On July 29, 2019, the USPTO hosted a panel discussion outlining the details of its newly-expanded random audit program, as part of its ongoing efforts to declutter the U.S. federal trademark Register.
Originally launched as a pilot program in 2012, the Random Audit Program was made permanent in November 2017, requiring additional proof of use for goods and services covered by over 4,600 registrations. The USPTO has now announced that it plans to expand the program to audit approximately 5,000 registrations each year and has reemphasized that the U.S. trademark registration system protects only those trademarks and service marks actually in use in U.S. commerce – and can not be used as a reservation of rights system.
What Kinds of Registrations are Subject to Audit?
During the July 29 seminar, the USPTO explained that registrations meeting the following criteria are subject to random audits:
- A Section 8 or 71 declaration of use has been filed; and
The registration includes:
- At least one class with four or more goods or services; OR
- At least two classes with two or more goods or services.
See Seminar Slide 9. This would seem to cover a significant percentage of existing registrations.
What Happens During an Audit?
If you or a client receive a Post-Registration Office action announcing an audit of one of your or your client’s registrations, you will be required to provide specimens demonstrating current commercial use of two specific goods or services claimed in the declaration as “in use.” The Registrant does not get to pick two goods or services for which it can prove use, but instead must respond with respect to the specific goods or services that the USPTO has identified.
If the Registrant cannot prove use of either of these two items, such items must be deleted from the registration in response to the initial Office action, and the USPTO will issue a second Office action requiring proof of use for every single remaining good or service covered by the Registration. If the Registrant is unable to provide such proof, each good or service for which use can not be established must be deleted from the Registration.
If the Registrant fails to respond to the audit requests, the entire Registration can be cancelled.
Currently, there are no penalties associated with deleting goods or services during an audit – even though they necessarily follow the submission of a sworn declaration claiming that all such goods or services were actually in use as of the declaration’s filing date.
However, the USPTO has suggested that they are considering both incentivizing earlier amendments to Registrations to remove goods no longer in use before the declaration even comes due (by not charging a fee to file a Section 7 amendment) and potentially imposing fines for making the amendment during the audit process (by imposing fees to delete good or services at this stage) or by referring attorneys submitting such modifications in response to audits for further investigation by the USPTO’s Office of Enrollment and Discipline. See July 18 Testimony at 5-6.
While the USPTO has not yet sought to penalize any Registrants or their attorneys for filing false declarations of use (prior to receiving an audit during which goods or services end up getting deleted because no proof of actual use can be provided), the USPTO has signaled its increasing concern that Registrants (or their attorneys) are not paying close enough attention to the solemnity of the declarations, submitting these declarations under oath (subject to criminal prosecution under 18 U.S.C. 1001), and yet are unable to prove use of the covered goods/services when requested to do so. Id. at 6; July 29 Seminar Slides 29, 31, 32.
During its July 29 seminar, USPTO representatives recommended several steps to managing the audit process:
- Registrants should review carefully the goods and services in connection with their Section 8 or 71 declarations to ensure that the registered mark continues to be used in connection with all goods and services identified in the registration;
- If not, delete these goods and services from the registration when the Section 8 or 71 declaration is signed;
- If a Registration is audited, consider providing proof of use for all goods and services covered by the Registration in response to the first Office action;
- It is not sufficient to simply provide another copy of the specimen submitted in connection with the original Registration – instead a current specimen showing current use in commerce in the U.S. is required. The USPTO also previewed that it is making changes to the specimen requirements for website specimens (now requiring URL and access/print date) and labels and tags (must show the mark as affixed to the goods – not just on the outside of a shipping container). See Federal Register Notice.
- Registrants should not wait until the USPTO requests additional proof in connection with a random audit in order to demonstrate that use in commerce has occurred and that the protected marks are not simply deadwood, cluttering the U.S. Trademark Register.
Sources for Additional Information
- Testimony of Trademark Commissioner Mary Boney Denison, “Counterfeits and Cluttering: Emerging Threats to the Integrity of the Trademark System and the Impact on American Consumers and Businesses,” Testimony before the House Judiciary Committee, Subcommittee on Courts, Intellectual Property and the Internet, July 18, 2019.
- Article in the World Trademark Review, guest written by USPTO Director Andre Iancu and USPTO Commissioner of Trademarks Mary Boney Denison, “‘We are taking unprecedented action – exclusive USPTO update on protecting the register,” July 23, 2019.
USPTO’s Presentation before the Trademark Public Advisory Committee, July 26, 2019
USPTO’s Seminar on the Post Registration Proof of Use Program, July 29, 2019
USPTO’s Examination Guide 3-19, “Examination of Specimens for Use in Commerce: Digitally Created or Altered and Mockup Specimens,” July 2019.
- Federal Register Notice, “Changes to the Trademark Rules of Practice to Mandate Electronic Filing,” 84 Fed. Reg. 37081 (July 31, 2019) (effective Oct. 5, 2019) – see also prior post, “USPTO Published Final Rule Mandating Complete Trademark Electronic Filing”, July 31, 2019.