assistance of the Office of Enrollment and Discipline (“OED”) has been instituting changes in U.S. patent and trademark practice over the last five to ten years that are designed to improve the overall quality of the U.S. trademark system and reduce fraud and abuse. One change that went into effect in August of 2019 was the requirement that foreign trademark applicants at the USPTO must be represented by a licensed U.S. attorney. The rule change can be found here. 
This change applies to newly filed trademark applications as well as renewal fees, office actions and TTAB proceedings for trademarks filed before or after August of 2019. The rule change applies to trademark applicants whose domicile (legal residence for individuals or principal place of business for an entity) is outside of the United States. Technically, foreign domiciled applicants can still file their applications pro se, but they will not be able to respond to an Office Action or take any other necessary step to achieve registration without the designation of a U.S. attorney. Currently Madrid Protocol applicants with no substantive office action are exempt from the change, but it is anticipated that this exemption will eventually be removed.   
One of the driving forces behind this rule change has been the increase in fraudulent applications filed by foreign entities, either by the entity itself, or as been increasingly common by a non-U.S. licensed foreign agent/trademark filing company. The USPTO has been running into a massive number of improperly filed trademark applications due to violations of the signature requirements, improper statements of use, improper specimens, and other defects. One of the clear goals of the rule change was to improve the quality of U.S. applications (avoiding unintended mistakes), but a secondary (and possibly primary) goal was to reduce abuse of the U.S. trademark system (avoiding intentional abuse).
The rule change may seem xenophobic at first glance, but what the USPTO and particularly the OED is focusing on is using U.S. licensed attorneys as gatekeepers to maintain trademark quality and ethical obligations. Because the USPTO and OED have the ability to sanction U.S. counsel, requiring their involvement in foreign applications and assisted U.S. applications provides a level of quality control backed by the ethical obligation of U.S. counsel. 
A U.S. domiciled individual or entity can still file and prosecute their own trademark application, however, if they are being represented by a third party before the USPTO that third party must be a licensed U.S. attorney. While it is not per se wrong to have “assistance” (not representation) with the mechanical filing of a patent application (see e.g., the many online non-attorney assisted filing services), many aspects related to trademark filing, and especially prosecution of a trademark application, fall under the “practice of law.” The USPTO (and the OED) have been wrestling with the definitions and rules by which domestic non-U.S. attorney assisted systems can operate with trademark filers. What is clear is that a non-U.S. attorney offering services that are the “practice of law” is in violation of the terms of service of the Trademark Electronic Application System (TEAS) and/or general trademark practice (as well as numerous state laws). Examples of actions that are very likely (to almost certainly) be considered the practice of law are: choosing the class of goods under which a trademark should be filed; drafting the goods and services; providing trademark clearance opinions; and responding (or providing advice) to office actions that raise substantive issues of law.
In addition to the U.S. counsel requirements the USPTO has increased its activity in pursuing and challenging fraudulent activity. A January 2022 Federal Register Notice detailed processes by which the USPTO and OED can investigate and terminate suspicious trademark filings. Actions can now be instituted based on information from Examiners, data analytics on recent trademark filings, letters of protest from the general public (which can be submitted to [email protected]), media reports, and/or law enforcement. If the USPTO makes a determination that violations have occurred in the terms of use of the USPTO online system (TEAS) and/or the trademark rules of practice, the examination will be suspended and an order to show cause will be included in the online trademark file (Trademark Status and Document Retrieval “TSDR”). If the USPTO ultimately decides the activity warrants sanctions it can take necessary action, including termination of the application and/or cancellation of the registration.    
Following in the footsteps of the USPTO’s foreign domiciled applicants’ rule and the explicit notice of its investigative power, on January 25, 2022 the USPTO sanctioned three foreign companies that were acting as trademark agents for thousands of (mostly foreign) trademark applicants. Not only did the USPTO permanently deactivate the companies online USPTO accounts it took the draconian step of cancelling over five-thousand trademark applications filed by these companies. The final USPTO order (which can be found here) details a host of actions above and beyond filing improper documents. The trademark filing companies allegedly created errors in the filings and falsified office actions to increase fees and costs for the trademark applicants. While individual applicants effected by the ruling can petition for reinstatement, the default is cancellation. 
A common example of the abuse of trademark registrations is the improper filing of applications claiming use in commerce (that did not exist, often with a false specimen), and then using improperly obtained registration to harass and/or block legitimate trademark users. The Amazon Brand Registry has become ground zero for this type of abuse. Manipulation of the Amazon Brand Registry by fraudulent trademark registrations is adversely affecting legitimate brand users, leading to the inability to market products on Amazon, the need to institute cancellation proceeding, and/or Federal District Court litigation to recapture their trademark rights.  
With the exception of increased filing costs for some foreign applicants, the overall effect on the U.S. trademark system and U.S. consumers should be beneficial. Inherent in many of the above discussed rule changes has been the ease with which trademark applications can be filed online, which in turn has resulted in unscrupulous actors preying on foreign (and domestic) trademark filers. Additional abuses have resulted from intentional filings of applications with fraudulent statements of use to harass and/or blackmail legitimate trademark users. The actions by the USPTO (often through the OED) are attempting to remedy the abuses to foreign and domestic applicants and improve the overall quality of the U.S. trademark system. Enforcement actions against bad actors and gatekeeping by U.S. counsel will hopefully result in a better U.S. trademark system for all. 
One of the best ways to protect yourself and your mark from bad actors is to register your trademark with the USPTO. It is highly advisable to consult an experienced trademark attorney to discuss your individual needs and goals. If you have any questions about trademarks, clearance searches, opinion letters, and/or you would like to discuss protection and registration please contact me at [email protected] or visit my website at www.chiaraiplaw.com

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