On Dec. 10, 2021, the U.S. Patent and Trademark Office (USPTO) issued a precedential Final Order for Sanctions against Chinese practitioner and law firm Yusha Zhang and Shenzhen Huanyee Intellectual Property Co., Ltd. for filing more than 15,000 applications and other submissions that were deemed fraudulent. The USPTO described the mass filings as “[a] scheme involving … egregious misconduct,” including unauthorized practice of U.S. law, providing false domicile addresses, impermissibly entering signatures of others and misusing uspto.gov accounts. Zhang had at least three different accounts, and multiple different people were using them.

The December Order followed a June 8, 2021 Show Cause Order and Response filed on July 6, 2021. Zhang and her firm claimed they were “unfamiliar with the filing requirements and did not fully understand the signature requirements under 37 C.F.R. § 2.193 until engaging counsel” and were now taking corrective action. The USPTO rejected this argument, as attorneys and pro se parties participating in the trademark registration process or board proceedings are presumed to be aware of the rules requiring foreign applicants to be represented by a U.S.-licensed attorney, and ignorance is no excuse. In addition to terminating the 15,000+ fraudulently filed applications, Zhang and her firm are precluded from future submissions to the USPTO.

Earlier this year, in January, the USPTO issued a report, Trademarks and patents in China: The impact of non-market factors on filing trends and IP systems, which shows that Chinese filings are significantly higher than those from other countries. This may be a result of the Chinese government offering trademark subsidies for foreign trademark filings. The USPTO reported that “because the amount of these subsidies often exceeds the cost of registering a trademark, a rational economic actor in China may choose to pursue a trademark application without any intention to use the mark in commerce.” See Report at 3. “After Shenzhen and other cities began offering subsidies for overseas trade applications, the USPTO experienced a surge in fraudulent trademark applications originating in China.” Id. at 4. Indeed, Shenzhen is the city where Zhang and her firm are located.

You can read more about the USPTO’s initiatives to combat fraudulent filings here: https://www.uspto.gov/about-us/news-updates/op-ed-new-us-counsel-rule-usptos-initiatives-ensure-accuracy-and-integrity.

With the USPTO’s tough stance, we hope we will see a decrease in fraudulent filings.