In our continuing effort to combat trademark scams and raise awareness of this important issue, we have recently submitted comments to the FTC. “The Federal Trade Commission (“Commission”) proposes to commence a rulemaking proceeding to address certain deceptive or unfair acts or practices of impersonation. The Commission is soliciting written comment, data, and arguments concerning the need for such a rulemaking to prevent persons, entities, and organizations from impersonating government agencies or staff and businesses or their agents.”
More than 100 comments were submitted. They can all be found at https://www.regulations.gov/document/FTC-2021-0077-0001/comment.
Because there are many types of fraud and government impersonation, only a handful of other commenters mentioned trademark issues.
Our comments focus on detailing the nature of the problem, and suggesting some possible ways to improve efforts to combat the scammers. See:
https://www.slideshare.net/erikpelton/empa-comments-re-ftcs-trade-regulation-rule-on-impersonation-of-government-and-businesses
Impersonation ANPR; FTC File No. R207000
Comments of Erik M. Pelton & Associates, PLLC Regarding the FTC’s Proposed “Trade Regulation Rule on Impersonation of Government and Businesses”
Introduction
The FTC’s Proposed Trade Regulation Rule on Impersonation of Government and Businesses (FTC-2021-0077) aims to prevent fraudulent or harmful acts caused by impersonation of government and businesses. We commend the FTC for proposing such a rule and allowing for such broad input from a variety of industries that affect consumers. As a trademark law firm, we represent a wide array of clients but predominantly focus on helping small business owners protect their intellectual property. In recent years, trademark scams have proliferated and become increasingly problematic, particularly for small business owners. Below, we propose that impersonation of the USPTO, WIPO, and other trademark-related government entities and businesses should fall within the purview of the FTC’s Proposed Trade Regulation Rule.
We begin our comments by summarizing the nature of trademark scams, and then attempt to answer some of the specific questions posed in the Proposed Trade Regulation Rule on Impersonation of Government and Businesses. We recognize that other types of impersonation of government and businesses are also serious and in no way seek to detract from any other such fraudulent activity; our comments are limited solely to trademark scams because that is where our experience lies.
About Erik M. Pelton & Associates, PLLC
Erik M. Pelton & Associates, PLLC (“EMP&A”) is a boutique trademark law firm located in Falls Church, Virginia. Established in 1999 by Mr. Pelton following nearly two years of working for the U.S. Patent and Trademark Office as a trademark examiner, EMP&A has registered more than thirty-five hundred U.S. trademarks for clients who are overwhelmingly small businesses. EMP&A attorneys are actively involved in the International Trademark Association (INTA) and the American Bar Association’s Intellectual Property Law section (ABA-IPL).
General Comments and Recommendations
The scams preying on filers with the United States Patent and Trademark Office (“USPTO”) fall squarely within the purview of the proposed rule. EMP&A has worked diligently to raise awareness of trademark scams and how they affect small businesses. Generally, there are two different types of scams that are sent to trademark owners: (1) solicitations to have a trademark listed in a “directory” or publication and to have it “monitored” for a fee, and (2) fraudulent warnings about key trademark maintenance deadlines, including registration renewals.[1] Many of these fraudulent solicitations appear to be affiliated with the federal government, using names such as “Patent & Trademark Resource Center,”[2] “World Trademark Register” (WTMR, LLC)[3], “World Patent and Trademark Register” (WPTR), “Patent and Trademark Office,”[4] “International Patent and Trademark Register,”[5] and “Trademark Edition – International Catalogue of Trademarks.”[6] Some of these solicitations use logos, designs, or fonts that replicate the look of official correspondence from the USPTO or WIPO. Many of them also contain information taken from the official USPTO public records, including the trademark wording or image, the applied-for goods and services, the serial or registration number, and references to relevant trademark statutes. Some of the solicitations also reference contract law in the fine print and give only a short timeframe to respond to create a sense of urgency.[7] As such, these letters often appear legitimate and could easily lead an unknowing recipient astray. [1]
