This week marks five years since the USPTO implemented its Requirement of U.S. Licensed Attorney for Trademark Applicants and Registrants. Also known as the “U.S. Counsel Rule”, the USPTO on August 2, 2019 amended its trademark rules of practice to require any non-U.S. domiciled trademark applicant, registrant, or party to a USPTO trademark proceeding to be represented by an attorney licensed in good standing by at least one State, the District of Columbia, or a U.S. commonwealth or territory.
USPTO’s Campaign of Discipline and Attorney Sanctions
Since implementing the U.S. Counsel rule, the Office of Enrollment and Discipline has investigated scores of licensed U.S. practitioners who engage in trademark preparation and prosecution services for Chinese applicants. Dozens of U.S. attorneys have received public, published discipline, resulting in punishments from reprimands to suspensions to exclusion (disbarment) from practicing before the USPTO. As OED Director Covey explained at a recent conference at Mitchell Hamline School of Law focusing on U.S.-China trademark issues, “trademarks used to be a sleepy side” of the OED’s activity. Now, it is a major part of OED’s workload. And the work keeps piling up as the OED continues to investigate more and more practitioners.
A review of the OED’s “Freedom of Information Act Reading Room” confirms Director Covey’s observations. A quick word search of those decisions over the past several years show an enormous uptick of disciplinary decisions against practitioners who are themselves Chinese. While the USPTO may not be intentionally targeting practitioners of Chinese descent, the number of published decisions against native Chinese U.S. attorneys is staggering.
For practitioners who engage in international IP law, the fact that so many Chinese native U.S. attorneys are often the subject of such matters should come as no surprise. Foreign clients who seek IP rights in the U.S. usually desire to get help locally in their home country by individuals with native language skills and cultural connections. In China, for example, from where much of the alleged misconduct arises, a citizen does not have access to the Google search engine, which makes it difficult, if not impossible, to locate and engage directly with a U.S. licensed trademark attorney.
Since the U.S. Counsel Rule’s implementation, the OED has worked side-by-side with the Trademark Commissioner’s Office of Trademark Policy and the “Trademark Register Protection Office.” The USPTO uses artificial intelligence and other technical tools to help identify potential problematic behavior, such as preparation, review, and filing practices that may violate the USPTO’s trademark rules of practice or “terms of service” for accessing the USPTO’s databases. Separate from attorney discipline, in the past five years, the USPTO has issued over 1000 “administrative orders and sanctions” based on alleged improper trademark filing conduct. In nearly all of the sanction cases, the sanctioned party is a Chinese individual or entity.
Why China? Subsidies and Amazon Brand Registry
The USPTO’s disciplinary and sanctions enforcement measurements have overwhelmingly been focused on trademark applicants from China–and the U.S. attorneys who represent them. The USPTO has been highly critical of the Chinese government for allegedly creating financial incentives in the form of government subsidies paid to Chinese individuals and entities who acquire foreign intellectual property rights.
In January 2021, the USPTO announced its criticisms of the Chinese subsidy system in “Trademarks and Patents in China: The Impact of Non-Market Factors on Filing Trends and IP Systems.” The USPTO commented that:
Although the USPTO is not aware of public source information . . .it has observed the impact of Chinese subsidies granted for foreign trademark applications. After Shenzhen and other cities began offering subsidies for overseas trade applications, the USPTO experienced a surge in fraudulent trademark applications originating in China.
A second reason for the surge of trademark applications from China is Amazon. Amazon created the “Amazon Brand Registry” ostensibly to help brand owners against knockoffs. But Amazon gets to say who qualifies for the “Brand Registry.” If Amazon believes that marks are being used inappropriately, it will ban not only the owners of the marks from inclusion in the Brand Registry–it also bans applications based on the identity of practitioners.
Some attorneys have referred to this practice as being “blacklisted.” Amazon, however, denies the existence of any “blacklist” of attorneys. But at the same time, Amazon has rolled out its “IP Accelerator” which purports to “sidestep trademark registration pitfalls by accessing our network of trusted IP law firms and get high-quality services at competitive rates.” But only a handful of law firms have actually been approved for the IP Accelerator program.
Best Practices For Trademark Practitioners To Avoid USPTO Discipline And Sanctions
Whether you have been practicing law for many years or are just starting in the field of IP law, there are several basic steps a practitioner can take to mitigate the risk of being investigated, sanctioned or otherwise disciplined by the USPTO as a result of allegedly improper trademark application filing practices.
1. Vet the Foreign Associate
Most international IP practices where a non-U.S. client is seeking patent or trademark rights in the USPTO necessarily involve a foreign intermediary–that is, someone (or something) not themselves “the client” but who is a middleman or intermediary between attorneys from around the world and clients looking to register IP rights abroad.
The USPTO has always recognized the ability of a U.S. practitioner to receive instructions from and obtain payments for their services from an intermediary, such as a foreign associate. The USPTO has advised practitioners to ensure that the applicant-client is aware of the intermediaries’ involvement and has given its “informed consent” for the client instructions to be relayed through the foreign associate. For a more detailed discussion on best practices for dealing with foreign associates, see our posts: Breadth of PTO Ethics Opinion Could Alter How IP Firms Interact with Foreign Associates.
