In an action that should encourage legitimate brand owners to take a closer look at any of their registrations that have been blocked by a third party, the United States Patent and Trademark Office (USPTO) recently ramped up its battle with fraudulent filers. Specifically, the USPTO issued an order to show cause to a group of entities that are alleged to have been particularly egregious in filing multiple applications to obtain or maintain registrations that contain material misrepresentations or contain false attorney information and signatures.

In the show cause order, the USPTO stated that “Respondents violated USPTO Rules by using 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.”

Under this show cause order, these entities, identified under names such as “Shenzhen Haiyi Enterprise Management Co., Ltd., Haiyi Enterprise Service (Shenzhen) Co., Ltd., and Haiyi Co., Ltd.,” along with their employees, agents, affiliates, subsidiaries, parent companies, holding companies, and officers, must respond and “show cause” why the USPTO should not immediately sanction them for fraudulently filing thousands of trademark-related documents with the USPTO.

If they cannot satisfactorily justify their actions, the USPTO will sanction these entities, which may include any or all of the following:

  • Termination of proceedings or pending applications, which also means the applicant will not be allowed to reinstate the application later;
  • Refusing consideration of any submission that was submitted under fraudulent information or signatures;
  • Preclusion of any further trademark submissions by the accused entities;
  • Deactivation of any accounts created by that entity.

In addition to the above sanctions, the USPTO may also update electronic records by the accused entities to indicate that the registrations or applications are subject to an order for sanctions, which would immediately cause question about the validity of the registration or application.

This order to show cause is the most recent step by the USPTO to address fraudulent filings, which have swamped the United States Patent and Trademark Office (USPTO) in the past few years and have slowed down the system for legitimate filers. Earlier this year, among other steps, the USPTO began requiring applicants to verify their identity electronically before their application can be processed.