The US Patent & Trademark Office (USPTO) decided to issue an order for sanctions against Yusha Zhang and Shenzhen Huanyee Intellectual Property Co., Ltd. on December 10, 2021. This follows the issuance of a show-cause order on June 8, 2021, and the filing of a response on July 6, 2021. The respondents have been involved in more than 15,000 trademark filings with the USPTO. Respondents participated in the unauthorized practice of law, gave incorrect domicile information to applicants, improperly inserted the signature of the identified signatory on declarations and verifications, and violated other USPTO Rules and the conditions of use of the USPTO’s website. Over 15,000 proceedings involving Respondents’ contributions were terminated, and Respondents were barred from further communication or submissions.
USPTO Sanctions Against Chinese IP Firm
Huanyee is a Chinese company that claims to help customers register trademarks in China, has submitted over 30,000 international trademark applications, including in the United States, and provides U.S. trademark registration services through its website.
Respondents are not permitted to make trademark submissions on behalf of others to the USPTO. Ms. Zhang is not a licensed attorney in the United States, and Huanyee does not employ any professional attorneys in the United States to monitor Respondents’ work.
Between 2016 and 2019, the name “Yusha Zhang” and/or email addresses associated with Respondents showed up in the corresponding fields of over 1,700 trademark applications and registrations identifying various reportedly unrepresented applicants filed through the USPTO’s Trademark Electronic Application System (“TEAS”), allegedly filed by the applicants. Huanyee’s mailing address and an email address within the domain huanyee.com were the most common submissions. Moreover, throughout the previous three years, Respondents created many uspto.gov accounts and proceeded to file almost 14,000 additional applications and other submissions on the behalf of the others.
Despite being banished from practicing before the USPTO in trademark proceedings, Respondents still engaged in such practice by consulting and offering advice in the preparation and prosecution of trademark applications and other documents, preparing and submitting arguments and amendments in trademark matters before the USPTO, and communicating directly with the USPTO on behalf of others.
Respondents involved in illegal activities before the Office, according to the record. Respondents undertook as such, according to the Response. See, for example, Responses 6 and 8 (saying that Respondents “intend to go past this and adapt its actions to the applicable USPTO standards” by, among other things, attempting to “engage with US Trademark Counsel”).
The Response expresses disagreement “with several of the claims in the Show Cause Order” (Response at 5) but offers no evidence to back them up. In the end, the Response admits that Respondents breached the USPTO Rules and website terms of service, but it tries to justify the violations and avoid punishment by contesting the administrative sanctions system and jurisdiction to impose sanctions. The Response further claims that sanctions should not be applied since the Respondents were unfamiliar with the USPTO Rules’ requirements, did not intentionally violate them, and are taking steps to address the difficulties raised.
The USPTO found the arguments unpersuasive and failed to explain why any of the sanctions mentioned in the Show Cause Order should not be applied, as stated in the Final Order.
As a result, the USPTO issued sanctions, including the suspension of any trademark application procedures involving Respondents’ submissions or those made through a uspto.gov account controlled or registered to Ms. Zhang or any officer, employee, or agent of Huanyee. The USPTO released a 198-page, two-column list of trademarks covered by the ruling, which included more than 15,000 trademark applications.
The USPTO noted in its explanation of the sanctions, the conduct at issue was intentional and part of a pattern of behavior designed to go around USPTO rules. Thousands of applications were affected, resulting in erroneous and fraudulent submissions to the USPTO, and compromising the integrity of the federal trademark registration process.
The heinous nature of the behavior at issue necessitates the dismissal of the case. A lesser sanction than dismissal of the case would not remedy the situation or dissuade Respondents or third parties from continuing wrongdoing. A plan combining the deliberate circumvention of USPTO Rules and the defrauding of the USPTO is the pinnacle of severe misbehavior that should result in termination.
Huanyee was apparently attempting to avoid the fees of hiring a U.S. lawyer in order to take advantage of government trademark registration incentives, as previously revealed by the USPTO. In reality, Huanyee detailed Shenzhen’s policy for trademark subsidies of up to 3,000 RMB ($464 USD) per trademark in a social media post in April 2021. It’s unclear whether or not applicants will be required to repay the subsidies now that the trademark procedures have ended.
The list of US IP Firms can be found here.