Transcripts For CSPAN3 Hearing On Fraudulent Trademarks 20240713

Good afternoon. This hearing will come to order. Before i began, i will thank the witnesses for accommodating the scheduled change today. We left the senate floor where senator Johnny Isaacson gave his Farewell Speech and may friend and colleague Ranking Member coons is down there now bidding him farewell on the speech. He and senator isaacson worked a long time together. Its fitting senator is there because in many respects he embodies a lot of the same attributes as senator isaacson in terms of working together on this committee. When he comes in he will interject but in the meantime we will get to your opening statements. We are here to talk about the issue of fraudulent trade marks. As everyone knows trade marks are the back bone of many businesses options. Unfortunately, the United States has seen a surge in fraudulent trademark applications. According to the wall street journal, from 2013 to 2017, the United States patent and Trademark Office testing a surgeon trademark applications from china a, 12 foot increase, in fact, totaling thousands more than the combined violations from canada, germany, and the uk. When i was preparing from the hearing, it reminded me of something that is not specifically focus on what we will talk about today, but it gives you an idea up the depth and challenge that we have with china on several different levels. There is a company thats decades old, its a factory, its been there for generations, what pops up in china but charlotte, hype, and foundry. Blatantly, just taking the brand that has gone on for generations and posting up and setting up shop in china. In this particular case they went to the chinese courts and try to uphold our trademark rights. They go even further. They actually counterfeit products and sell them, and they have cases of dumping. Although we are here to talk about trade mark applications in the United States, is important to understand our major threat is china. And they are fighting their economic war on several different fronts. This is another front that i intend to come back to in another hearing, but today, we want to know that the people are paying citizens to fraudulently obtain trademarks. Im concerned that the surge is leading to a prevention of legitimate brand owners to protect or promote their reputation. We are taking steps to address the problem, and our counterparts at the House Industry Committee heard how the agency is piloting software capable of attracting altered photographs of trademarks, how they are increasing the number of post audits and how increase training is being provided to examiners to identify and more closely scrutinized suspicious specimens. Those are all great efforts, and they should be commended for his work, but i think Congress Also has a role to play in addressing this problem. That is why we are holding this hearing today. We want to hear from experts about their experience with fraudulent trademarks, and how theyre negatively impacting american businesses and consumers. Im also interested in the recommendations, your recommendations on what steps congress should take to combat the problem. Finally, while this is our first hearing in the senate, our counterpart at the house of representatives have been working on the issue for months. House just this Year Committee chairman jerry nadler and Ranking Member doug collins have done fantastic work but i appreciate the work. I am looking forward to this positive impact. And i would like to keep on with his work. Thank you for being here. And i hope you view this has just one of the series of discussions to get this right. Cinder cones arrives, if he would like to make any opening comments, to get the testimony making forward and echo director of the ankle work innovation policy, a previously thought in Stanford Law School and the university of hong kong, he has published about 40 law schools worldwide. Douglas is a partner at finnegan anderson, and done are. He focuses his practice on trademark, false advertising and unfair competition litigation, trials, appeals and disputes. Hes argued before the u. S. Court of appeals for the federal, and litigated before the United States panned office. Mcgahn is council, where she is a member of the International Property media group. She has represented clients before the u. S. Pto, the trademark trial and appeal board and the International Trade commission. She is active in International Trademark association, the ip section of the American Bar Association and the American Intellectual property law association. Thomas williams is the supervising attorney for duke law Duke Law School startup Vice President venture clinics where he works with opportunities to represent early stage for profit and nonprofit entities also director of the Duke University jdma joint degree in bioethics and science policy. Prayer to joining duke law mr. Williams was a corporate attorney and served as assistant counsel to a physician practice. Finally stephen lee. Stephen lee serves as chief sblg the property counsel for the Target Corporation where he told the position of senior director and assistant general counsel. He put prayer worked in private practice at two minnesota law firms. I know i have a swearing in a statement here, im not going to square you and, i know your passes around this issue, i trust you to be truthful, he promised me . Thats your swearing in. So lets start with your opening statement. Ranking member coons, and members of the subcommittee, good afternoon and thank you for inviting me to be a witness. I am the professor of