Trademark Squatting – Is It A Thing?

Perhaps “trademark squatting” is not yet a commonly used term in trademark law, as is “cybersquatting” in the realm of domain name registrations. But maybe it should be. Because some trademark applicants have substantially the same unscrupulous goals as a cybersquatter – to obtain a registration solely for the purpose of holding it ransom to others.

This article addresses difficulties that can be created by such activities, various protections of U.S. trademark law that are supposed to guard against such activities, and some related considerations for potential trademark applicants.

Applications for United States trademarks may be filed on several bases. The two most common of these bases are likely Section 1(a), commonly also referred to as “use in commerce,” and Section 1(b), commonly also referred to as “intent-to-use.”

The use in commerce filing basis requires an applicant to provide evidence that the mark being applied for has already been used in interstate commerce prior to filing of the application. The intent-to-use filing basis, on the other hand, requires only that the applicant have a “bona fide intent” to eventually use the mark applied for on or in connection with the goods or services listed in the application as of the application filing date.

But what happens when the “intent” of an intent-to-use trademark applicant isn’t really “bona fide” at all? For example, what happens when someone files a trademark application not because they have any intent to ever use the mark applied for, but purely because they think the mark may have future value to others?

This is not a completely new issue, nor a completely new question. However, recent media stories have highlighted what appear to be various blatant attempts at “trademark squatting”. Perhaps the best (or at least most well-known) recent example involves dozens of trademark applications that were filed by an applicant seemingly for no other real purpose other than trying to corner the market on likely new names for the former Washington Redskins NFL football team . And this isn’t his first time doing so.

The goods and services associated with these trademark filings include goods like cups and mugs, apparel, helmets, and footballs, and services such as providing a website featuring information relating to the sport of football, and entertainment in the nature of football games. Yet the applicant appears to be an actuary by trade rather than someone who would have the knowledge or ability to make helmets, or to provide entertainment in the nature of football games – especially not games played by a small league of teams sporting all of the various names for which trademark applications were filed. And a review of the website this particular applicant created to provide supposed evidence of the requisite bona fide intent to use the marks leaves (more than) a lot to be desired, and delivers little to no actual evidence of any real intent to use the marks for the stated goods and services.

So, what are the ramifications of and/or the remedy to a situation such as this, where an applicant has pretty clearly filed a multitude of trademark applications in bad faith? Well, there are numerous previous instances of intent to use applicants having their trademark registrations ultimately denied because of a lack of adequate evidence of a bona fide intent to use the mark as described in the application as of the filing date of the application. However, in most of these cases, the applicant in question filed an application for a trademark that was similar to, if not substantially identical to, an already existing trademark, but usually for different although often similar goods or services. And, registrations were denied to the offending applicants largely only after protests were lodged by the owners of the existing trademarks (typically via an opposition proceeding before the U.S. Trademark Office).

While it’s reassuring that potentially bad-faith trademark registrations have been foreclosed in the past, it hasn’t been without possible business disruption and a (potentially unfair) burden to the parties challenging the registrations. That is, in the previously mentioned exemplary cases, it wasn’t until after the improper applications were allowed and published, and then subsequently opposed, that the registrations were denied. Consequently, the marks for which registrations were eventually denied were rendered unavailable for registration by possible legitimate applicants for many months if not years, and the opposers of said marks likely had to expend significant time and expense to prevent the bad-faith registrations.

Current U.S trademark law is seemingly equipped with the tools required to more efficiently deal with trademark applications where the applicant lacks the requisite bona fide intent to use the mark – at least those applications where the bad-faith of the applicant seems readily apparent. For example, when filing an intent-to-use trademark application, the applicant (or other acceptable signatory) is required to make certain verifications, such as:

• The applicant has a bona fide intention to use the mark in commerce or the applicant had a bona fide intention to use the mark in commerce as of the application filing date.
• The applicant is entitled to use the mark in commerce on or in connection with the goods or services specified in the application.
• The facts recited in the application are true.
• To the best of the signatory's knowledge and belief, no other person has the right to use the mark in commerce.₄

Additionally, when signing a trademark application, the signatory is presented with a warning such as “willful false statements and the like are punishable by fine or imprisonment, or both, under 18 U.S.C. § 1001, and that such willful false statements and the like may jeopardize the validity of the application or submission or any registration resulting therefrom.” ₅

The penalties for filing an intent-to-use trademark application in violation of one or more of the foregoing verifications include, for example, deletion of the affected goods from the subsequently-received registration, cancelling the registration, sanctioning an attorney/agent representing the bad-faith applicant, and criminal prosecution for perjury.