These scam letters not only cost those who fall victim to them hundreds or thousands of dollars in exchange for essentially nothing, but they also greatly undermine the legitimacy of the USPTO and trademark law. Many of these scam letters appear to be affiliated with the government but make it unclear what is being offered. Some offer to publish a trademark in a directory or to provide trademark monitoring services while others offer fake trademark registration renewals. The offered “services” do not constitute legal advice or legal services and they give no real benefit to trademark owners. The letters often blatantly provide incorrect dates (such as renewal dates) that are key to maintaining existing trademark rights, thereby misinforming trademark owners about the actual status of their trademarks. People may pay for the scam “service” believing their trademark will be renewed only to lose rights in the mark when no action is taken on their behalf. These scenarios can lead to confusion, frustration, and misunderstanding of trademark law. Further, trademark owners could easily lose rights in a mark they spent significant time, money, and energy to acquire. Continued fraud greatly undermines the integrity of the USPTO and the quality legal services that many trademark attorneys provide. [2]
In recent years, it has become clear that trademark scams are widespread and pervasive. In 2017, the USPTO held a roundtable to discuss fraudulent trademark solicitations and determine strategies to mitigate the problem.[8] The USPTO has since undertaken new measures to combat scams, including sharing educational resources, conducting trademark audits, reviewing specimens more closely, creating a special task force, implementing the US counsel rule, requiring mandatory logins, and implementing the Trademark Modernization Act.[9] Notwithstanding these efforts, trademark scams continue to proliferate. [3]
Trademark scams operate on a global scale and US trademark holders are often targeted. In early 2021, it was reported that a Pakistan-based company used over 200 fake websites to offer inexpensive trademark filing services (amongst others) and impersonated the USPTO.[10] This company made itself look legitimate by using the USPTO’s logo and similar colors on one of its websites.[11] Similarly, in the fall of 2021, a Latvian man named Viktors Suhorukovs was sentenced to over four years in prison for committing mail fraud by offering fraudulent trademark renewal services.[12] Suhorukovs operated under the names “Patent and Trademark Office” and “Patent and Trademark Bureau” to impersonate the USPTO and make his operation look legitimate.[13] Viktors Suhorukovs was required to pay $4.5 million in restitution to at least 2900 victims.[14] [4]
Last year, to determine how widespread these scams are, our firm sent a FOIA request to the FTC seeking documents and more information pertaining to Misleading Trademark Notices sent by various fraudulent entities. We learned that the FTC received at least 200 complaints regarding trademark scams between March 2020 and March 2021. The complaints were from individuals and companies located throughout the US, as well as foreign companies that conduct business in the US. Along with its response, the FTC provided our firm with comments received from those who submitted complaints to the agency.[15] Based on the comments, consumers could easily be deceived by the solicitations because they appear to be from the federal government. Here are several excerpts of comments the FTC received from trademark scam victims:
- “Solicited our Company to renew our Trademark an entire year early. Posing as the actual U.S. Patent and Trademark Office (USPTO).”
- “I received a letter in the mail that was from the Patent Trademark Office stating that our firm has a Pending Trademark Cancellation. The way the letter and its envelop is presented, it is misleading and appears to be from the USPTO.gov agency.”
- “We see official looking spam mail about our patents or trademarks, fairly often…but this one was convincing enough, that my employee issued a check to them and had I not caught it when signing checks, they would have scammed us out of $925. They try to make themselves look like USPTO as possible and they are preying upon people, businesses and small business…”
- “I received a letter in the mail saying that my trademark is about to expire on January 16, 2021. It had all of our personal information on it regarding the mark, and it looked like an official government correspondence complete with a barcode and calling it under declaration of Section 8 … That this organization lied about our renewal date (which is January 2023), tried to replicate a government office, and up-charged to almost three times the actual fee is horrible. For us, this was a bullet dodged, but it was a close call.”
