It’s about that time of year, when you may be thinking about tax season. Tax day is still a few months away, but you may already have received your W-2, or 1099, (or other various assortments of mysterious numbers and letters), which will determine how much you’ll owe Uncle Sam (or perhaps a nice refund is on the way?). You might also be thinking about the possibility of an audit. Depending on your particular business or personal income situation, the chances of an audit may be quite small, but it’s hard not to think about.

What you’re probably not thinking about, however, is an audit by the U.S. Patent and Trademark Office (USPTO), regarding any trademark registrations that you own. It can happen. Luckily, a trademark registration audit is not nearly as onerous or time-consuming as a tax audit. For any trademark owners or practitioners out there, who may receive an audit this year, here’s a quick overview and some tips.

In March of last year, following a two-year pilot program, the USPTO implemented new rules, establishing a random audit program for trademark registrations. The audit program is targeted at the required maintenance filings (“Declarations of Use”) for any registrations with more than one good or service per class. The goal of the audit program is to randomly request additional verification, that the registered mark is actually being used in commerce with the identified goods or services (which is required to maintain a valid trademark registration). Specifically, each year about 10% of all trademark registrations with recent maintenance filings will be randomly selected for an audit.

The rationale for the program is that under current rules, registration maintenance filings (every 5 years for the first 10 years, then every 10 years after that), only require the registrant to submit proof of use (a “specimen”) for one of the identified goods or services in each class, rather than all identified goods or services. Therefore, this can lead to invalid (or partially invalid) registrations sitting on the register for years (referred to as “deadwood” registrations), that identify goods or services for which the mark is no longer being used in commerce. The goal of the audit program, therefore, is to “to assess and promote the accuracy and integrity of the register” (Trademark Rule 2.161(h), as amended) by cleaning up the deadwood.

When a registration is randomly selected for an audit, the USPTO will issue a “Post-Registration Office Action,” stating, “Registration Selected for Audit.”  This Office Action will require the registrant to submit additional specimens for two goods or services, which are randomly selected among all the goods and services identified in the registration. Linked here is a sample of such an audit Office Action–this should look the same for everyone, other than the registration data.

The electronic response form is straightforward, which requires the registrant to submit acceptable specimens of use according to the applicable specimen rules (see TMEP §§ 904, 1301.04), and a verified statement of use. However, if it turns out that the registrant was not using the mark in commerce for the selected goods/services, the next step is to request deletion of those goods or services from the registration.  If deletion is requested, the USPTO, unfortunately, will then expand the audit to require specimens for all remaining goods or services identified in the registration.

Here are a few tips for dealing with the new audit system, for both trademark owners and practitioners:

  • Carefully Confirm Use for All Goods and Services; Amend Registration as Needed: When it comes time for filing the Declaration of Use, confirm use in commerce of the registered mark for all identified goods and services (even though only one specimen is required), and if use has ceased for any goods and services, they should be deleted from the registration. That way, there won’t be any hiccups when it comes time for an audit.
  • Get Ready for Expansion of the Audit if Deletion Is Requested: If you must delete any of the goods or services selected in the audit for non-use, the audit will expand to all goods or services identified.  Therefore, if any deletion is required, you should comb through all identified goods/services and make any necessary deletions at the same time–don’t just delete those currently selected in the audit. Otherwise, after the audit expands, it will further delay the process if you need to request more deletions.
  • File a Timely Response to the Post-Registration Audit, or Entire Registration will be Cancelled: There is a six-month deadline for responding to the audit issued in the Post-Registration Office Action. One might think that without a timely response, only the audited goods/services would be deleted by the USPTO. But unfortunately, the consequence is harsher than that–if a response is not submitted by the six-month deadline, the entire registration will be cancelled.

What do you think about the new audit process? Is it worth it having the deadwood registrations cleaned up, which can be beneficial from both a prosecution and enforcement perspective? Or are the benefits outweighed by the additional administrative time and cost associated with gathering more specimens and responding to these Office Actions? Perhaps that answer might depend on whether you fall within the audited 10% this year–so, good luck to all!

The records of applications and registrations at the U.S. Patent and Trademark Office are publicly available, allowing individuals and companies to evaluate the registered trademark rights of third-parties. Unfortunately, these same records are also accessible by individuals for more sinister purposes, including sending “invoices” to applicants that appear to be official requests for required payments. While these scams have been occurring throughout the world for a number of years, New Zealand recently scored a significant win in the fight against these scams.

While most attorneys advise clients of the likelihood of receiving these notices, it does not prevent some unrepresented applicants from mistakenly making a payment. Thankfully, governments have begun to fight back against these scams. Over the last year, New Zealand has sought to obtain refunds from TM Publisher, an entity that sent misleading notices to companies in New Zealand. The company requested a payment of $1,600 NZ in order to “publish” an applicant’s trademark. Over the last six months, the New Zealand government identified and refunded more than $600,000 NZ from TM Publisher. While this is a large sum, TM Publisher is just one example of many scams, suggesting the number of payments could be even greater.

To provide some context in the U.S., it is common for applicants and registrants to receive misleading notices regarding publication, renewal, and other services. Some solicitations offer to publish your trademark in an international database, such as the Trademark Patent Publications solicitation, but doing so provides no benefit to the trademark owner. Other solicitations offer “renewal” services, which may or may not result in the actual renewal of your registration with the relevant authority. Most solicitations are printed to appear to be official, government notices. Some of the solicitations, like this notice, come from misleadingly named companies, like the “Patent and Trademark Office” in New York.

In the U.S., there have been criminal charges brought against individuals running at least one similar scam. The first indictment issued in October of 2015 and two more individuals were charged earlier in July 2016. The charges include bank fraud, mail fraud, and money laundering.

Notwithstanding these minor successes, there are still significant numbers of misleading notices sent to represented and unrepresented applicants and registrants. If you receive any notice regarding your trademark application or registration in the mail or in your e-mail, consult with your attorney. Although the Trademark Office has recently begun reminding owners of renewal deadlines, the Trademark Office does not request payment in these notices (especially through a wire to a bank account in the Czech Republic). If you don’t have an attorney, you can consult the USPTO’s information page regarding these invoices here or contact the Trademark Assistance Center.