“The surge in filings is not only delaying the processing of new applications, but the processing of routine Office Action responses. There is sand in the gears everywhere you turn.” – Josh Gerben, Gerben Perrott PLLC
On June 23, a U.S. Patent and Trademark Office (USPTO) blog post published a piece authored by Commissioner for Trademarks David Gooder discussing a massive surge in trademark application filings at the agency this year. Through June 17, the USPTO had received 63% more trademark applications (211,000 additional filings) when compared to the same period in 2020. Spurred on by the growth of the internet economy during the COVID-19 pandemic, the surge has created a backlog of trademark applications that has extended the wait times for first office actions to an average of 5.2 months and final disposals of applications to an average of 10.5 months.
Trademark Filing Spikes: Old News Having New Impacts on USPTO Applicants
Although the blog post places a new emphasis on the trademark filing surge at the USPTO, it’s not necessarily news to anyone following major trends in trademarks over the past few years. In late July 2019, the agency reported a spike in application filings owing mainly to increased activity from Chinese entities during a week in which daily filings were 1,000 applications greater when compared to the same week in 2018. Then in September 2020, the USPTO received trademark applications totaling 92,600 classes of goods and services, the greatest number of filings the agency had ever received in one month.
At a public meeting of the Trademark Public Advisory Committee (TPAC) on May 21 of this year, Gooder acknowledged that the agency was undertaking an effort to “attack the surge” of trademark applications. At that time, trademark application filings were 220,000 greater than filings received during the same period in 2020, an increase of 57% compared to the 63% increase reported in the USPTO’s more recent numbers. Still, Gooder acknowledged that the past year has seen the three highest monthly filing totals that the agency has ever received in September, December and April. Despite the increases to average pendencies for trademark application actions, Gooder’s presentation indicated that the agency was still meeting quality targets for statutory compliance on first actions and final actions. Gooder also tied the spikes in trademark filings seen in September to the end of the government’s fiscal year and indicated that December’s filing spike was likely motivated by a fee increase that went into effect in January.
From a practitioner standpoint, the dramatic increases to trademark application filings at the USPTO have had a palpable impact on wait times for trademark registration, according to Josh Gerben, Founding Partner at trademark firm Gerben Perrott PLLC. “The delays at the USPTO began to be noticeable early this year,” Gerben said. “The surge in filings is not only delaying the processing of new applications, but the processing of routine Office Action responses. There is sand in the gears everywhere you turn.” Gerben added that actual delays for trademark applicants are even longer than the USPTO’s publicly disclosed average pendencies when factoring in the time it can take to process a response to an office action.
Those delays in registering trademarks are having deleterious effects on many of the most vulnerable players in the thriving Internet economy providing much of the impetus for the increased filings. “These delays are damaging to businesses seeking trademark protection, especially small businesses,” Gerben said. He noted that such delay can result in uncertainty over whether or not a particular trademark will be cleared for registration, resulting in additional legal risks when launching new products or services. “Moreover, in today’s online marketplace, a delay in obtaining a registration can make it very difficult to fight against infringers and counterfeiters on platforms like Amazon and Alibaba,” Gerben added.
China: The Main Culprit Behind the Rise of Trademark Register Clutter
Perhaps the most common culprit charged with encouraging a rapid tide of trademark filings, many of which are of questionable legitimacy, is China. This January, the USPTO issued a report on Chinese patent and trademark filing activities showing that government subsidies and other non-market factors are likely playing a much larger role in encouraging such applications from Chinese entities rather than organic invention or economic activity. Although the Chinese government has publicly said that it will eliminate all government subsidies offered by provincial governments for patent application filings by the year 2025 and has amended trademark law to make it simpler for legitimate brand owners to challenge bad faith filings by trademark squatters, Chinese entities are still encouraged to file many bad faith applications to cover trademarks that are in actuality owned by unrelated third parties.
China’s government has taken some action to curb such bad faith filings, including the promulgation of regulations by the China Trademark Office for identifying bad faith applications and punishing entities filing them, but as Gerben points out, the impacts of the Chinese trademark surge threatens the integrity of the U.S. trademark register. “Fraudulent filings from China-based businesses have been pouring in during the past four years,” Gerben said. “In 2021, 29% of all trademark filings made in the US have come from China-based businesses. A decade ago, in 2011, that number was 1%. This historic backlog is due to one reason: filings from China-based businesses.”
Washington, D.C. lawmakers have made efforts to declutter the trademark register in recent years, most notably through the passage of the Trademark Modernization Act (TMA) late last year. This May, the USPTO issued a notice of proposed rulemaking in order to begin implementing provisions of the TMA that create new ex parte expungement and reexamination proceedings at the Trademark Trial and Appeal Board (TTAB) as well as new grounds for cancellation of a mark for nonuse of the mark in commerce. But the problems posed by a cluttered trademark register continue to impact brand value for many businesses, as recent empirical research published in 2018 by Harvard Law Review shows that word-mark depletion and trademark congestion is forcing applicants to choose less competitively effective marks.
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