IP UPDATE
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IP UPDATE
Exploring the latest in intellectual property law
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Exclusive Licensee Has Constitutional but Not Statutory Standing

by | Dec 9, 2021 |

The US Court of Appeals for the Federal Circuit vacated the dismissal of an exclusive licensee’s complaint for lack of statutory and constitutional standing, despite affirming that the licensee had no statutory standing where the district court erroneously found no constitutional standing. Univ. of So. Florida Res. Found., Inc. v. Fujifilm Med. Sys. U.S.A., Inc., Case No. 20-1872 (Fed. Cir. Nov. 23, 2021) (sealed opinion issued Oct. 22, 2021) (Stoll, J.)

In April 1997, the University of South Florida (USF) received an invention disclosure related to a workstation-user interface for digital mammography. In September 1997, the inventors, USF and the USF Research Foundation (USFRF) entered into a revenue allocation agreement assigning all rights in the invention to USF. The inventors also entered into a separate assignment agreement in 2002. The patent issued in 2003. The revenue allocation agreement was later followed by a nunc pro tunc license agreement, which recited an effective date of July 1997.

In May 2016, USFRF sued Fujifilm Medical Systems for infringement of the issued patent. USFRF pled that USF assigned its rights in the issued patent to USFRF such that USFRF was “currently the owner” of the patent. In June 2019, Fujifilm moved for summary judgment, arguing that USFRF lacked statutory standing because USF had not fully assigned the patent to USFRF. Five days later, USFRF amended its complaint to state that it was an exclusive licensee (i.e., it was not the assignee).

In May 2020, the district court dismissed the case, finding that USFRF lacked both statutory and constitutional standing. Analyzing the nunc pro tunc license agreement, the district court found a lack of statutory standing because the agreement was silent on (and thus did not transfer to USFRF) the right to sue to enforce the patent. The district court also found that USFRF lacked constitutional standing because USFRF had not established that the invention disclosure number in the license agreement corresponded to the issued patent and had not shown that the nunc pro tunc agreement was signed before the complaint was filed. USFRF appealed.

The Federal Circuit analyzed both statutory and constitutional standing and affirmed the district court’s finding with respect to statutory standing, reasoning that this case was analogous to others in which an exclusive licensee lacked statutory standing because the right to sue was either not transferred or only partially transferred. The Federal Circuit found that the district court had clearly erred with respect to constitutional standing, however. First, the Court held that there had been sufficient evidence tying the invention disclosure identified in the assignment agreement to the issued patent. Second, the Court found that it did not matter when the nunc pro tunc agreement was signed because the original revenue allocation agreement was signed before the complaint was filed and conveyed at least one exclusionary right to USFRF—enough for USFRF to have constitutional standing.

Because “the district court’s dismissal was predicated on constitutional standing,” the Federal Circuit remanded for further proceedings, including determination of whether USFRF may join USF.

[...]

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European UPC Almost Ready to Launch as Austrian Parliament Approves Ratification

by and | Dec 9, 2021 | ,

Austria became the 13th country to join the protocol on a European Unified Patent Court (UPC) on provisional application (PPA) when the second chamber of the Austrian parliament (Bundesrat) approved the PPA unanimously on December 2, 2021. The Austrian government is expected to formally deposit its ratification shortly.

As expected, Austria followed Slovenia as the last of the 13 EU Member States that were required to ratify in order for the PPA to take effect. This group mandatorily included Germany, Italy and France (i.e., the three Member States in which the most European patents were in effect in 2012).

With the upcoming Austrian ratification, the UPC Preparatory Committee (Committee) will be able to formally start its work. Although there is no timeline set for the initial provisional application stage, the Committee expects that stage to take approximately six to 10 months. As stated in a note published by the Presidency of the Council of the European Union on September 24, 2021, this stage includes the adoption of the secondary legislation of the UPC, including procedures, establishment of a budget, recruitment of judges and administrative staff, election of a president, final configuration and testing of the file management system and ensuring that all IT infrastructure is properly set up and secured. In addition, a working agreement with the European Patent Office (EPO) on patent application and validation remains to be completed. Many observers regard the timeline to complete preparations as challenging, noting that several of these steps will likely require significant discussion.

