Impersonation NPRM, R207000

USPTO Comments Regarding the Federal Trade Commission’s Proposed Rule Titled “Trade Regulation
Rule on Impersonation of Government and Businesses”

The United States Patent and Trademark Office (USPTO) would like to offer the general comment below,
followed by specific comments on questions 1, 2, 5, and 6 the Federal Trade Commission (FTC) posed in
the Notice of Proposed Rulemaking titled “Trade Regulation Rule on Impersonation of Government and
Businesses” published in the Federal Register on October 17, 2022. The USPTO commends the FTC for its
focus on this growing area of consumer fraud.

The USPTO and its customers have experienced an increasing number of scams intended to defraud
trademark owners. These scams are designed to deceive USPTO customers into contracting for fake or
unnecessary trademark registration or maintenance services with inflated fees, often paid through
payment portals that appear to be affiliated with the USPTO, but are, in fact, not.

Scammers use a variety of methods to imply a false or misleading association with the USPTO or
outrightly impersonate the agency. Some scammers use traditional methods, such as mailing
misleading notices to existing USPTO customers instructing them to maintain and renew their
trademark registrations through scam companies for inflated fees. Those scammers typically use
names suspiciously similar to the USPTO, such as “United States Trademark Registration Office,”
“Patent and Trademark Bureau,” “Patent & Trademark Office,” or “Trademark Compliance Center.”1

The scams affecting trademark owners have become more sophisticated in recent years and involve
blatant impersonation of the USPTO. Our customers have received phone calls, emails, and letters that
use the USPTO’s name, logo, or seal, as well as the names, email addresses, and phone numbers of
specific USPTO employees. Scammers have also digitally altered legitimate communications from the
USPTO and then forwarded the manipulated versions to victims. In other cases, scammers have
spoofed USPTO email addresses and phone numbers to create the false or misleading impression that
they originate from the agency, making it difficult for USPTO customers to determine the legitimacy of
the communications. The agency encourages customers who question whether a communication is
legitimate to call the Trademark Assistance Center; however, this creates an added burden for both
those inside and outside the USPTO.

Trademark owners have also been contacted by purportedly “low-cost” trademark filing firms that
claim to be sponsored by, or otherwise affiliated with, the USPTO and who employ the tactics noted
above and engage in the unauthorized practice of law. In fact, many of these firms circumvent USPTO
rules in order to file application and registration submissions, which, as a result, jeopardizes the
validity of the applications and any resulting registrations.

Even individuals and businesses who never engaged the services of filing firms to assist them with
registering a trademark with the USPTO are impacted by these illegitimate activities. Trademark

1
The USPTO maintains a list of misleading solicitations scammed customers have referred to the USPTO at
www.uspto.gov/trademarks/protect/caution-misleading-
notices#I%20received%20a%20misleading%20trademark%20offer%20or%20notice.%20What%20should%20I%20d
o.
owners are sometimes blocked from having an application move forward to registration by an earlier-
filed application originating from a filing firm, and must bring legal action against the scammers’
invalidly filed applications or registrations to remove the impediment. Similarly, in the process of
assessing potential new trademarks, these illegitimate applications and registrations can interfere
with the risk assessment process, again often causing the potential trademark owner to incur lost time
and added expense.

Making effective use of its limited enforcement authority to combat trademark scams, the USPTO
launched the Administrative Sanctions Program to review suspicious submissions and terminate those
that are invalidly filed. As a result, the USPTO has terminated tens of thousands of invalidly filed
trademark applications due to scammers’ rule-violating activities, some of which involve scammers
impersonating the USPTO. In many of these cases, the affected applicants claim to be unaware that
they had contracted with a scammer; therefore, the USPTO endeavors to educate trademark owners
and others about such scams through outreach, webpages, and social media posts. Nonetheless, the
trademark applications filed by the scammer are typically void and unenforceable due to the nature of
the rule violations (e.g., invalid declaration signatures), whether or not the applicant is aware of the
scam. Refiling trademark applications that were terminated due to USPTO sanctions based on the
impermissible behavior of the scammers is a significant cost, both financially and legally, for
individuals and small businesses to bear.

These thousands of invalidly filed applications from scammers have strained the USPTO’s resources
available to examine good-faith applications and increased the time it takes for all trademark
applications to be examined. And the USPTO business units responsible for investigating and
prosecuting violations of the USPTO Rules of Professional Conduct have seen a marked increase in
cases linked to these scams. In short, the sheer volume of suspicious applications has created an
enormous workload for the USPTO. Moreover, the USPTO is user fee-funded, and the current fee
structure does not account for the monetary cost of fighting scams, resulting in limitations on both
personnel and information technology resources.

Although the agency has launched a series of initiatives to protect the integrity of, and promote
business certainty regarding, the trademark register, the USPTO is limited in what it can do to protect
its customers from impersonators. While the USPTO encourages customers to notify the agency and
provide examples of the scam solicitations they receive, the USPTO does not have a law enforcement
authority to pursue either civil or criminal action against these impersonators and can do little more to
educate the public than issue warnings regarding the reported solicitations. Thus, the USPTO provides
helpful information and guidance to victims of trademark scams, expressly including assistance with
filing a complaint with the FTC, though not all are willing to do so.

(1) Should the Commission finalize the proposed rule as a final rule? Why or why not? How, if at all,
should the Commission change the proposed rule in promulgating a final rule?

