Trademark Scams
Why Trademarks or Service Marks?
A number of my clients have filed for federal trademark registrations with the U.S. Patent and Trademark Office, and there are great reasons to do so. For one, a federal trademark registration may provide protection throughout the United States for your trade name, brand or logo. If successful, the registration helps protect an owner’s right to continue using the mark, whether a trademark used in connection with goods, or a service mark used in connection with services. It also provides a remedy should someone else decide to use the same mark for similar goods or services in a manner that is confusing to consumers.
While these statements are all oversimplified, they explain in simple terms the reasons why businesses and individuals pay several hundred to several thousand dollars to register their name, brand or logo with the U.S. Patent and Trademark Office. Figure additional filing and attorney’s fees to protect marks that will be used internationally. While most people recognize that trademark registration can involve significant expense, they often do not have a complete understanding of the various filings required and total expenses involved over the life of a trademark registration. As a result, trademark owners are often tricked into paying fees that have no relation to the official registration process.
The Scam
There are several variations of this fraud that I have seen, but all involve similar modus operandi. A formal-looking invoice will arrive unannounced at the address of the owner, presumably for an amount that is due and payable. The invoice will include the registration number and description of the mark, perhaps the international class or description of the goods and services covered, and whatever additional information might make it look official and legitimate. (All information publicly available at www.uspto.gov, by the way.) The sender may be a U.S. domestic company, or one of many international fraud perpetrators. (China is a popular source.) The invoice is generally designed to give the appearance that some official or valuable filing or purpose will be achieved, while the fine print of the “offer” may or may not state otherwise.
As an example, a client recently received in invoice from a company purportedly located in the Czech Republic, with the heading “Registration of the International Trademark”. An odd title, no doubt, designed to both suggest that paying the fee might accomplish some type of international registration, while at the same time not really making any type of commitment. The amount of the invoice – $2,327.00, is payable by wire transfer within 14 days. The fine print on page two clarifies the “offer”, should there be any misperceptions. It states that the “offer” made by the “Invoice” is simply “the year registration of your international trademark application in our internet database”. So for the nominal amount of $2,327.00, the trademark owner receives the “privilege” of being listed in a Czech company’s internet database for one year. I don’t know many business owners seeking out that service. It goes on to reference a number of likely irrelevant “Commercial Code” sections intended to further the appearance of legitimacy. The funniest thing about this particular solicitation is that it even references a number of other companies (WIPT, CPTD, ODM, RIPT, WOIP, . . .) that “for some time . . . making offers to register trademarks”, and points out that this company (WDTP) has no connection to those “other” companies. Well, there you go, they must be legit.
Unfortunately, these scams are relatively common, and I can only assume they proliferate because, unfortunately, and as with many other types of scams, they work. Registrants who process their own trademark filings without the assistance of an attorney may be most susceptible, since the fees and filings timeframes for trademarks can be somewhat confusing. While the trademark attorney knows when the next filing and fee is due, the owner who receives an official-looking invoice with their trademark and registration number listed may just assume that it’s time to pay for the renewal. (Another pointer for another day – make sure you know when renewal filings are due. I’ve seen more than one expired trademark that the owner thought was still active, while assisting with legal review for a business buyer. Expired trademarks give business buyers heartburn!) The USPTO has occasionally published notices warning registrations of these types of scams.
For an example of an active USPTO warning with a link to a very official-looking invoice: http://www.uspto.gov/trademarks/solicitation_warnings.jsp.
How to Protect Yourself
You might be questioning whether anyone would fall for this scam, given how ridiculous it sounds when you read through the details. Not all of these solicitations are worded as poorly as the one from our friends in the Czech Republic (although many are), and some that I have seen from U.S. companies in particular are actually very legitimate looking. Sometimes they offer “registration” services (i.e., listing in their own database, whatever that’s worth), and others may offer promotional or tracking services. Whether any of these companies actually provide the services they advertise, I do not know. However, there are legitimate and reputable national trademark services providers, and your attorney can provide referrals should you desire to contract for those types of services.
If you have an attorney who assisted with your trademark filing, just forward any solicitations you might receive and ask whether you should pay it. The answer will almost certainly be ‘no’, since official communications from the U.S. Patent and Trademark Office will generally be sent through your attorney of record, and any other services or registrations your attorney may recommend will likely be billed through your attorney or at least recognizable to you. If you handled the filing yourself and you have a business attorney who handles other matters for you, ask them. They will likely recognize if it is a scam, or at least be able to investigate to determine whether the invoice is legitimate. Perhaps most importantly, if you have an accounts payable department or other personnel who might receive and inadvertently pay a fraudulent invoice, share this information with them or ensure that they are aware to not pay any trademark-related invoices without special authorization. On more than one occasion I have received a communication from AP employees of clients, asking if the invoice was OK to pay. (Usually it is not.)
Steve Minnich is a North Carolina practicing attorney who counsels business clients in intellectual property matters and a broad range of other business legal matters. He is also a Certified Business Intermediary and the President of Piedmont Business, LLC, a business brokerage firm based in Winston-Salem, North Carolina. Piedmont Business represents businesses for sale throughout North Carolina and the Southeastern United States, and assists buyers with their business acquisition.