As noted in the Presidency of the Council’s statement, the UPC will be in force when these preparations are completed, which could be as early as the second half of 2022. The exact start date of the UPC and the Unitary Patent System depends on how long the initial provisional application stage takes. It also depends on when Germany formally deposits its UPC Agreement ratification, which has been withheld so far in order to give the committee time to complete its work. Once the UPC member states agree that the initial provisional application stage is almost complete (likely during the next two to six months), Germany will deposit its UPC Agreement ratification, which will trigger another four-month period before the UPC may officially take its first cases. The UPC will finally open its doors four months after that last instrument deposit. At that point, European patents with unitary effect could be available at the EPO.

Practice Note: Entities doing business in the European Union should check whether their intellectual property strategy is fit for the UPC entering into force and European patents with unitary effect becoming available.



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PTO Publishes Regulations to Implement Trademark Modernization Act

by | Dec 2, 2021 |

The US Patent and Trademark Office (PTO) recently published its final rules implementing provisions of the Trademark Modernization Act of 2020 (TMA). Most changes are effective as of December 18, 2021, but certain changes (i.e., adjustments to the office action response period) won’t go into effect until December 1, 2022. The new regulations are summarized below.

Ex Parte Proceedings

The TMA created two new ex parte proceedings by which any third party (including the PTO director) can seek to challenge registrations for nonuse: Reexamination and expungement.

One of the TMA’s underlying legislative aims was to clean up the “clutter[ed]” register by removing registrations for marks not properly in use in commerce. These new proceedings offer efficient and less expensive alternatives to a cancellation proceeding before the Trademark Trial and Appeal Board (Board).

Reexamination

Any party (or the PTO director) can file a reexamination action to cancel some or all of the goods or services covered by a use-based registration if the trademark was not in use in commerce in connection with those goods or services before (1) the application filing date when the application was based on Section 1(a) (Use in Commerce), or (2) if the application was filed based on Section 1(b) (Intent to Use), the date the amendment to allege use was filed, or the deadline by which the applicant needed to file a statement of use, whichever is later. A reexamination proceeding must be initiated within the first five years of registration.

Expungement

Similarly, an expungement action can be brought by any party (including the PTO director) seeking to cancel some or all of the goods and/or services from a registration based on the registrant never having used the trademark in commerce in connection with the relevant goods/services. An expungement proceeding must be initiated between the third and 10th year of registration. However, until December 27, 2023, an expungement action can be requested for any registration that is at least three years old, regardless of how long it has been registered.

Requirements for Ex Parte Petitions

The final rules detail the requirements for a petition for expungement or reexamination:

  • A $400 fee
  • The US trademark registration number of the registration being challenged
  • The basis for the petition
  • The name and contact information of the petitioner
  • The name and contact information of the designated attorney, if any
  • A list of the goods and services that are subject to challenge
  • A verified statement of the facts, which should include details of the reasonable investigation of nonuse and a “concise factual statement of the relevant basis for the petition”
  • Copies of the supporting evidence with an itemized index.

A reasonable investigation of nonuse will vary depending on the nature of the goods and/or services but “should focus on the mark disclosed in the registration and the identified goods and/or services, keeping in mind their scope and applicable trade channels.” Also, “[a]s a general matter, a single search using an internet search engine likely would not be [...]

