The Foreign Trademark Scam – Why (Oh Why) do We Tolerate this?

I hate it when this happens – a client comes up with a great trademark for a great product, everyone is really excited and then – the knockout search uncovers one of those stinking foreign based US trademark registrations with a list of goods and services that is the trademark equivalent of a 40 car pileup on the freeway at rush hour.  The identification covers 17 classes and is thousands and thousands of words long, and everyone knows that none of the goods and services have ever been, or will ever be, used in commerce in the US (I actually feel sorry for whoever has to examine these applications).  And, there is basically nothing anyone can do about it.  How does this happen?

Well, let’s go back to 1984. In Crocker Nat’l Bank v. Canadian Imperial Bank of Commerce, 223 U.S.P.Q. 909 (TTAB 1984), the Board went on record stating that a foreign applicant could obtain registration of a mark in the United States based on a foreign registration, even if the trademark has never been used anywhere in the world, and whether or not the applicant had a bona fide intention to use the trademark in the United States.  Wow – that’s a bargain if I ever did see one, especially since US applicants have to prove use before they can get a US registration.

This happens because many countries, including most European countries – unlike the US, do not have use based trademark systems.  This allows a person in those countries to obtain a trademark registration for any mark without any use of the mark.  In the EU, a Community Trademark registration creates property right in a mark without any requirement of a bona fide intention to use, without goodwill, or without any actual use of the mark anywhere, and these rights extend throughout the entire EU (subject to cancellation for non-use after five years).

This foreign trademark registration then can be used under Section 44/66 as the basis of a valid US trademark registration, and there is no requirement that the trademark be used in the US (at least not until the statement of continued use is due 6 years after registration).  That’s a 6-year free ride for foreign applicants, allowing them to put extremely broad registrations on record with the USPTO effectively blocking anyone from registering a confusingly similar trademark.

The Crocker decision, in large part due to the efforts of the predecessor of INTA, led the US to adopt an intent-to-use basis for trademark filing in 1988, which allowed for filing a trademark solely based on an intent-to-use the mark, and includes a requirement that all foreign applicants declare an intent-to-use the mark in the US.  Problem solved, right?  Well – not exactly.

Applicants filing in the US based on a foreign registration are required to state that they have a bone fide intent-to-use the mark in the US, but what does that really mean, and how is that enforced?  Intent-to-use generally only requires a good faith intention to eventually use the mark in a real and legitimate commercial sense.  It is not all that hard to “intend” to do something.  It is certainly nothing like actually doing that something.  I can intend to go to Mars, and without having to actually go to Mars , I don’t have much on the line.  It does not take much to cover your tracks, and show an intent-to-use.

So, what happens if there really was no intention to use the mark?  Keep in mind that when a trademark application filed in a country without a use or intent-to-use requirement is filed in the US with the same colossal list of goods and services that appeared in the foreign registration, it is reasonable to assume that there was no intent-to-use the mark in the US (since there was no intention to use required when the foreign application was filed).  Then, there should be some hope of invalidating the US filing?

In reality, there is not much that can be done.  The client can try and cancel the registration, but that is an awful lot to ask of someone at the name selection stage, and they would need to make the challenge based on the mere existence of a long list of goods and services in a foreign based application (it would be hard to have more evidence than that).  That may be too speculative of a basis for most people to take on the expense and burden of litigation (no matter how reasonable the basis).  Also, since the Federal Circuit’s In re Bose decision, which requires clear and convincing evidence of a material misrepresentation and an intent to deceive to prove fraud, it has become more or less impossible to invalidate an registration based on fraud.

There have been cases that have invalidated registrations based on a lack of a bone fide intent-to-use, however, these have been generally limited to cases against unsophisticated registrants or those that have been unable to produce any documentation at all of an intent-to-use.  As stated above, it is not hard to create some basic documentation of an “intention” to do something thereby clearing the intent-to-use hurdle.

Thus, the available options have serious limitations.  In reality, that vast majority of people in the situation I described at the outset are not in a position to do anything except select another mark, and what is most certainly an invalid trademark registration stays on the register.

The real solution to this problem is to require all applicants for a US trademark to produce evidence of use before obtaining a registration.  Additionally, to deal with the problem of absurdly long identifications maybe there should be requirement to provide a specimen for every distinct good and service rather than just one specimen per class (but don’t get me started on that).

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Posted on March 1, 2013, in International, Invalidity, Patent, Regulations, Trademark and tagged , . Bookmark the permalink. Comments Off on The Foreign Trademark Scam – Why (Oh Why) do We Tolerate this?.

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