Trademarks are one of the most important resources that a company can have. Trademarks and intellectual property as a whole serve as an indicator of the source of a manufactured good, give customers a first impression of the product, and show the business’s commitment to the product as a whole. Businesses across the world are beginning to fully grasp how competitive trademarks are, and this has led to the depletion and congestion of trademarks.
Trademark law has traditionally relied on the anecdote that the supply of unclaimed trademarks is inexhaustible. In other words, there will always be an unclaimed company name, a slogan, or a logo available for a new company to use as a trademark. Regarding wordmarks, in particular, the assumption is that there will always be a set of preexisting words or newly coined words that can be adopted as a trademark.
Trademark Depletion and Congestion
Today, these viewpoints are met with skepticism, as business owners across the United States struggle to find and register original and competitive trademarks. This is due to two main issues trademark depletion and trademark congestion. Trademark depletion describes the decreasing number of potential trademarks that could be claimed by trademark owners due to overfilling. Conversely, trademark congestion describes how there is an increasing number of trademark owners. The USPTO has partially attributed this increase in trademark filings and ownership to the general rise of e-commerce in conjunction with the global pandemic and rise of new businesses.
Law Professors Barton Beebe and Jeanne C. Fromer conducted an empirical study on this subject in 2018 to gauge the scope of trademark depletion and congestion and analyzed the effects these issues had on American business owners. Their findings showed that wordmarks in particular have become extremely depleted, as many common English words, surnames, and neologisms have already been registered with the USPTO. For example, even the word “The” has eleven active trademark registrations. The congestion of trademarks has not stopped businesses from applying for marks however, as the USPTO has stated that they have experienced a historical shift in the number of trademarks being filed, with estimates of a 40+% increase in the number of applications being filed in 2020.
Due to the depletion in viable options and congestion in registered trademarks, many are being forced to choose and apply for second-rate, and often less competitive, trademarks. These more complicated marks can take form as “complex marks” which contain both word and design elements, or even a series of words. Even with these efforts to distinguish their marks, it was found that many applicants could not avoid refusals from the USPTO.
Due to the now highly competitive nature of the trademark industry, many low-cost trademark filing businesses are taking advantage of companies across the globe, mostly through marketing to foreign businesses who are looking to sell goods in the United States. Many of these low-cost trademark filing businesses are not legitimate and take advantage of unsuspecting clients who have little to no experience in USPTO procedures.
There are also instances of foreign entities who are aware of USPTO procedures and try to elude them by hiring U.S. attorneys who approve whatever paperwork they provide or even seize attorneys’ credentials to rubber-stamp their own paperwork. Not only are these bad actors obstructing others’ from properly applying and gaining trademarks, but they are also damaging the USPTO’s system of examining applications, by making examiners investigate potentially fraudulent applications instead of examining applications sent out in good faith. The trademark application process is already lengthy and complicated, and bad actors are contributing to the dysfunction of a system that is handling its largest number of applications in the history of its existence.
USPTO recognized these recent issues with trademark congestion, depletion, and fraud, and has created a task force as of 2019, to mitigate these effects on the USPTO and legitimate applicants. The USTPO stated that those suspected of fraud will be required to submit more information to support their filings through the Post-Registration Proof of Use Audit Program. If these applicants cannot provide adequate responses, e.g recent use of packaging materials, screenshots of webpages with the marked goods, or photos of the mark on identified goods, they will be sanctioned from applying and pursuing trademarks.
The USPTO is also going to be implementing the Trademark Modernization Act of 2020 in the near future. This act will allow third parties to challenge the legitimacy of registrations they believe have not been used. This act is critical in addressing trademark congestion and depletion, as it allows the USPTO to dissolve inaccurate and unused registrations through new expungement and cancellation proceedings.
Competing in the influx of trademark applicants could be difficult without the right advice. Therefore, a strong team of intellectual property attorneys may be needed. With expertise in filing trademark applications and understanding the current regulations in trademark law, Wang IP Law Group, P.C. can provide advice on the correct approach for new market entrants in combatting and overcoming the difficulties of trademark congestion and trademark depletion. Our firm is experienced in serving both domestic and international clients on intellectual property issues. Combined with the experience our firm has in business law, our firm provides legal services that are tailored to the business structure of the new market entrants when filing trademark applications.
Wang IP Law Group, P.C. is a Los Angeles based full service legal firm that specializes in intellectual property law (patent, trademark, copyright, and licensing agreement), business and commercial litigation, and a wide range of other legal matters including immigration, real estate, and landlord/tenant cases. Our multilingual attorneys represent clients from all over California and internationally from China, Taiwan, Hong Kong, Japan, and Israel.
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