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Big Little Lies: Guidelines for Challenging Trademark Acquired Distinctiveness Claims

by | Dec 2, 2021 |

For the second time, the US Court of Appeals for the Federal Circuit examined the standard for demonstrating fraud in a party’s claim of a trademark’s acquired distinctiveness for purposes of registration under Section 2(f) of the Lanham Act. The Federal Circuit found that a party challenging an applicant’s Section 2(f) claim based on substantially exclusive use of that trademark does not need to establish secondary meaning in its own mark to undercut the applicant’s claim of substantially exclusive use. The Court also found that use of the mark by any party, regardless of its relationship to the challenger, may undercut a trademark applicant’s claim of substantially exclusive use. Galperti, Inc. v. Galperti S.R.L., Case No. 21-1011 (Fed. Cir. Nov. 12, 2021) (Taranto, J.)

Galperti S.R.L. (Galperti-Italy) filed a US trademark registration for the mark GALPERTI in 2008. In an effort to overcome the US Patent and Trademark Office’s (PTO) initial refusal to register the trademark as “primarily merely a surname” (and therefore not registrable unless the mark has become distinctive of the applicant’s goods in commerce), Galperti-Italy asserted acquired distinctiveness of the GALPERTI mark under Section 2(f) and stated that the mark had become distinctive of Galperti-Italy’s metal hardware goods through its substantially exclusive and continuous use in commerce for the five years prior to the trademark registration. In 2013, Galperti-USA, a US company unrelated to Galperti-Italy that operates in the similar business of metal flanges and related products, petitioned to cancel Galperti-Italy’s registration on various grounds, including fraud in Galperti-Italy’s claim of substantially exclusive use of the GALPERTI trademark during the years 2002 – 2007. Galperti-USA claimed that it and other third parties also used the mark during that time, undercutting Galperti-Italy’s “substantially exclusive use” claims.

The Trademark Trial and Appeal Board (Board) rejected Galperti-USA’s cancellation claims, including the fraud claim. Galperti-USA filed its first appeal, and the Federal Circuit vacated the Board’s determination that Galperti-USA failed to prove the falsity of Galperti-Italy’s Section 2(f) claim. The Court remanded to the Board to assess whether the other uses of GALPERTI noted by Galperti-USA were significant or inconsequential, which would impact the proof of falsity of Galperti-Italy’s representations to the PTO. On remand, the Board again found that Galperti-USA failed to prove significant—rather than inconsequential—uses of GALPERTI between the years 2002 – 2007 so as to make Galperti-Italy’s representations of “substantially exclusive use” false. Galperti-USA filed its second appeal.

In this appeal, Galperti-USA challenged the Board’s conclusions that (1) Galperti-USA had to show that it acquired secondary meaning in its own GALPERTI trademark during the relevant time period, and (2) Galperti-USA could not undercut Galperti-Italy’s claims of substantially exclusive use with evidence of use by third parties with no privity to Galperti-USA. The Federal Circuit determined that both of the Board’s premises for its fraud analysis were incorrect as a matter of law, and it was therefore unclear whether the Board’s determination was affected by these errors. Taking a closer look at the Board’s conclusions, the Court found that [...]

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Dispute on Arbitrability Needs an Arbitrator

by | Dec 2, 2021 |

The US Court of Appeals for the Federal Circuit found that a license agreement between two parties required an arbitrator to determine whether a dispute between the parties had to be heard by an arbitrator. ROHM Semiconductor USA, LLC v. MaxPower Semiconductor, Inc., Case No. 21-1709 (Fed. Cir. Nov. 12, 2021) (O’Malley, J.)

MaxPower owns patents directed to silicon transistor technology and licensed said patents to ROHM Japan in a technology license agreement (TLA) that contained an arbitration clause applicable to any disputes arising from or related to the TLA, including disputes regarding patent validity. A dispute arose between the parties regarding whether the patents covered certain ROHM Japan products. After MaxPower notified ROHM USA that it was initiating arbitration under the TLA, ROHM USA filed a complaint for declaratory judgment of noninfringement of four MaxPower patents in a California district court. After MaxPower filed a motion to compel arbitration, the district court granted the motion and dismissed the district court action, finding that the TLA “unmistakably delegate[s] the question of arbitrability to the arbitrator.” ROHM USA appealed.