- “The letters are obviously designed to look like they came from the USPTO.” [5]
The above comments serve as direct evidence of how misleading these solicitations are and the harm that they cause individuals and business owners. Given that many trademark owners are unaware of these scams, much of the burden falls on attorneys to educate clients about ongoing scams, signs to look out for, and actions to take if they are targeted. For instance, our firm has devoted a section of our website to provide content to keep clients and the public abreast of ongoing schemes. We provide updated articles, scam identification tools, and examples of actual scam letters our firm or our clients have received. Numerous people have commented on these blog posts to thank me for raising awareness, because the blog either confirmed their suspicions regarding correspondence they received or alerted them to the scam.[16] While these resources are informative and helpful to some, they only reach a small portion of the population. Some people who receive such fraudulent correspondence likely do not question it or think to research it before responding. Many trademark applicants and owners, particularly small business owners, are uninformed and want to take any necessary steps to protect their trademark rights. For many, this means using their limited funds and resources to pay an exorbitant fee that will provide no benefits and get them no closer to a trademark registration. [6]
Another step our firm has taken to address trademark scams is to contact several landlords that were unknowingly providing office space or mail services to scam perpetrators. One way that scammers continue to evade detection is by changing the addresses through which the fraudulent mailings are sent. In corresponding with these landlords, we were shocked to learn that they had not been contacted by the USPTO or any other federal agencies to help prevent ongoing fraud. Upon learning that they were unknowingly providing a means for scammers to operate, the landlords were generally happy to assist by immediately terminating their agreements with the perpetrators. While this has been a useful tactic, it clearly needs to be done at a much larger scale and preferably by a more powerful entity, such as the FTC. [7]
Other firms have taken even more drastic measures and sued trademark scammers.[17] While these cases have been successful in some instances, law firms should not have to spend precious time and resources to address the scams.[18] One of the challenges to stopping trademark scams is the lack of proper enforcement mechanisms. The USPTO has recently taken several measures and increased security protocols to crack down on fraudulent filings, including applying to trademark its name and logo.[19] As stated by the USPTO Commissioner for Trademarks, David Gooder, “Like any other brand owner facing infringement by third parties, if we have federal trademark registrations, they will help us take appropriate legal action as needed to protect the USPTO brand from improper use by those trying to impersonate or falsely claim affiliation or endorsement with the USPTO.”[20] While these measures are commendable, more action is needed. In the next section, we address some of our general recommendations and suggestions regarding ways the FTC can enhance detection and enforcement of trademark scams. [8]
Suggestions and Recommendations Moving Forward
Moving forward, we ask for greater transparency from the FTC, USPTO, and the U.S. Postal Inspection Service about the prevalence of trademark scams and the preventative measures being implemented. Other than the 200 complaints received by the FTC, little is known about how many trademark owners are affected by scams. Further, many who receive false communications likely do not know where to report them. While we commend the education that has been provided thus far, the scams are only becoming more prevalent. As such, widespread education is needed to draw attention to the harmful nature of fraudulent trademark schemes. [9]
As discussed above, our firm successfully prevented multiple landlords from continuing to unwittingly give trademark scammers the means to operate. If our firm can accomplish this with a few letters, then the FTC and its resources could make an enormous impact. Accordingly, we recommend that the FTC investigate whether it has the authority to contact landlords that provide office space or mail services to scammers. If so, the FTC could notify landlords that their services are being used for fraudulent activities and get them to stop providing their services. Perhaps widespread notice can be given to the major mail carriers, including USPS, UPS, and FedEx to avoid working with entities known for sending fraudulent correspondence. If scammers must continually find new ways to operate, it will become difficult for the scams to be efficient and profitable. [10]
Further, we also recommend that the FTC investigate the means that scammers use to collect “fees” from victims. Whether they request payment by credit card or check, the FTC should use its power to create an enforcement mechanism to prevent payment to scammers. Perhaps the FTC rulemaking can clarify whether there is authority to have banks, credit card processors, and other financial institutions halt operating with known scammers. [11]
We also suggest that the FTC increase its general education efforts to spread awareness of these schemes. The FTC could provide notice to consumers that fraud is rampant and to not assume that correspondence is legitimate just because it appears to be from a government entity. The FTC could educate consumers about what genuine government correspondence looks like and work in tandem with other government entities, such as USPS and the USPTO to educate the public about how to distinguish fraudulent communications from legitimate ones. [12]
Additionally, we recommend that the FTC adopt a more robust reporting system to allow people to provide full details and documentation of the scams they receive. Currently, the process for reporting fraudulent trademark correspondence to the FTC is rather cumbersome and there is no way to upload the offending document received. It would be helpful if there was a user-friendly online reporting tool that allows users to upload documentation. The FTC could then better monitor which entities are currently operating and have proof of the misleading information being provided to trademark owners – including more address, banking, and postal information. [13]
In response to the specific questions as framed in the Federal Register notice, we provide the following:
- How widespread is the impersonation of government entities, such as agencies of the U.S., state, and local governments?
