Trademark Threats and Demand Letters - Anatomy of a Scam

By Marc Whitfield

Typically, attorneys advise those who receive a demand letter or a “cease and desist” letter to promptly seek legal counsel. This advice has become even more important in recent years with respect to threats and demand letters related to trademarks. Unfortunately, because of the vast volumes of company records open to public viewing over the Internet, trademark scams have become a rich haven for unscrupulous scammers and con artists, who employ a wide range of deceptive schemes designed to trick companies and individuals into paying bogus invoices or incurring unnecessary “registration” fees or other legal charges. For example, anyone who files a federal trademark application with the United States Trademark Office will almost certainly receive at least one “Trademark Publication” notice designed to resemble a bill or invoice, and requesting payment of a “Publication Fee” for “registration of your brand in our private database.” Many mistakenly believe that these notices are related to legitimate filing fees charged by the United States Trademark Office. For these reasons, it is crucial to read the fine print often included in these deceptive notices.

It is important to note that these schemes are not limited to companies that have filed federal trademark applications. For example, within the past month, we have become aware of multiple companies receiving “urgent” “trademark infringement” warnings. Because each company separately received the same form of email, this scammer is likely targeting numerous businesses across Louisiana, and throughout the United States. Each company was contacted by email, warning as follows:

Subject: Att!! USPTO CONFLICT TRADEMARK INFRINGEMENT AN URGENT RESPONSE REQUIRED

An applicant is intending to file an application with the USPTO for the trademark registration of the brand name [“Company Name Omitted”] from North Carolina. While searching for this brand name, your information appeared. According to online research, your brand is not registered with the USPTO           and anyone can register this brand name under their information.

Since the USPTO treats applications on a first-come, first-served basis, the other applicant will be respected if you are not using the brand name “[Company Name Omitted”] in commerce and are unwilling to register the trademark so. We would appreciate it if you can revert to us ASAP, In case of no objection is raised from you, so the other applicant will be allowed to begin their registration following the standard examination and filing procedure with USPTO.

A few days after the initial email/bait was sent, the following ominous “FINAL WARNING” was sent:

Subject: FINAL WARNING ATT!! USPTO CONFLICT TRADEMARK INFRINGEMENT AN URGENT RESPONSE REQUIRED.

We are reaching out for the last time, if you do not proceed today we will move forward with the other applicant by tomorrow and you will lose the right to use the brand name.

Furthermore, Find the below information about the Trademark which will clear your concepts about the trademark:

What makes us reach out?

You have a website and an online presence for your business, so in accordance with company policy, before trademarking any brand name for any business, we search the name over Google. If we find any companies already using the name, we contact them to see if they want to continue using it. If we do not hear back from them within 48 to 72 hours, we move on to the party who is interested in registering the name.

Trademark infringement is prosecuted under civil laws, and is not a criminal act. Instead, lawsuits over trademark infringement will usually require you to stop using the trademark, and you may have to return any profits made off of the infringing use or pay monetary damages for the use of the trademark.

What is the penalty for violating a trademark?

The most common penalty for trademark infringement is an injunction or a cease-and-desist letter directing the infringer to stop using the trademarked material. It's also possible for criminal or civil penalties to result from an intentional violation of trademark law, although this is rare.

How much can someone sue for trademark infringement?

Trademark infringement lawsuits can cost on average anywhere between $120,000 to $750,000 depending on the complexity of the case. During the pendency of the lawsuit, you are responsible for paying your Attorney's monthly bills.

If you are interested in registering this brand name, I can share the process and sign-up details with you.

The above emails share several traits or clues commonly found in many trademark scams, namely:

• a pressing warning that requires urgent action;
• a warning about the loss of your company name or trademark;
• poor grammar, misspelled words, or use of uncommon phrases;
• unsupported factual claims;
• false, misleading and/or inaccurate legal principles; and
• a request that you pay them to take action to protect you or your trademark.

Similarly, we have become aware of another e-mail received by a local company, representing:   

We are an agency engaging in registering brand name and domain names. Our center received an application from “[Company Name Omitted”] and they apply to register “[Company Name Omitted”] as their brand name and some top-level domain names. We found the main body of domain names is    same as your company name. I am not sure about the relationship between you and them. Please tell me whether or not your company authorizes them to register names.

We are dealing with the application and we need to confirm whether you have authorized them? If you don't authorize them, please reply me an e-mail. Looking forward to your reply.

Sadly, these scammers are making a fortune by tricking businesses into paying bogus charges or otherwise incurring unnecessary fees over fictional legal threats, so there is little hope of these scams going away. The United States Trademark Office is doing what it can to warn of and/or prevent these scams, but many of these con artists operate under shell companies that are almost impossible to trace to their host countries.

If you receive an email or letter warning about your company’s name or trademark being at risk of infringement or loss of use, you should promptly contact your legal counsel to verify whether the threat is legitimate, or a common trademark scam. For additional information, you can also review the latest trademark scam warnings provided by the United States Trademark Office at https://www.uspto.gov/trademarks/protect, or email Marc at marc.whitfield@taylorporter.com if you have any trademark questions or concerns.

Marc S. Whitfield is a Partner at Taylor Porter and works primarily with the firm's Intellectual Property Law Group, Commercial Litigation Section and its Healthcare Section.  Marc has practiced since 1988 in the areas of commercial business contracts and litigation, including contract negotiations and litigation, intellectual property law, including intellectual property licensing and litigation involving copyright, trademark, and trade secrets, data security, cyber security and data breach litigation, HIPAA and data licensing, and non-compete disputes. He is admitted to practice in all Louisiana and Texas state courts and admitted to practice in all Louisiana federal district courts, the United States Fifth Circuit Court of Appeals, and the United States Patent and Trademark Office.