The issue on appeal rested on legal determinations concerning whether the parties agreed to arbitrate arbitrability. The Federal Circuit noted that “courts should not assume that the parties agreed to arbitrate arbitrability unless there is ‘clear and unmistakable’ evidence that they did so.” ROHM USA argued that its TLA with MaxPower lacked clear and unmistakable evidence of an agreement to arbitrate arbitrability, and that two provisions of the California Code of Civil Procedure (CCCP) were ambiguous regarding arbitrability. The Court noted that the CCCP sections cited by ROHM were explicitly superseded by another provision of the CCCP for international commercial arbitration.

ROHM USA then challenged the international nature of the case. ROHM USA attempted to position the matter as a dispute between two domestic corporations and stated that ROHM USA was not a signatory to the TLA at issue. The Federal Circuit concluded that ROHM USA clearly was covered by, and obligated under, the TLA, because the TLA explicitly applied to all subsidiaries of ROHM Japan. The Court also noted that the present case was “merely one aspect of a sprawling international dispute” involving MaxPower, ROHM Japan and ROHM USA.

ROHM USA also argued that the meaning of “may” in the CCCP’s statement that “[t]he arbitral tribunal may rule on its own jurisdiction” was ambiguous, but the Federal Circuit found that MaxPower’s interpretation of “may” as permissive (i.e., “may, if arbitrability is disputed”) made sense in the context of the TLA. The Court concluded:

In contracts between sophisticated parties, it is fair to hold the parties to all provisions of their contract, including those incorporated by reference. To hold otherwise would deprive sophisticated parties of a powerful tool commonly used to simplify their contract negotiations—adoption of provisions established by neutral third parties. And to refuse to give effect to the plain language of the contract, both its incorporation of the CCCP and the CCCP’s delegation of arbitrability to an arbitrator, would ignore [...]

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No More Bites at the Apple: Imminent and Non-Speculative Standing Still Required

by | Nov 18, 2021 |

The US Court of Appeals for the Federal Circuit reiterated that a patent challenger did not have Article III appellate standing to obtain review of a final Patent Trial & Appeal Board (PTAB) ruling because the underlying district court proceedings had been dismissed with prejudice after the parties reached a settlement and license agreement. Apple Inc. v. Qualcomm Inc., Case Nos. 20-1683; -1763; -1764; -1827 (Fed. Cir. Nov. 10, 2021) (Prost, J.) (Newman, J., dissenting).

This is the second dispute between Apple and Qualcomm to reach the Federal Circuit. In the first appeal (Apple I), the Court found that Apple did not have standing to maintain an appeal from the PTAB because the parties had entered into a settlement agreement.

As in the earlier case, here Qualcomm asserted patent infringement in district court, and Apple filed petitions for inter partes review of the patent claims that Qualcomm asserted Apple had infringed. The PTAB instituted on four petitions. While the inter partes review proceedings were pending, the parties settled the district court litigation, whereby Apple received a license in exchange for royalty payments to Qualcomm. The parties filed a joint motion to dismiss Qualcomm’s district court action with prejudice, which the district court granted. Ultimately, the PTAB found that Apple failed to prove that the challenged claims were unpatentable. Apple appealed.

As in Apple I, Qualcomm moved to dismiss the appeal for lack of standing. Apple responded by arguing that “[a]lthough Apple continues to disagree with [Apple I], in light of that decision and the . . . order denying Apple’s petition for rehearing en banc, Apple believes that the present appeal can be resolved on the briefs without the need for oral argument.” The parties filed a joint motion to vacate oral argument, but the Federal Circuit instead held a consolidated oral argument. Apple reiterated its disagreement with the Court’s ruling in Apple I but admitted that the operative facts in this appeal were “the same.” The Court found that other than the specific difference of the patents in issue themselves, the operative facts were the same and the alleged failure of proof as to certain patent claims (regarding whether the petitioner had established them to be unpatentable) were the same. The Court further found that any specific patent differences were irrelevant since the settlement and license agreements in each case covered the patents in issue in that case.

