The USPTO is struggling to deal with an unprecedented volume of trademark applications. The result is unpredictable wait times for processing of applications and any documents related to them. Back when I reviewed trademark applications at the USPTO, the goal was always to review every application within three months or less after the filing date. Current wait times are more than twice as long. In early July, I am still waiting for the USPTO to review applications that I filed in late December of last year – that’s more than six full months. I feel bad for my clients and for the current examining attorneys at the Trademark Office - the job already places them under tremendous time pressure, even in the best of circumstances.
How bad is the problem?
The World Trademark Review reports that the USPTO’s backlog of unreviewed trademark applications recently hit an all-time high of more than 900,000 applications. (For more details, click here.) According to the same article, as recently as 2014, the backlog was below 500,000, but between 2019 and 2021, there was a sharp jump of about 300,000 additional applications in the backlog. The past year and a half has been particularly overwhelming for the USPTO. David Gooder, Commissioner for Trademarks, recently reported that trademark application filings in mid-June 2021 were up more than 60% from the same time last year and that filings in December 2020 were up more than 170% from the same time in 2019. (For more details, click here.)
Why is this happening?
There are multiple reasons for this increase. The shocking December numbers can be explained, in part, by the fact that the USPTO had announced fee increases that would go into effect the following month. I saw that factor motivate a lot of people to file in December and avoid the higher fees. But one of the most important factors here is the surge in applications filed on behalf of China-based applicants. A few months ago, a USPTO IT specialist reported to the World Trademark Review that nearly 40% of the trademark applications filed with the USPTO in the fourth quarter of 2020 came from China-based applicants. In a Fortune article entitled “China is flooding the U.S. with trademark applications and no one is sure why,” the authors point out that as recently as 2010, China-based applicants filed only 1% of the trademark applications received by the USPTO. (For more details, click here.) So how did we go from 1% to nearly 40% in the span of a decade? The same article points out that some Chinese municipal governments pay locals to register trademarks in the U.S. – as much as $800 for applicants located in Shenzhen.
There is extra cause for concern here, because a significant percentage of the applications filed on behalf of applicants based in China are fraudulent. Back in 2019, NYU Law professors Barton Beebe and Jeanne Fromer testified before a U.S. Senate subcommittee that they estimated 66.9% of certain applications filed at the USPTO and originating in China “included fraudulent specimens” (specifically, their research looked at applications filed in 2017 for apparel goods in Class 25). (For the full-text of their testimony, click here.) If an applicant files to register a trademark based on use, they must submit evidence to the USPTO that they are actually using their mark out there in the U.S. marketplace in connection with the goods/services identified in the application. That is the purpose of a specimen. So submitting a fake specimen is a big deal: it represents an effort to bypass the requirement of actual use.
What does this mean for business owners who really are using their marks?
While I find all of these reports fascinating, none of them surprises me. Back when I reviewed trademark applications, I saw a shocking number of fake specimens. Now that I’m in private practice, I’ve been approached by multiple companies based in China who want to file applications under my name. Of course I say no, but they eventually find U.S.-licensed attorneys who say yes.
What’s particularly frustrating about this, on the other side of the process, is that I have clients who are engaged in legitimate business in the U.S. who struggle to find interesting and engaging trademarks that they can use and register because our current federal trademark register is crammed with “deadwood” registrations – ones for marks that have never actually been used in U.S. commerce and many of which are supported by fake specimens. It’s a complex problem that the USPTO (mightily, I’ll given them that) is trying to combat. But these numbers suggest that, at least for the immediate future, applicants for U.S. trademark registrations will face longer delays in protecting their marks and increased competition for the good marks that remain. Unfortunately, a significant amount of that competition comes from people and companies who never had any intention of actually using these marks in the U.S. marketplace.
This information was posted on July 6, 2021 and was accurate as of the date of writing. However, the law changes frequently, and readers should not rely solely on general online information but instead should consult a licensed attorney by asking questions about their specific issues when they need legal advice.
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