Please see the above discussion in Paragraphs 3-6.
- How should a rule addressing the practices described in Questions 1 through 3, above, define the term “impersonation”? What claims, images, or symbols are likely to give rise to the net impression of government or business impersonation? What evidence supports your answer(s)?
The definition of “impersonation” should include creating names, logos, and images that attempt to create a false association with legitimate government entities and/or businesses. For example, using logos that mirror those of the USPTO or WIPO should fall within the scope of “impersonating” the government. Likewise, using misleading terms that create a false sense of authority or officiality, such as “Office,” “Bureau,” “Agency,” “Register,” etc. should also be prohibited. Overall, attempting to mirror official government correspondence by using similar color schemes, logos, fonts, names and the like should be deemed impersonation. Please see the discussion in Paragraphs 1 & 2 above and the trademark scam letters cited in footnotes 3-6 as examples of fraudulent trademark letters that use these tactics to impersonate the federal government and/or businesses.
- For the practices described in Questions 1 through 3, above, are there individuals or entities that provide the means and instrumentalities for impersonators to conduct such practices? If so, what types of goods or services do they provide that significantly enable impersonators to conduct such practices? What type of consumer injury does this cause? Under what circumstances should the provision of such goods or services be considered deceptive or unfair? What evidence supports your answer(s)?
Several entities provide the means and instrumentalities for trademark scammers to operate. As discussed above in Paragraphs 7 & 10, landlords that provide office space or mail services to scammers unknowingly enable the scams. Providing scammers with mail services injures consumers because the correspondence often appears legitimate and many trademark owners are unaware that scammers can target their home or business addresses by using the USPTO’s public records. Further, the US Postal Service, of course, carries and delivers the physical offers from many of the scam operators. Likewise, as discussed in Paragraph 11, scammers use various banks and payment processing services to collect “fees” from victims. If scammers request payment by credit card or check, banks and payment processing services provide the means for scammers to get paid. Additionally, domain registrars and web hosting services that provide websites and related services also provide bad actors with instruments to operate and/or promote their services.
The provision of the contributory services detailed above should be considered deceptive or unfair following a procedure for putting service providers on notice of the fact that they are unwittingly enabling scammers. We encourage the FTC to consider regulations that would allow for such a contributory notification process could come from the FTC, following an investigation, or come from concerned parties with notice to the alleged scammers who would be permitted an opportunity to respond and rebut the allegations. If scammers are denied these means and instrumentalities, it will become difficult for the scams to be profitable and hopefully they will cease operations.
- For any practices discussed in Questions 1 through 3, above, does the practice cause consumer injury? If so, what type of consumer injury does it cause? What evidence demonstrates such practices cause consumer injury? Please provide the evidence.