Apple raised a “nuance” not “specifically addressed” in Apple I, namely that Apple I “did not explain why the threat of liability, if Apple ceases the ongoing payment and the agreement is terminated, is not a sufficient injury to support standing.” The Federal Circuit was not convinced that this nuance merited a different treatment because:

  • The Court would need to sit en banc to change Apple I, and panels of the Court are bound by stare decisis.
  • Apple acknowledged that this “nuance” was at the core of its denied en banc petition in Apple I.

Accordingly, [...]

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Federal Circuit Clarifies Venue in Hatch-Waxman Case

by | Nov 18, 2021 |

Addressing venue in the context of a Hatch-Waxman case, the US Court of Appeals for the Federal Circuit explained that sending a paragraph IV notice letter to a company in the district is insufficient to establish venue. Celgene Corp. v. Mylan Pharmaceuticals Inc., Case No. 21-1154 (Fed. Cir. Nov. 5, 2021) (Prost, J.) The Court affirmed a district court finding that venue was improper since the defendant had not committed any acts of infringement and did not have a regular and established place of business in the district.

Celgene owns patents related to a multiple-myeloma drug that it markets and sells under the brand name Pomalyst. Mylan Pharmaceuticals Inc. (MPI) submitted abbreviated new drug applications (ANDAs) to the US Food & Drug Administration in order to bring a generic version of Pomalyst to market. Celgene filed suit in New Jersey against MPI and its related companies, Mylan Inc. and Mylan N.V. While Celgene is headquartered in New Jersey, MPI is based in West Virginia, Mylan, Inc. is based in Pennsylvania and Mylan N.V. is based in the Netherlands and Pennsylvania. The district court dismissed the case for improper venue (MPI and Mylan, Inc.) and for failure to state a claim (Mylan N.V.). Celgene appealed.

Citing Valeant v. Mylan, the Federal Circuit reiterated that venue for Hatch-Waxman cases must be predicated on past acts of infringement, and “it is the submission of the ANDA, and only the submission, that constitutes an act of infringement in this context.” Celgene argued that because MPI sent a paragraph IV notice letter from West Virginia to Celgene’s headquarters in New Jersey, acts of infringement occurred in New Jersey. Celgene also argued that since the notice letter was mandatory and the ANDA had to be amended to include proof of delivery, the delivery of the letter was “sufficiently related to the ANDA submission.” The Court disagreed, explaining that venue in Hatch-Waxman cases is focused on the submission of the ANDA itself, including acts involved in the preparation of an ANDA submission. The Court noted these acts must be part of the ANDA submission and that Celgene’s “related to” standard was impermissibly broad. The Court found that since the submission of the ANDA did not take place in New Jersey, venue there was improper.

The Federal Circuit also found that neither MPI nor Mylan, Inc. had a regular and established place of business in New Jersey. Celgene argued both had a regular and established place of business based on places associated with Mylan employees as well as Mylan affiliates. In rejecting these arguments, the Court noted that the employees Celgene pointed to were working remotely from home, and that the employee’s home numbers were contained in business communications. However, the Court noted that there was no indication that the defendants owned, leased or rented the employees’ homes; participated in the selection of the homes; stored inventory there or took any other actions to suggest that they had an intention to maintain a place of [...]

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Federal Circuit Makes Clear: Prior Failures in the Art May Demonstrate Non-Obviousness

by | Nov 11, 2021 |

Addressing the issue of obviousness of a patent directed toward a method of killing antibiotic-resistant bacteria using only visible light with no photosensitizer, the US Court of Appeals for the Federal Circuit reversed the Patent Trial & Appeal Board’s (PTAB) decision, finding no obviousness where the asserted prior art did not disclose a successful method that did not use a photosensitizer. University of Strathclyde v. Clear-Vu Lighting, LLC, Case No. 20-2243 (Fed. Cir. Nov. 4, 2021) (Stoll, J.) The Court held that the PTAB erroneously found a reasonable expectation of success where “[t]he only support for such a finding [was] pure conjecture coupled with hindsight reliance on the teachings in the [asserted] patent.”

