Fighting the trademark scammers: agencies and victims convene to strategise next steps 31 Jul 17
Last week the US Patent and Trademark Office (USPTO) and Trademark Public Advisory Committee hosted a roundtable to strategise on how to tackle fraudulent solicitations. The in-depth discussion revealed details on how scammers go about duping consumers, and the inter-agency approach that will be required if this new ‘whac-a-mole’ challenge is going to be overcome.
We have written previously about efforts to combat trademark solicitations, most recently reporting on the news that Leason Ellis had filed a lawsuit against the Patent and Trademark Association (PTMA), alleging that it is seeking to confuse trademark owners into purchasing listings on a private trademark database that “provides no extrinsic value”.
Peter S Sloane, the chair of the trademark and copyright practice at the firm, has previously been vocal about the need for governmental actors, trademark associations and private practitioners - in the US and Europe – to engage in a more concerted, coordinated effort to tackle scams. As he was participating in the roundtable, we asked him to provide a post-event report, relaying the main discussion points and – crucially – providing his thoughts on whether meaningful action could result. Here is his report:
On July 26 2017, the United States Patent and Trademark Office (USPTO) held a first of its kind roundtable discussion on the fraudulent solicitations to trademark owners, those increasingly prevalent trademark scams which most of us in private practice have received from confused clients over the years. Mary Boney Denison, the commissioner for trademarks, welcomed the assembled crowd, which included a representative of the Japanese Patent Office. Joseph Matal, the interim director of the USPTO, then followed with opening remarks which made it clear that the office is well aware of the problem and that it requires cooperation from others in addressing it. Director Matal specifically mentioned efforts to work with members of the Trademark 5 (TM5) as an example of such cooperation.
The first half of the roundtable consisted of public remarks by those who wished to share their personal experiences in dealing with trademark solicitations. Although the roundtable was initially organized so that the individual victims of scams could share their stories, those who attended and spoke were mostly attorneys and representatives from trade associations such as the International Trademark Association (INTA) and the American Intellectual Property Law Association (AIPLA).
As the first speaker, I shared my experience in taking actions on behalf of my firm, Leason Ellis, against trademark scammers through the filing of civil actions in federal court. Previously, we obtained consent judgments against USA Trademark Enterprises, a worthless catalog of registered trademarks, and Patent & Trademark Agency, a shady trademark renewal service. Most recently, we filed an action against Patent and Trademark Association Inc, which sends mailings asking trademark owners to pay to appear in an online database of registered trademarks. That case is currently pending.
Among the public speakers, Eric Perrott of the Gerben Law Firm spoke about how his firm is adversely affected by fraudulent solicitations. He said that the time required to respond to client inquiries about such solicitations cuts into its flat fee model and makes it difficult to provide affordable services to the new and small businesses of his firm. He also mentioned reputational damage as one client even asked if his firm had sold its information to a foreign company.
John Heinbockel of Erik M. Pelton & Associates spoke about how his firm’s clients regularly inquire about unsolicited notices and how even his firm, which has its own trademarks, receives these trademark scams. Heinbockel said that it is impossible to know how many people have been duped. He added that the majority of trademark owners are small businesses and every dollar spent on such solicitations is a dollar not spent on effective trademark protection or on the business.
During the second half of the roundtable, commissioner Denison moderated a discussion among government agency representatives including from the US Department of Justice (DOJ), the Federal Trade Commission (FTC), the US Postal Inspection Service (USPIS), US Customs and Border Protection (CBP) and the Small Business Administration (SBA).
Denison started out by offering congratulations to the DOJ and USPIS on the recent successful prosecution and conviction of five individuals involved in a trademark scam in California. The Trademark Compliance Center (TCC) had laundered over $1 Million in proceeds from a mass-mailing scam involving the supposed recordation of trademark registrations with CBP. David Frederick of the USPIS explained that his agency decided to pursue TCC because it had the most complaints and the most current complaints listed on databases including the Consumer Sentinel database of the FTC. According to Frederick, the Alexandria and DC addresses used in the mass mailings were virtual offices and checks received there were then forwarded to other virtual offices in California for pickup. TCC further falsified its identity by using the real names of actual students taken from J-1 visas. A propitious phone call allowed investigators to move fast and make arrests.
Postal Inspector Clayton Gerber of the USPIS explained that dealing with these criminal enterprises is like “whac-a-mole” and that progress requires sustained multinational cooperation. He said that he has recently met with European authorities, who are encountering the same problems abroad, and that it is impossible to coordinate efforts in a civil context. Inspector Clayton suggested that the USPTO donate personnel to the USPIS, which has limited resources to pursue such criminal investigations.
Postal Inspector Gerber further stated that the government needs victims to come forward as soon as the crime is committed and not to be afraid or ashamed. Alison Anderson of the DOJ concurred and added that the best cases to prosecute are where there is clear lying and money is recently lost. Kati Daffan of the FTC invited victims of trademark scams to file detailed complaints through the website at ftc.gov. She explained that the information is then shared with other government agencies.
The government representatives made it clear that when complaining to the USPIS or the FTC, it is extremely helpful to provide the envelope received with the solicitation as well as the original stamp. A canceled check can also provide a money trail and proof of monetary loss.
Commissioner Denison concluded the roundtable by thanking the participants and stating that several good ideas came out of it. I, too, believe that this initial effort can lead to progress in dealing with this blight upon the trademark industry. I am especially encouraged by the prospect of an ongoing dialog between government agencies and the trademark bar, and I encourage the USPTO to hold a follow-up roundtable in the not too distant future.
Peter S Sloane, Leason Ellis
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