In China, for examples, there are hundreds of trademark agencies, law firms, and other entities that assist locals with getting a trademark registered in the United States and other key markets outside of China. Many of these applicants lack the means, funds or sophistication for locating and directly engaging with a qualified licensed U.S. attorney on their own. As a practical matter, without an intermediary, those individuals will find it difficult, if not impossible, to locate themselves a U.S. counsel.
For U.S. attorneys who work with foreign intermediaries, vetting the associate is critical. The U.S. attorney should ensure themselves that the foreign associate is conducting itself properly and ethically. For a more detailed discussion on best practices for sizing up a possible intermediary or associate relationship, check out our post Get Out of Town: The Ethical Perils of Outsourcing IP Services.
Questions U.S. attorneys may wish to ask a foreign referral source include:
- Is the associate authorized to provide trademark legal rights or services by the laws of its own country?
- Are the people who are working for the associate authorized by law in their jurisdiction?
- How long has the associate served in this type of capacity?
- What is the associates’ familiarity with the legal subject area?
- Has the associate worked with other law firms?
- How does the associate protect confidentiality?
- Have you visited the associate personally, seen its operations, and met with those who would be involved?
- How does the associate handle conflicts of interest?
2. Know Who You Represent
In a trademark representation, the practitioner’s legal “client” is the applicant or registrant itself. Some trademark practitioners believe the intermediary is “the client” because that is who “pays the bills.” But just because a foreign law firm pays your fees, that does not make them your “client”–at least as that term is used in the world of legal ethics.
What this means is that U.S. practitioners must treat each matter individually in understanding their client relationships. If one intermediary refers to a trademark practitioner 1,000 unique trademark applications on behalf of 1,000 different applicants or owners, the U.S. attorney is being asked to form 1,000 separate new attorney-client relationships. They are not “representing” one party (the intermediary). They are representing separately each of the 1,000 rights holders.
3. Conduct a Conflict Check Including Related Trademarks
Lawyers owe a duty of loyalty and confidentiality to their current clients. The USPTO and state bar ethics rules prohibit an attorney from representing two clients simultaneously when: (1) the lawyer or her firm is representing another client (even in an unrelated matter) whose interests are directly adverse to those of the prospective new trademark client; or (2) the lawyer is materially limited in their ability to represent the new prospective trademark client due to some other interest–whether it is an interest of another client, a former client, a third party, or a personal interest of the lawyer.
The only way to make these determinations is by conducting a conflict check, preferably before agreeing to represent each (or any) of the foreign clients. The conflicts rules necessitate that lawyers maintain a system for identifying and resolving potential conflicts of interest. Many firms use computerized search systems, in combination with manual “real-time” firmwide communications, prior to accepting any new engagement.
4. Document the Scope and Duration of Your Representation
Some lawyers may believe that they can simply file a trademark application and the representation has concluded. But in most cases, the client desires more than just filing the application. A “typical” trademark representation can last for months, if not years. When a client says they want your help with securing a trademark registration, it is generally understood that you are agreeing to do more than simply file the application. A “full scope” trademark representation ordinarily means preparing, filing, and prosecuting the application, such as responding to official actions.
A written agreement that binds the associate and is agreed to by the applicant-client is the best medicine for ensuring that the applicant and intermediary understand their respective roles.
5. Review and Verify Information
In many cases, the practitioner must rely upon information provided by a foreign associate to draft a U.S. trademark application or Office Action response. Trademark practitioners are expected not to simply “rubber stamp” whatever information has been compiled by their clients or their foreign representatives. The OED expects the practitioner to actually do work.
For example, one of the issues that has dogged the IP bar since implementation of the U.S. Counsel Rule is the adequacy of an applicant’s proof of use in U.S. commerce. U.S. attorneys in trademarks are expected to oversee and instruct foreign associates to help them understand what are the U.S. specimen requirements. When receiving an alleged proof of use, a U.S. practitioner should attempt to verify independently the availability of the marked goods or services in the United States. Insist on proof that the marked product is actually available for sale in the United States.
Some practitioners also make sure that the foreign client is provided with instructions in both English and in their native language. Practitioners who wish to validate the information provided by their intermediary may require that the client execute a declaration (in the client’s native language) attesting to the legality of the mark, its date of first use, and the types of goods or services to which the mark relates.
6. Personally Sign Everything
In addition, practitioners must ensure that applications are “personally” signed by the named signatory. 37 C.F.R. 2.193(c). The USPTO is very literal about the purported duty for the named individual to “personally” sign his or her own name in the trademark application. It is OED’s position that no one, under any circumstances, can type in the S-signature of another for any reason whatsoever. If a client or client representative is the individual whose name is being used on the application, a best practice is to ensure that the individual whose name appears has personally entered their own signature. For more information about OED’s views on signatures of filings at the USPTO, check out our post, Trademark Signature Best Practices at OED.
7. Don’t Dabble
IP law is complicated and constantly evolving. A non-IP lawyer who occasionally “dabbles” in providing IP services runs the risk of getting in over their head, potentially causing harm to a client. For more thoughts on the dangers of dabbling check out our post: “Lawyers Who Dabble In USPTO Trademark Matters Face Nightmare of OED Ethics Investigations, Discipline.”
Conclusion
The USPTO is intensifying its efforts to address suspect foreign trademark practices. Attorneys must be extra careful when representing non-U.S. clients in trademark matters before the USPTO. By adhering to best practices, attorneys mitigate the risk of USPTO sanctions and OED disciplinary actions.