Unfortunately, the protections offered by current U.S. trademark law have not served as a sufficient deterrent to bad-faith trademark applicants such as trademark squatters. At the examination level, research suggests that typically little action is taken by trademark examining attorneys with respect to possible bad-faith intent-to-use applications beyond perhaps occasionally requesting some minimal evidence of a bona fide intent to use the mark applied for. Penalties beyond deletion of a good or service directly affected by an act of bad-faith are rare, and criminal penalties are exceedingly rare. And, when penalties of any kind are imposed, it is primarily not until an application is challenged through an opposition or cancellation proceeding.

Furthermore, as alluded to above, a finding of lack of bona fide intent on the part of a trademark applicant does not automatically void the entire affected trademark application. Rather, only the particular goods and/or services of the application with respect to which there was no bona fide intent are affected (e.g., deleted). ₆

Automatically rendering an entire trademark application void ab initio (i.e., invalid from the outset) based on a finding of lack of bona fide intent to use the mark by the applicant requires a further finding of fraud. In addition to voiding the affected trademark application in its entirety, a finding of fraud potentially subjects a bad-faith applicant to more severe penalties.

Succeeding on such a fraud claim is difficult, however, because it requires not only proof that an applicant lacked a bona fide intent to use the mark at the time of filing the application, but also that the applicant acted with an intent to deceive the Trademark Office. As a consequence, there are very few cases where an applicant or applicant’s representative has been found to have committed fraud based on the bad-faith filing of a trademark application.

The good news is that things seem to be moving in the right direction. For example, the world’s largest five trademark offices (often referred to as “TM5”) have taken notice of the issue of bad-faith trademark filings, and are actively seeking to address it.

In the U.S., the “Trademark Modernization Act of 2020” was just signed into law on December 27th of last year as a part of the “Consolidated Appropriations Act, 2021”, and makes several substantial amendments to current U.S. trademark law. Among the changes provided by the Trademark Modernization Act of 2020 are new tools for more effectively and efficiently dealing with bad-faith trademark applications.

It will be interesting to see if the Trademark Modernization Act of 2020 works as intended once its provisions begin to be put into actual use, and also whether additional protections may be developed and implemented as a result of the collective efforts of TM5. Until then, clients are advised to be cautious about revealing a potential trademark before filing a corresponding trademark application, especially if the client is aware of competitors or others who may be interested in the mark for their own use or simply to disrupt the client’s business. Likewise, clients are encouraged to consider filing for a desired trademark as early as possible – particularly where a mark has already been publicly used or may have been inadvertently disclosed, and/or when a significant expenditure of time or resources have already been invested in a mark.

If you have questions regarding inventorship of an invention, seek the advice of your patent attorney.

₁ See, e.g., Virginia man trademarks dozens of possible new names for Washington NFL team, Christopher Brito, CBS News, July 15, 2020; Tons of Redskins nickname options have been trademarked by a guy in Virginia, Liz Roscher, Yahoo!Sports, July 13, 2020.

₂ See http://www.washingtonamericansfootball.com/home.html

₃ See, e.g., M.Z. Berger & Co., Inc. v. Swatch AG, 787 F.3d 1368 (Fed. Cir. 2015); L'Oreal S.A. and L'Oreal USA, Inc. v. Robert Victor Marcon, 102 USPQ2d 1434 (TTAB 2012); Honda Motor Co., Ltd. v. Friedrich Winkelmann, 90 USPQ2d 1660 (TTAB 2009); Boston Red Sox Baseball Club L.P. v. Sherman, 88 USPQ2d 1581, 1587 (TTAB 2008).

₄ See, e.g., 37 CFR §§ 2.33(a), 2.33(b)(2), 2.33(c), 2.34(a)(2).

₅ See 37 CFR § 2.20.

₆ See, e.g., The Wet Seal, Inc. v. FD Management, Inc., 82 USPQ2d 1629 (TTAB 2007).

₇ The TM5 includes the trademark offices of China, the European Union, Japan, Korea, and the United States.

₈ See H.R. 133 at pp. 1019-1029; Public Law Number 116-260.