Dealing with China Trademark Deadwood: Expungement and Reexamination Proceedings

Expungement and reexamination proceedings are new tools that brands can use to get rid of trademark registrations blocking their own U.S. trademark applications. This development does not impact China trademark applications, but will help businesses and the United States Patent and Trademark Office (USPTO) counteract the flood of fraudulent trademark applications by parties from China. More generally, it will help brands, including those engaged in China business, better protect their intellectual property.

In the United States, trademark rights are intrinsically linked to use of the trademark in question. You can design a cool new logo for your brand, but if you are not actually using it on your products or in some public-facing way, the law is not interested in protecting your trademark. The very first line of the U.S. Trademark Act (known as the Lanham Act) makes this clear: “The owner of a trademark used in commerce may request registration of its trademark.”

Demonstrating use of a trademark is a prerequisite for registration (though an application can be filed before the trademark is used, on the basis of an intent to use the trademark). However, USPTO has limited resources to confirm the veracity of proof of use submitted by applicants and police ongoing use of a trademark. As a result, the trademark register is full of “deadwood,” in the form of registered trademarks that are not being used in commerce.

The Trademark Modernization Act (TMA) seeks to deal with this problem by empowering USPTO and third parties to go after deadwood. Expungement and reexamination proceedings allow third parties to request that a trademark not used in commerce be stricken off the register. This in turn allows them to free up the trademarks that they want to use.

Trademark applicants can ask USPTO to suspend their application pending the resolution of an expungement or reexamination proceeding. This is very helpful in cases in which USPTO provisionally rejects an application due to a conflict with a confusingly similar trademark. If that trademark is deadwood, the applicant can initiate an expungement or reexamination proceeding and, if successful, pick up where they left off.

In case you are wondering about the difference, in an expungement proceeding, the third party requests cancellation of a trademark on the basis that it was never used in commerce. By contrast, in a reexamination proceeding, the allegation is that the trademark was not in use at the time the application was filed (or, in the case of an intent-to-use application, on the “relevant date”, as defined in the TMA).

Sometimes, trademark deadwood is generated innocently. If a business fails, its trademark registrations may survive on autopilot for up to a decade. These unused trademarks are just a natural byproduct of capitalism’s creative destruction.

There is however a more pernicious source of deadwood. In a 2021 report, USPTO identified a number of non-market factors driving “suspect” trademark applications from China, including subsidies and government mandates given to Chinese companies for intellectual property filings. In addition, bad faith actors such as squatters and counterfeiters use the trademark system to further their activities. Expungement and reexamination proceedings may be the best option for brands to deal with the pesky registrations that result from these activities.

To be fair, China is not the only source of deadwood. Some problematic registrations originate in other countries, or even in the United States itself. Defensive registrations by legitimate companies also add to the problem. These companies may register a trademark they have no intention of using just in case they change tack in the future, or to prevent their registration by a bad-faith actor. Given the unchecked fraud out there, these defensive moves are understandable, but they are improper from a legal perspective.

Expungement and reexamination proceedings are a novel development, available only since December 2021. Our firm filed one of the very first petitions, successfully moving USPTO to expunge a trademark that was blocking the registration of our client’s trademark. This case had nothing to do with China, and the expunged trademark appears to be the innocent result of normal business activity. Our success, however, demonstrates that expungement and reexamination proceedings are an effective weapon against deadwood, innocent or not.