intellectual property law at University School of law. Along with our written testimony for the record, i have attended an article entitled, ill be running out of trademarks, and empirical study of trademark the pollution and congestion. At its best, trademark law promote fair competition and helps newmarket entrance and Small Businesses and particular to compete on a level playing field. This benefits american consumers, however, in the Empirical Research we report in our article, we show in essence that it is becoming increasingly difficult for businesses to find a recently good trademark that someone else has not already claimed. And it is expressly difficult for a new and Small Businesses to do so. Trademark law has assumed that there is an inexhaustible supply, and most of this is built on the assumption that the company can always find a difference mark that is just as good. Weve reached the economic developments in which this is no longer true. To give you a sense of what youre talking about our Research Shows that even using a conservative similarity, 89 of the time we speak american english we are using a word that has already been used as a trademark or similar with an already registered mark. Consider that at least 60 of americans carry a surname for with the same is true. The surname has already been registered, or as confusingly similar with another one. This means that they have been born too late to register their own name as a mark. Meanwhile, new applicants are increasingly shifting towards coined words, and longer, more complex and thus less effective marks. Get these are failing. Our Research Shows that detail rates continue to rise. This is a cute for Small Businesses, which typically lack the sophistication and researchers to find competitive marks and prosecute those marks to register. This problem of what we term trademark depletion has been significantly worsened in recent years by a surge of fraudulent applications, originating from china. Accepting rare to qualify for registration at the patio. To meet the use in commerce requirement, numbers chinese applicants have been submitting during the registration process fraudulent evidence of used, typically in the form of doctored photographs. We report the results of a empirical study conducted on the issue. We show that at least with respect, to thirds of chinese applicants contain fraudulent terms of use. When these applications are proceeded, they contribute to clever on the register. Clutter is the term they used to describe marks that are not used and commerce. To address the problems of the trademark depletion and clutter, and to defend the integrity of the trademark registry, we support a mix of reforms, including processes for export reexamination and expansion of resignations of trademark not being used in congress, specialization a trademark examiners, and requiring the pretrial to study and report annually on fraudulent on the trademark register. Thank you and i look forward to your questions. Thank you, apparently my staff was watching this, i have glasses and im low energy, they got a mountain do as well. inaudible chairman tillis, thank you for inviting me to testify. I will discuss whether irreparable harm which is required for an in junction should be provided in cases where the party can establish success on its claim. The presumption is needed, the trademark system to function properly, fairly, and effectively. To start, its useful to discuss the important roles that trademarks play in our society, and how they differ from other forms of intellectual property, including patents and copyrights. Patents, for their part, to protect not only inventions, copyrights protect original worth of author ship. Both of those are meant to encourage innovation in the science and the arts by giving authors and inventors limited economic monopolies. Trademarks are quite different. And what they protect, how they protected and why they protect it. A trademark is a word symbol or device it is used to identify one parties goods and to distinguish them from others. Trademark law serves several unique objectives, force a trademark and shores that when a consumer sees a brand that they recognize, they know what they are getting. Economically, this creates marketplace efficiencies because it reduces consumer search costs. For example, my eyes arent very good but when i saw that soft drink that you are saying, i could tell by the colors and the font, exactly did that was a mountain dew. Without more, i need that immediately. At the same, time trademark law also protects and owners investment in the brand and it incentivizes that investment, and incentivizes owners to invest more in their goodwill but of trade marks are not given their due protection, all of this falls apart. Without recourse, the cost of copying someone else is trademark its quite low and the upside is very high. Thats why the trademark law prohibits, as a form of trademark infringement, the use of marks that are likely to cause confusion, mistake or deception. When that happens, when somebody uses a mark that causes consumption, the trademark owner loses the control over its goodwill and its reputation. And even though monetary damages are available, they cant pace these harms. Courts have historically acknowledged that they are virtually impossible to ascertain and measure. Also monetary damages are notoriously difficult to prove and to collect in those cases. So none of this is new a revolutionary. For decades, nearly every circuit has recognized that pernicious reputation or harm that flows from those violations, and for that reason, the