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Experts ask Congress to Rein in Fraudulent Chinese Trademarks

John Gilberston \ December 10, 2019

In a hearing before the Senate Intellectual Property Subcommittee, trademark experts argued that a tidal wave of fraudulent Chinese trademark applications is stifling American business––and Congress needs to do something about it.  

In testimony this week, trademark attorneys told Senators that more than two thirds of trademark applications from Chinese applicants for apparel goods have fraudulent ‘specimens,’ a fancy word that means examples of the trademark being used on actual products.  Not only that, but 60% of those applications make it to publication, and 39% are actually approved for registration.

This isn’t a new problem, and the USPTO has taken steps to combat it.  For example, the agency issued a new rule this past summer which requires foreign applicants to use U.S.-licensed attorneys if they want to file trademark registration applications with the USPTO.  At Tuesday’s hearing, the experts testified that while this has helped alleviate some of the “clutter,” it’s not enough.  

The witnesses proposed a slate of reforms, including ex parte reexamination processes, expunging trademark registrations that aren’t being used in commerce, requiring the USPTO to issue annual reports on fraudulence in the federal register, and requiring increased specialization of trademark examining attorneys to better enable them to identify fraudulent applications.

Some experts went even further, imploring Congress to amend the Lanham Act to impose a presumption of irreparable harm upon a successful showing of trademark infringement, thereby making it easier for a successful trademark litigant to obtain a permanent injunction to stop future infringement.  After the Supreme Court in eBay v. Mercexchange put a stop to the patent practice of automatically issuing a permanent injunction upon a successful showing of patent infringement, a circuit split has emerged on whether the same rule should be applied to trademark cases.  In the experts’ view, Congress should settle that by simply amending the Lanham Act.  

In the absence of an act of Congress, the witnesses warned, American businesses will be hurt by the growing thicket of unused trademarks in the federal register, which prevents legitimate U.S. businesses from using them.  Not only that, but the current procedure for proving trademark fraud takes up to two years, a veritable lifetime for a startup business trying to come to market.  

Senator Thom Tillis, R-N.C., chairman of the subcommittee, praised the director of the USPTO for the agency’s efforts to combat the melee, but also admitted that “Congress has a role to play in addressing this problem.”

IPR Attorney, Patent Lawyer, Copyright and Trademarks in Iowa
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