Gram-positive bacteria, such as Methicillin-resistant Staphylococcus aureus (MRSA), are known to negatively affect health but effective methods of killing (or inactivating) such bacteria have been elusive. Photoinactivation is a way to kill antibiotic-resistant bacteria, and previous methods involved applying a photosensitizing agent to the infection and then activating the agent using light. Through experimentation, scientists at the University of Strathclyde discovered that application of visible (blue) light of wavelengths in the range of 400 – 420 nm was effective at inactivating bacteria such as MRSA without using a photosensitizing agent. The challenged patent claimed this method of using a photosensitizer for inactivating MRSA and other Gram-positive bacteria.

After Clear-Vu Lighting petitioned for inter partes review, the PTAB found the patent invalid as obvious in view of prior art disclosing methods of photoactivation using visible light. The university appealed.

The Federal Circuit reversed, finding that the prior art did not disclose all claim elements and there was no reasonable expectation of success in reaching the claimed invention by combining the prior art.

The Federal Circuit first addressed the PTAB finding that the prior art disclosed all claim limitations, finding that neither of the asserted prior art references taught or suggested “inactivation” of the bacteria without using a photosensitizer—as required by the claims. The Court noted that it “fail[ed] to see why a skilled artisan would opt to entirely omit a photosensitizer when combining [the] references,” finding it “particularly relevant” that one of the references actually “disclosed such a photosensitizer-free embodiment and was wholly unsuccessful in achieving inactivation.”

The PTAB also found that, based on a prior art teaching that “blue light may” inactivate “other bacterial cells that produce porphyrins,” a skilled artisan would have expected that MRSA could be inactivated by blue light without a photosensitizer due to the presence of porphyrins. In defense of the PTAB’s findings, Clear-Vu argued that support for the reasonable expectation of success could be found in the challenged patent itself. Citing its 2012 decision in Otsuka Pharm. v. Sandoz, the Federal Circuit harshly criticized this position, reiterating that the inventor’s own path to the invention is not the proper lens through which to find obviousness; “that is hindsight.”

The Federal Circuit explained that “not only is there a complete lack of evidence in the record that any bacteria were inactivated after exposure [...]

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It’s Not Esoteric: Absent Ambiguity, Plain Contractual Language Governs

by | Nov 4, 2021 |

Rudimentary principles of contract law stipulate that words in a contract that are plain and free from ambiguity must be understood in their usual and ordinary sense. Applying such principles, the US Court of Appeals for the First Circuit vacated a district court’s damages award of more than $1 million under a patent license agreement, finding that the release clause in a settlement agreement wiped out the licensee’s obligation to pay royalties and sublicense fees for use and sale that occurred before the effective date of release. The General Hospital Corporation; Dana-Farber Cancer Institute, Inc. v. Esoterix Genetic Laboratories, LLC, Laboratory Corporation of America Holdings, Case Nos. 20-2126; -2149 (1st Cir. Oct. 21, 2021) (Selya, J.)

BACKGROUND

The plaintiff hospitals own several diagnostic patents, and Laboratory Corporation of America Holdings (LabCorp) and its subsidiary, Esoterix Genetic Laboratories, are licensee to the patents. Under the master license agreement, the licensee is obligated to pay fees to the hospitals, including royalties and sublicensee incomes.

In 2014, Esoterix settled a lawsuit against QIAGEN in association with a sublicense agreement concerning the diagnostic patents. LabCorp and Esoterix agreed to pay a portion of the settlement amount paid by QIAGEN to the hospitals. The settlement agreement included a broad release clause under which the hospitals released Esoterix from “any and all” obligations, “known or unknown,” that may have arisen out of the patent rights or the license before the effective date (June 27, 2017), including “payment of any past royalties or other fees pursuant to the [license].”