Yes, as discussed in Paragraphs 2, 5, & 6, the practices described herein cause serious injury and financial harm to the duped consumers and undermine consumer integrity in the government, federal trademark process, and trademark attorneys. Law firms are often required to expend extra resources educating clients about ongoing scams, answering questions from clients about solicitations they have received, and sometimes mitigating any damage affected clients have suffered. These scams also erode trust in the USPTO, WIPO, and other trademark-related government entities. Further, these entities are burdened by the additional time and effort it takes for staff to respond to scam inquiries and to create educational resources. The collective time and energy spent on preventing and resolving trademark scams by all involved parties is significant and diverts resources that could be spent helping consumers register their trademarks. Please see Paragraphs 5 & 6 for evidence of actual harm to consumers.
- Is there a need for new regulations to prevent the practices described in Questions 1 through 3, above? If yes, why? If no, why not? What evidence supports your answer(s)?
Yes, as discussed in Paragraphs 9-13, regulations that provide the FTC or other authorities with sufficient tools to target and shut down trademark scammers impersonating government agencies and/or businesses are greatly needed.
- Should the Commission consider publishing additional consumer and business education materials or hosting public workshops to reduce consumer harm associated with the practices described in Questions 1 through 3, above? If so, what should such education materials include, and how should the Commission communicate that information to consumers and businesses?
It would be beneficial for the Commission to provide additional consumer and business education materials regarding trademark scams to bring more publicity to them. The FTC could provide consumers with educational materials regarding what legitimate government correspondence looks like and from which entities they should expect to receive correspondence from (for example: if a consumer applies for a federal trademark, the only government entity that will contact him is the United States Patent and Trademark Office/USPTO and/or a retained attorney). The FTC should also educate consumers about ongoing scams, common signs of fraud, and provide examples of existing fraudulent entities and what misleading solicitations look like. The FTC could work closely with the USPTO to make educational materials widespread and to ensure there is a coordinated effort by both agencies to target scams. Greater transparency about each agency’s efforts to address trademark scams would also help. Additionally, a better reporting system is needed for people who either have received a fraudulent solicitation or have been scammed. At least one person has commented on the FTC’s website that the reporting process is cumbersome and requires someone to have been scammed to file a report.[21] A reporting system should allow people to file a complaint regardless of whether they have paid money. For example, attorneys and other involved parties have valuable input and should be able to file a complaint. Further, the reporting system should allow recipients of fraudulent solicitations to upload documentation of the scam to the FTC’s website.
Conclusion
Given the widespread nature of these scams, it will take a concerted effort by the FTC, USPTO, and other involved agencies to stop them. We thank you for your time and consideration and appreciate your efforts to use new and/or updated regulations to help prevent the impersonation of government and businesses.
February 20, 2022
Erik M. Pelton
Erik M. Pelton & Associates, PLLC®
[1] The Growing Threat of Trademark Scams, ABA, https://www.americanbar.org/groups/intellectual_property_law/publications/landslide/2021-22/september-october/growing-threat-trademark-scams/ (last visited Feb. 11, 2022).
[2] Beware of Continued Trademark Renewal Solicitation from Patent & Trademark Resource Center, iPelton Blog, https://www.erikpelton.com/beware-of-continued-trademark-renewal-solicitation-from-patent-trademark-resource-center/ (last visited Feb. 11, 2022).
[3] Beware of Latest Trademark Scam from WTMR, LLC, iPelton Blog, https://www.erikpelton.com/beware-of-latest-trademark-scam-from-wtmr-llc/ (last visited Feb. 11, 2022).
[4] Misleading Mail to Trademark Owners from Washington, DC “Patent and Trademark Office,” iPelton Blog, https://www.erikpelton.com/misleading-mail-to-trademark-owners-from-washington-dc-patent-and-trademark-office/ (last visited Feb. 11, 2022); Astonishing Offer to Trademark Registrants from Patent and Trademark Office in Jersey City – **NOT** USPTO, iPelton Blog, https://www.erikpelton.com/astonishing-offer-to-trademark-registrants-from-pto-patent-and-trademark-office-in-jersey-city-not-uspto/ (last visited Feb. 11, 2022).
