Similar to its patent and copyright-focused counterparts, “trademark troll” is a negative moniker that refers to people who register for a trademark in bad faith, meaning they have no lawful intention to use the mark in commerce. Instead, trolls seek out intellectual property that companies will likely want to register in the future, and beat them to the punch.
In the United States, trolls typically begin by searching the internet for potential opportunities, often focusing on trending pop culture terms or start-up companies with names they believe will be valuable. Trolls then apply for registration with the United States Patent and Trademark Office (“USPTO”). If they are successful in obtaining a trademark registration, trolls can then target so-called “infringers,” who aren’t really infringers at all, but rather the rightful mark owners, as rights in a trademark are created by use of the mark in commerce, not federal registration. Nevertheless, trolls contact the mark owners to exploit them, often demanding licensing fees or royalties and threatening litigation. Trolls may also offer to sell the trademark back to the mark owner - for a steep fee, of course.
Though there are legal guardrails that discourage trademark trolling, unscrupulous scammers often find any possible loophole. For example, to obtain federal registration with the USPTO, a trademark must actually be used in U.S. commerce via the sale of goods or services. To fulfill the use requirement, filers often submit photos of their products bearing the trademark in question, or submit screenshots that show their trademarked products are available for purchase online. Unfortunately, in the digital age, trolls can easily put a newfound trademark to supposed “use” by creating a website, equipping the site with a secure payment method, and “using” the trademark there. Others simply submit “dummy” specimens—digitally altered photos of goods supposedly bearing the mark sought to be registered.
In fact, a 2019 study revealed that over 60% of U.S. trademark applications filed by Chinese applicants for certain categories of goods contained digitally altered “evidence” of use. Equally shocking, nearly 40% of these phony filings survived the USPTO’s review process and emerged as fraudulent registrations. Dummy use among foreign-domiciled trademark applicants was so prevalent that in 2019, the USPTO enacted several requirements in an effort to stop the tide of fraudulently filed applications in the United States. The new requirements, such as requiring foreign-domiciled applicants to be represented by a US-licensed attorney, initially seemed to be a promising deterrent; however, experts have expressed that the new requirements have not done enough to slow the spread of bogus foreign filings. Indeed, the media continue to report on rampant fraudulent filings and, as recently as 2021, the USPTO acknowledged it was struggling to review an unprecedented backlog of Chinese filings.
Trademark trolls can also specialize in international meddling. With this approach, the troll searches for growing U.S. businesses and registers for their trademarks in foreign countries. Obtaining registrations abroad can actually be easier for a troll than doing so in the United States, as foreign countries typically do not have the same requirements to establish use of the mark in that country prior to obtaining a registration. When the business expands into those countries, it is blocked from registering its U.S.-registered mark in that country and is faced with paying a trademark troll to get the rights to its name or design overseas. The practice of trademark trolling can be a lucrative endeavor, as many businesses prefer to settle outside of court rather than commit to the time, expense, and publicity of litigation.
Fortunately, there are steps business owners can take (and that our attorneys can help implement) to ensure their core brands don’t fall victim to trademark trolls:
- Be proactive by registering your trademark as early as possible.
- File trademark applications as early as possible in the countries where you plan to do business.
- Maintain detailed records of your brand’s creative development, especially on any consumer-facing marketing materials or websites. In the United States, being the “first to use” is highly influential in deciding who has the rights in a mark.
- Most importantly, consult with a knowledgeable Miller Nash trademark attorney to ensure your company and your brand are protected.
Editor's Note: Danielle Riege, a 2022 Miller Nash summer associate, coauthored this blog post along with Miller Nash attorney, Delfina Homen.