A semi-annual reporting period under the license agreement was due on June 30, 2017. Esoterix took the position that all royalties and sublicense income prior to June 27, 2017, were released, and thus only reported revenue and royalty information for the period of June 28 ­– 30, 2017. The hospitals sued to recover sublicense fees from QIAGEN to Esoterix. The district court found that Esoterix had not been released from its payment obligation for use and sales occurring before June 27, 2017, on the ground that Esoterix’s payment obligation had not originated until the payment deadline, which fell after the effective date of release. Esoterix appealed.

FIRST CIRCUIT DECISIONS

The First Circuit disagreed with the district court and concluded that the terms of the release agreement and the license agreement did not indicate that Esoterix’s obligation arose when the payments became due and payable (i.e., after the effective date of the release).

Following the Massachusetts law in accordance with the choice-of-law provision in the agreements, the First Circuit applied the principle that the plain meaning of the agreements governs, absent ambiguous provisions. The Court decided that the release agreement released Esoterix’s obligations in connection with the underling license agreement that may have arisen before the effective date. Taking into consideration the royalty and sublicensing fee provisions of the license agreement, the Court further decided that Esoterix’s financial obligation under the license agreement, including royalties and sublicense income, arose upon its sales and receipt of sublicensing income, which originated [...]

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US Lawyers Aiding Scam Trademark Applications May Face Sanctions

by | Oct 28, 2021 |

As reported by the US Patent & Trademark Office (PTO) this past summer, since mid-2020 trademark applications from US and foreign applicants have “surged to unprecedented levels.” In December 2020 alone, the PTO received 92,608 trademark applications, an increase of 172% over December 2019. Not only has this extraordinary volume of applications created a backlog and delay in the procedural review of new US trademark application filings, but the PTO is experiencing a notable increase in what it calls “suspicious submissions ranging from inaccurate to fraudulent.”

These illegitimate trademark filings harm the quality and integrity of the trademark register and have significant legal and financial impact on legitimate brand owners whose applications may be blocked by fraudulent filings for marks that are identical or similar to their real brands. Faced with a legal obligation to defend and enforce their trademarks, legitimate brand owners are forced to dispute such illegitimate filings with letters of protest, by filing oppositions or cancellation actions in the Trademark Trial & Appeal Board, and even by taking action in the federal courts. Such enforcement and defensive actions can clog up these forums and force brand owners to take on costs that would not otherwise be necessary, and which may distract from, or reduce the budget for, real trademark disputes.

The PTO outlined various strategies and tools to review, assess, challenge and combat suspicious and fraudulent filings, including aspects of the Trademark Modernization Act of 2020. In 2019, the PTO also implemented a rule requiring any overseas trademark applicant to file with a US lawyer. The requirement for a US lawyer appears to have resulted in many foreign applicants (primarily from China) making up fake names, addresses and bar credentials for the US lawyers named in their applications. Not all named US lawyers are fake, however, as the PTO’s investigations into certain lawyers lodging a high volume of trademark filings for Chinese-based applicants have revealed that some US-based lawyers may be taking on clients from China without conducting proper diligence as to the veracity of the client’s trademark application information. For example, the PTO’s investigation of some potentially illegitimate filings from applicants in China reveal doctored or disingenuous specimens of use, including e-commerce listings for products that may not actually exist or are no longer “in stock” (and likely never were “in stock”).

In September 2021, the PTO’s investigations into US lawyers with a high volume of filings for Chinese applicants resulted in two sanctions orders. The first was issued against a lawyer found to have filed thousands of applications for overseas parties deemed fraudulent by operating as a US-based agent for a centralized “filing gateway” platform located in India. The sanction order includes a 12-month probationary period and required ethics and trademarks classes. The second sanction against a US-based lawyer specifically noted that the lawyer did not do enough to properly review the applications that they signed on behalf of an applicant based in China. It has [...]

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