The USPTO supports the proposed rule and believes it to be in the public interest because it would
facilitate the FTC’s collection of civil penalties for impersonating a government agency, provide
restitution for trademark scam victims, and serve as a deterrent against future bad acts. Streamlining
the process by which the FTC can pursue bad actors impersonating government entities will help
conserve resources that can be allocated to many different enforcement efforts, including those that
impact the USPTO and its stakeholders.
Specifically, scams involving the impersonation of the USPTO are prevalent, and, as a result,
intellectual property owners have suffered significant financial harm as well as the loss of valuable
intellectual property rights. While the USPTO continues to address these scams through the means
available to it—including: (1) issuing administrative sanctions for proscribed trademark practices
before the agency, and (2) obtaining disciplinary sanctions against trademark attorneys who violate
the USPTO Rules of Professional Conduct—the USPTO must otherwise rely on the investigative and
enforcement capabilities of other agencies such as the FTC to seek additional civil relief and, where
appropriate, criminal penalties. This rulemaking will provide a powerful mechanism for the FTC to
counteract the repercussions of agency impersonation.

(2) Please provide comment, including relevant data, statistics, consumer complaint information, or any
other evidence, on each different provision of the proposed rule. Regarding each provision, please
include answers to the following questions: (a) How prevalent is the act or practice the provision seeks
to address? (b) What is the provision’s impact (including any benefits and costs), if any, on consumers,
governments, and businesses, both those existing and those yet to be started? (c) What alternative
proposals should the Commission consider?

Scams involving the impersonation of the USPTO are prevalent, affecting tens of thousands of
individuals and businesses that own trademarks and causing them financial harm. Some
representative examples follow and provide a sense of the volume and impact of these scams.

Regarding trademark registration maintenance scams, an individual behind one of the renewal
solicitations was criminally prosecuted by the Department of Justice and ordered to pay $4.5 million in
restitution to the over 2,900 victims identified. Federal agents seized over $2.4 million from accounts
at various financial institutions in the name of the scammer’s entities.

Regarding trademark filing scams, those that involve the impersonation of the USPTO impact
thousands of applications and cause losses to mark owners totaling in the tens of millions of dollars.
One scam the USPTO is fighting involves dozens of websites offering logo design services and low-cost
assistance filing U.S. trademark applications with the USPTO. The websites present themselves as
individual U.S.-based companies, though each website is, in reality, under the primary control of a
company based in Pakistan. The scammers send customers false yet official-looking letters bearing the
actual seal of the USPTO, threatening customers with legal action if they fail to register their logos
with the USPTO within a particular time period. The scammers provide customers with falsified
application filing receipts and invoices for inflated fees and provide the USPTO with false owner
contact information so the scammers can intercept any communications to the applicants from the
USPTO in order to doctor them and require more fees. The USPTO issued an administrative order in
January 2022 to sanction the Pakistani companies based on the evidence the USPTO had at that time.
In that action, 5,500 invalid trademark applications owned by U.S. citizens were terminated. In many
of the affected applications, applicants had been scammed out of thousands of dollars on top of losing
their trademark applications. If each of those 5,500 applicants were charged inflated fees ($5,000
instead of $1,050) for three classes of goods or services in an application, the total loss for these
trademark applicants would be $27,500,000.

The USPTO regularly receives complaints from scammed customers, who often provide examples of
fake letters with false information that are designed to impersonate the USPTO. The communications
list fees that are exponentially higher than actual USPTO trademark application filing fees and charge
fees for activities for which there are no USPTO fees, such as declarations and registration issuance.
Some recent examples are reproduced below:
(5) The proposed rule contains a one-sentence prohibition against impersonation of government in
§ 461.2 and another against impersonation of businesses in § 461.3. Are these prohibitions clear and
understandable? Are they ambiguous in any way? How if at all should they be improved?

The USPTO defers to the FTC on whether the one-sentence prohibition against impersonation suffices
to capture the conduct the rule is designed to address, examples of which are included in the
background information in the NPRM. The USPTO suggests an adjustment to the examples of
impersonation of government entities in the background discussion of any final rule to specifically
reference the use of logos, which is mentioned in the NPRM as a way a business can be impersonated
but is not referenced for government. Government agencies use logos in addition to official seals and
insignia, and scammers impersonate agencies using those logos. As shown in the example reproduced
above, the USPTO’s logo, not just its official seal, has been used by bad actors to extort money from
USPTO customers. For clarity, the list of matter used to impersonate a government should be
broadened to also list logos among the types of government insignia, to avoid any misunderstanding
about whether using government logos is also covered by the proposed rule.

(6) The proposed rule, in § 461.4, prohibits providing the means and instrumentalities to commit
violations of §§ 461.2 or 461.3. Should any final rule contain this prohibition against providing the means
and instrumentalities for violations of the prohibitions against government or business impersonation?
Why or why not?

The USPTO supports retaining the provision. Many of the scammers soliciting U.S. trademark
customers are foreign-based; therefore, establishing U.S. court jurisdiction can be difficult. While the
rule cannot address judicial jurisdiction over foreign defendants, the rule can address liability for those
who provide the means and instrumentalities to commit violations of the impersonation rule.

The foreign-based scammers use U.S.-based payment processors, banks, landlords, internet service
providers, etc. If the U.S.-based instrumentalities for perpetuating the scams can be held liable, FTC
action against these intermediary actors can make it harder for the foreign-based scammers to
operate in the United States.