circuits have recognized a presumption of irreparable harm, once somebody proved the likelihood of success or success on the merits of a claim. This changed in 2006, when the Supreme Court ruled that a presumption of irreparable harm does not exist. But ebay was not a pattern case, and it has madrid sorry, it has muddy the landscape. After ebay some circuits recognize the presumption of irreparable harm, despite a base holding. Others have done away with the presumption of irreparable harm. Other circuits have struggled the issue questioning whether you buy fails to even have the issue. It makes sense for several reasons, first its appropriate. And that decision the Supreme Court did not once mention trademarks or the policies that underlie. In that decision the justices roberts and kennedy earth him not to jettison practice, Justice Roberts said, a page of history is worth a volume of logic. Here, the historical practice of recognizing the presumption is longstanding and robust, and should not be restored. The presumption is also needed. If there is infringement, infringers can continue without an injunction to confuse unwitting consumers and to shell out their hard earned money for product that what they are not understood to be. All the while, they lose Consumer Trust and control over its brand. It is essentially commercial identity theft. The presumption would also provide clarity for the courts. Be on the presumption of if it applies in certain cases, its unknown what now you need to do to prove irreparable harm. One would think that proof of actual deception and confusion would be enough, but the ninth circuit has set otherwise. Finally, a presumption would be balanced by the fact that it is rebuttal, so and a lot and friends are can come forth to claim. And that is the main injunction will issue. Its still much so that the balance of hardship tips in their favor, and that an injunction would favor the public interest. In the end, this time tested doctrine has well served trademark owners, consumers in the marketplace for many years, and should not be taken away. Thank you for your time, and i welcome your questions. Chairman tell us, Ranking Member coons, and members of the subcommittee, good afternoon. I am meghan ban again, where my practice includes protecting and, forcing, and defending intellectual Property Rights of our clients. Im honored to be here today, to share my views on fraudulent trademarks, and the importance of the cluttering the trademark register. While we all agree that protection of trademarks its critically important to the American Economy and competitiveness around the world, over protection has a negative repercussions. The trademark register of what marks are already in use. It can stifle innovation by providing this information for companies about whether they can use a mark or not. For instance, this might cause a company to abandon it if it is already in use. It is most productive, less suitable and less productive. Fraud, as we know, is one of the causes. To prove fraud and to have a mark canceled from the register on the basis of fraud, you have to meet a very high standard. A third party would have to show willful intent to deceive, and as a litigator, i can tell you thats a very hard standard to meet. In order to prove that, you have to embark on complex discovery, which can include forensic review of documents, detailed depositions and a time consuming and difficult process. These proceedings can take up to two years, thats not okay if youre a new brand looking to enter the market. You dont have two years to wait for a trademark. And the courts, you can see, the courts agree that this is really difficult. In fact, in the last ten, years they have only canceled one mark on the grounds of fraud, and theres only a handful of federal courts that have found the same. The question becomes, what do we do about these fraudulent trademarks . After we get them off of the register. One of the first things people have said, is that we need to lower the standards of fraud. But there are real risks of doing that because you risk harming innocent mistakes. They risk, well, let me back up. Before 2009, the standard was actually lower. You could prove fraud by showing a miss statement on the registration. So numerous registrations were canceled, based just on misinformation, without any intent to deceive. This put a ton of pressure on practitioners and trademark owners, they had to do so with such exacting detail or risk cancellation of the entire registration, even when those classes of goods that are using the trademark. That is a consequence we dont want to see. Thats just not the intended outcome. We dont want to make applying for trademark so onerous and so complex that it turns that, it intern causes to trademarks to go unprotected. We need a balanced approach that promotes brand protection while at the same time protecting against over broad and and valid registrations. There has to be a bright Line Division against intentional fraud and innocent mistakes. Well there surely some ways that we can prove the fog standards, perhaps even by lowering the penalty if were going to lower the standard, perhaps the better more effective solution is to look at how we address this problem of debt would as a whole. Those remarks that, weather due to fraud, innocent mistakes or due to something in between exist on the register, covering more goods and services and they should be covering. The peel has been working on this, as you noted they have implemented various solutions and they have been very effective. My clients are now paying more attention to