On June 8, 2021, the USPTO issued an Order to Show Cause to Shenzhen Huanyee Intellectual Property Co., Ltd. (“the company”) and its identified Executive Director, Yusha Zhang, “for engaging in unauthorized practice before the USPTO in trademark matters, providing false information to the USPTO by means of entering the signatures of thousands of third parties on trademark submissions, and providing false, fictitious, or fraudulent information in trademark submissions with the intent to circumvent the USPTO Rules.” The USPTO required a response as to why it should not immediately issue sanctions. Unsatisfied with the response given by Zhang and the company, the USPTO issued a Final Order for Sanctions on December 10, 2021, terminating proceedings involving submissions filed by Zhang and the company and precluding any further correspondence and submissions.
The Order to Show Cause:
In the initial Order to Show Cause, the USPTO carefully directed the Respondents to the USPTO rules and regulations that aim to prevent fraudulent activity. Specifically, the USPTO stated, “protection of the integrity of the U.S. trademark register is of the upmost concern to the USPTO because the register is a reflection of trademarks actually used in commerce and its accuracy serves the critical purpose of avoiding needless costs and burdens to applicants, who rely upon its contents when choosing a mark.” The USPTO warned that “providing false information of any kind in a trademark submission undermines the integrity of the register, and those who provide false, fictitious, or fraudulent information are subject to sanctions.”
The USPTO continued by meticulously providing all of the evidence it had that Zhang and the company were engaging in fraudulent activity. First, it noted that the company boasts on its website that it has filed over 30,000 foreign trademark applications, including in the U.S. The website lists photographs of “U.S. attorneys” identified as “Nyxia” and “Gaulle;” however, the USPTO states that it is unaware of any trademark application or registration listing an email address associated with the company that includes attorney information for these persons. Specifically, the USPTO states that it could not find any information to show that Zhang or her employees are attorneys qualified to practice before the USPTO. Additionally, the USPTO points out that between 2016 and 2019, Zhang and her employees were routinely practicing before the USPTO in trademark matters, even though the USPTO Rules provided that only attorneys licensed in the U.S. can represent others.
Second, the USPTO presented evidence that Zhang and her employees were providing fraudulent information to the USPTO. The USPTO noted that Zhang and her company appear in registrations for three different USPTO accounts registered to the email addresses 1090194565@qq.com, sztmlaw@hotmail.com, and paralegal1@tbchadwick.com. USPTO records show that those accounts alone were linked to over 8,000 pending applications, and users of the accounts have filed many applications and amendments. Additionally, the information tied to these accounts prove that the same person or entity is using these accounts to provide the signatures of others. The USPTO lists multiple examples where it would not be possible for different applicants to provide signatures in such a short period,[1] indicating both that it was forging signatures and that multiple persons were using the same account. Furthermore, Zhang and her employees were submitting several hundred applications identifying the owners as juristic entities in the U.S. with fake addresses. When the USPTO examined these addresses, it found that they were “merely commercial mail receiving agencies, capable of forwarding or scanning mail for people or entities located elsewhere in the world.” When examining attorneys pushed back on the given address, the company would often change the address to another false domicile. Only when the examining attorney questioned the given address multiple times did the company provide a domicile that was outside of the U.S.
The USPTO demanded that Respondents show cause as to why the USPTO should not issue sanctions. The threatened sanctions included:
“(1) Permanently preclude you and your employees from submitting trademark-related documents on behalf of yourselves or others;
(2) Strike or otherwise give no weight to all trademark-related documents submitted by you or your employees;
(3) Remove correspondence information associated with you and your employees from the USPTO’s database in all applications and/or registrations;
(4) Direct the USPTO’s Office of the Chief Information Officer to permanently deactivate any USPTO accounts in which contact information related to you or your employees appears, and to take all reasonable efforts to prevent you or your employees from creating or activating further accounts; and
(5) Terminate all ongoing proceedings containing submissions filed by you or your employees; and
(6) Continue to strike documents, remove information, deactivate accounts, and terminate proceedings containing submissions later found to have been filed by your or your employees. “
The Final Order for Sanctions:
The USPTO issued the Final Order for Sanctions on December 10 after Respondents had submitted a response to the previous Order. First, the USPTO addressed the Respondents’ assertion that the USPTO is prohibited from making information concerning this administrative proceeding available to the public. The USPTO rejected this argument, stating that (1) foreign individuals or entities have no rights under the Privacy Act and (2) that 37 C.F.R. § 11.306[2] does not apply to an administrative order issued by the USPTO.
The USPTO notes that respondents have been involved with over 15,000 trademark matters before the USPTO. Additionally, in its response, Respondents failed to either address or concede to the points made by the USPTO in the initial Order. First, the Response acknowledges that the Respondents engaged in the unauthorized practice before the USPTO, stating that they “plan[] to move past this and conform its conduct to the requisite USPTO regulations.” However, the Response does address the allegation that fictitious addresses were provided or the misuse of the USPTO’s systems. The Respondents then admitted to entering the signatures of others on filings submitted to the USPTO, stating that they were not aware of the filing requirements. In response, the USPTO critically rejects this argument, pointing to the fact that the company prides itself on being an intellectual property firm, and Respondents clearly knew that laws and regulations govern the trademark process.
Respondents also argue that sanctions should not be imposed, as the violations were not willful. However, the USPTO outlines precedent that shows that ignorance of the law is not a defense, and those who do not comport themselves with the governing regulations will be held accountable.[3] In this case, the USPTO indicates that the actions by the Respondents was clearly willful, and sanctions are warranted. The USPTO terminated all submissions filed by Respondents and decided that Respondents are not authorized to practice before the USPTO in trademark matters under the USPTO rules. Additionally, they are not allowed to represent others or themselves; if the Respondents wish to apply for a trademark themselves, they must seek representation by a U.S. licensed attorney.
Impact:
Notably, the USPTO designated that this order be citable as precedent, signaling that it may be preparing to take similar actions against other trademark applicants that are abusing the system. Although this case is an extreme example of fraud, the USPTO has indicated here that it will not accept defenses of ignorance if false, fictitious, or fraudulent information is provided. The USPTO even noted that the sanctions were given not only to deter Respondents from continuing in their “flagrant flouting of the USPTO Rules and improper submissions,” but also to deter others from committing similar mistakes. Although an applicant can represent himself in trademark prosecution matters, representation by a trademark attorney can prevent even accidental missteps and potential sanctions.
[1] In its first example, the USPTO outlines how on May 14, 2021, between 2:29 AM and 3:29 AM Eastern, one of these USPTO accounts was responsible for submitting four new TEAS Plus applications and five responses to Office Actions. Seven different alleged signatories were to personally enter their signatures. However, the signatories had domicile addresses in geographically diverse parts of China as well as in New York. In its second example, the USPTO notes, “On March 16, 2021, alone, your accounts were responsible for filing 201 different TEAS forms, most within minutes of each other, with several submitted mere seconds apart.”
[2] 37 C.F.R. § 11.306 (a) provides that “A practitioner who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that the practitioner knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter.”
[3] The USPTO cites Patagonia, Inc. v. Azzolini, 109 USPQ2d 1859, 1862 (TTAB 2014) (pro se party bears the responsibility of following rules of practice in Trademark matters before the Board) and Hurley In’tl LLC v. Volta, 82 USPQ2d 1339, 1345 (TTAB 2017) (“the fact that applicants allegedly misunderstood a clear and unambiguous requirement . . . does not change [the Trademark Trial and Appeal Board’s] finding of fraud”).