[5] Beware of Trademark Scam from IPTR – International Patent and Trademark Register, iPelton Blog, https://www.erikpelton.com/beware-of-trademark-scam-from-iptr-international-patent-and-trademark-register/ (last visited Feb. 11, 2022).
[6] Beware of Continuing Scam from Trademark Edition – International Catalogue of Trademarks, iPelton Blog, https://www.erikpelton.com/beware-of-continuing-scam-from-trademark-edition-international-catalogue-of-trademarks/ (last visited Feb. 11, 2022).
[7] Beware of Trademark Scam from IPTR – International Patent and Trademark Register, iPelton Blog, https://www.erikpelton.com/beware-of-trademark-scam-from-iptr-international-patent-and-trademark-register/ (last visited Feb. 11, 2022).
[8] Summary of Fraudulent Solicitations Roundtable, USPTO, https://www.uspto.gov/sites/default/files/documents/Summary_FraudRT.pdf (last visited Feb. 11, 2022).
[9] Scam Awareness, USPTO, https://www.uspto.gov/trademarks/protect/scam-awareness?utm_campaign=subscriptioncenter&utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term= (last visited Feb. 11, 2022).
[10] USPTO Users Targeted in Massive Fraud and Money Laundering Case in Pakistan, World Trademark Review, https://www.worldtrademarkreview.com/governmentpolicy/uspto-users-targeted-in-massive-fraud-and-money-laundering-case-in-pakistan (last visited Feb. 11, 2022).
[11] Id.
[12] Criminal Conviction in Trademark Renewal Solicitation Scam, USPTO, https://www.uspto.gov/trademarks/protect/criminal-conviction-trademark-renewal-solicitation-scam (last visited Feb. 11, 2022).
[13] Id.
[14] Latvian National Sentenced to More Than 4 Years in Federal Prison, Ordered to Pay Over $4.5M in Restitution after Defrauding Millions from Patent and Trademark Mail Fraud Scheme, United States Department of Justice, https://www.justice.gov/usao-sc/pr/latvian-national-sentenced-more-4-years-federal-prison-ordered-pay-over-45m-restitution (last visited Feb. 11, 2022).
[15] See text of comments received in data file from the FTC, responsive to FOIA request FOIA-2021-00522, at https://www.scribd.com/document/558428616/2021-00522-USPTO-Imposter-Complaints-Formatted.
[16] Beware of Latest Scam Publication Offer to Trade Owners from “Worldwide-Trademarks,” iPelton Blog, https://www.erikpelton.com/beware-of-latest-scam-publication-offer-to-trademark-owners-from-worldwide-trademarks/ (last visited Feb. 11, 2022).; Beware of New Trademark Scam from IPS Intellectual Property Services, iPelton Blog, https://www.erikpelton.com/beware-of-new-trademark-scam-from-ips-intellectual-property-services/, (last visited Feb. 11, 2022).
[17] The Growing Threat of Trademark Scams, ABA, https://www.americanbar.org/groups/intellectual_property_law/publications/landslide/2021-22/september-october/growing-threat-trademark-scams/ (last visited Feb. 11, 2022).
[18] Id.
[19] The USPTO Trademarks its Name and Logo, Gerben, https://www.gerbenlaw.com/blog/the-uspto-trademarks-its-name-and-logo/ (last visited Feb. 11, 2022).
[20] Director’s Forum: A Blog from USPTO’s Leadership, USPTO, https://www.uspto.gov/blog/director/entry/protecting-our-trademark-customers-with (last visited Feb. 11, 2022).
[21] Is the USPTO Really Contacting Your Company? Maybe Not., Federal Trade Commission, https://www.ftc.gov/news-events/blogs/business-blog/2017/07/uspto-really-contacting-your-company-maybe-not (last visited Feb. 11, 2022).
