IP Law Daily, TOP STORY: USPTO Director sanctions Chinese company for abuse of trademark process, (Dec 15, 2021)

By Robert B. Barnett Jr., J.D.

A Chinese company has had all pending trademark matters terminated and has been permanently banned from ever filing again because of serial abuses of the trademark system.

Huanyee Intellectual Property Co., Ltd, and its executive director, Yusha Zhang, have been hit with sanctions that include terminating all pending submissions and precluding them from ever submitting applications again, as the result of an investigation finding that, in filing 15,000 trademark matters, they (1) engaged in the unauthorized practice of law, (2) provided false domicile addresses, (3) impermissibly entered others’ signatures, and (4) repeatedly violated the terms of use for uspto.gov, according to a Final Order for Sanctions issued by the Director of the U.S. Patent and Trademark Office (USPTO). In releasing the final precedential order, the USPTO rejected Huanyee and Zhang’s request not to disclose this matter publicly, concluding that the Privacy Act applies only to U.S. citizens and lawful permanent residents (In re Zhang, December 10, 2021, Gooder, D.).

Background. Huanyee is a Chinese company that offers to assist clients with registering trademark applications in China. It has also filed more than 30,000 trademark applications worldwide. After examining the 15,000 applications filed in the U.S., the USPTO investigation concluded that Huanyee engaged in the unauthorized practice of law, provided false domicile addresses, impermissibly entered others’ signatures, and repeatedly violated the terms of use for uspto.gov.

Unauthorized practice. Executive Director Zhang is not a licensed U.S. attorney, nor is anyone on Huanyee’s staff. Despite not being authorized to practice before the USPTO, Huanyee advised clients, prepared documents, prosecuted applications, submitted arguments, and communicated with the USPTO on behalf of others before the USPTO. As a result, Huanyee and Zhang were guilty of the unauthorized practice of law.

False address. Since August 3, 2019, the USPTO has required that all applicants provide the address of their domicile and that any foreign-domiciled applicant be represented by a U.S. licensed attorney on trademark matters. Aware of this rule, Huanyee provided a false applicant domicile address. When USPTO examining attorneys questioned the address, Huanyee provided a second false domicile address. As a result, Huanyee was found guilty of providing false domicile addresses.

Signature of others. Trademark applications, of course, are required to be signed by the mark owner or someone authorized on the owner’s behalf. Huanyee filed more than 15,000 trademark applications that were signed by Huanyee rather than by the those who were supposed to sign the documents. Examining attorneys became suspicious when Huanyee would file multiple different documents online within minutes and sometimes seconds of each other, that purported to be signed by signatories located in different areas around the world. For example, several submissions contained simultaneous signatures of a licensed U.S. attorney located in the U.S. and an applicant located in China. Some were entered during a COVID-19 period when Chinese citizens were not allowed to travel to the U.S. As a result, Huanyee was deemed to have violated the trademark signature rules.

Misuse of account. Those using uspto.gov and wishing to file documents online through the Trademark Electronic Application System (TEAS) must, of course, register for an account and abide by the Terms of Use. Huaynee, however, filed documents through TEAS in such rapid succession that it was obvious that a single account was being used by multiple people. As a result, Huanyee was deemed to have failed to abide by the Terms of Use and was guilty of misusing uspto.gov.

Defense. Huaynee’s defense consisted largely of a claim that it was unfamiliar with the filing requirements. Those participating in the trademark registration process, however, are presumed to be aware of the regulations. In addition, willful misuse is a not a requisite for issuing sanctions (although the USPTO concluded that Huaynee’s conduct was willful).

Sanctions. Sanctions were necessary, the USPTO concluded, in order to “deter [Huanyee’s] flagrant flouting of the USPTO Rules and improper submissions in trademark matters and to deter similar conduct by others.” The sanctions consisted of two parts. First, the USPTO terminated all pending matters filed by Ms. Zhang or any officer, employee, or agent of Huanyee. All existing records were also to be updated to reflect the sanctions. Second, Ms. Zhang and any employee, officer, or agent of Huanyee were permanently banned from filing or submitting any new trademark proceedings. All pending USPTO accounts were also permanently deactivated.

Privacy. In defending its actions, Huanyee an Zhang requested that any sanctions not be made public, citing the Privacy Act. The Privacy Act, however, does not apply to Chinese citizens. It only protects U.S. citizens and lawful permanent residents.

In seeking to keep the sanctions private, Huanyee also cited 37 C.F.R. §11,306, which prohibits public statements by those involved in investigatory or litigation matters before the USPTO. This rule, however, the USPTO noted, does not apply to an administrative order issued by the USPTO.

Attorneys: David S. Gooder for the USPTO. Emil J. Ali (McCabe Ali LLP) and Jiyuan Zhang (J. Zhang And Associates, PC) for Yusha Zhang and Shenzhen Huanyee Intellectual Property Co., Ltd.

Companies: Shenzhen Huanyee Intellectual Property Co., Ltd.

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