the trademark filings, but there still a way to go. We still have a cluttered register. And some potential approaches include, requiring applicants and registers excuse me, specimens of used for all 15 services, requiring applicants and resistance to be represented by u. S. Council, implementing a more streamlined procedures as an alternative to the cancellation and the lengthy opposition procedures. And these are not mutually exclusive. There are each but a clear trademark register is important and i look forward to your questions. Thanks. Thank you. Mr. Williams . German tillis, Ranking Member coons, members of the subcommittee. Good afternoon and thank you for the opportunity to be here today. My name is Thomas Williams as currently served as election fellow and supervising attorney at Duke Law School, and today im here to advocate for the creation of tools and systems in place for Small Businesses accessing trademark protections. I would also like to provide a things to the Committee Staff whose hard work made as possible. This is important for Small Business owners, some of whom, along with brian mcgahn, i have the opportunity to serve with our student. Small businesses are the backbone of the economy, according to the 2018 Small Business profile, 99 of the businesses in this country are in fact Small Businesses. Every major country in the world was at some point a Small Business that grew and flourished, and because they are important, they create academic possibilities and responsible for almost 60 million jobs. Because of, that reducing costs can help to boost that number, but also to create more flexibility and economic promise for Small Businesses in their community. Im here to relate to you and a meaningful way the stories of the clients might students and i serve. Their stories are important to help the police and reforms claims. We can ask empirical questions and create new models of policy that serve this important backbone of the American Economy. Our clinic advises a broad range of clients, Tech Companies trying to gain their footing, Health Care Related startups, and a retail venture or to. Often, our students are the ones to direct these clients to the importance of protecting their intellectual property interests,. Doing this for quite our students to become proficient and intellectual property basics, using usual avenues and skill sets. Theres been a good amount of time learned to navigate the test system, consulting with our intellectual property specialists, and using analytics to come to conclusions about whether or not the name, for eight or local of a client is infringing on another Party Trademark rights. Use of these tools provides us with a particular type of knowledge, apart namely it is a trademark that our client maybe infringing on or if it is free and clear. Even when we know a trademark is held by someone else it may not be it clear as to whether its fraudulent or abandoned. But based on these discussions and the Information Available to us, we have to work with our strategies moving forward. We advise clients they will need to be another name and to do so quickly. For some clients that we have worked with, this is not problematic. For others the task is more onerous and complicated. Some are already doing business in the real world and they have to answer some questions that Legal Counsel long cannot create answers. To one option is to knowingly in french, with the hope that they will not discover the usage. Even if its discovered, for some clients the cost of we really might be so high as to make the risk reasonable. Its hard to know. The costs of indecision, the rebranding that my car with respect to rebranding for his militias are often unclear. What is clear is that there is a cost. Trademark flip issues could be the proverbial straw that breaks the camels back. Just a few thousand dollars can make a huge difference. In fact, for some of our clients the decision to apply for trademark protection alone comes down to a Short Term Financial analysis. Providing a means of challenging existing fraudulent trademark that are not exercised and substantive, meaningful ways, would face incredible hurdles, dilutes goes on and on providing a simplified means will eliminate much uncertainty. , when someone has a great idea they should be able to seek the refuge of trademark protection for their product or little and then the ship to proceed the interest of their predecessors. For Small Businesses in the u. S. , one important component would be some form of anonymity, with challenging a trademark to ensure a Small Business owner can take on a larger more wellestablished Company Without fear of representation. The expense of which Small Businesses cannot bear. In closing, there is no question that our trademark system, and it helps to fuel. We should be driving a focused on fairness, and thinking about the role they play in our society in our communities and making room for a new Small Businesses, thank you for inviting me, and for insisting with the committee in any way. Good afternoon members of the committee. Thank you for holding a hearing on emerging threats. A name is steven lee, and i am chief intellectual property counsel for target. Target is one of americas largest retailers with more than 360,000 team members supporting almost 1900 Stores Across all 50 states. As a company, we are in the midst of a multi year transformation strategy, and we have invested in remodeling our stores, increasing wages, and reinventing our portfolio of target designer brands. Since 2017, target has introduced more than three dozen new brands. From food, to apparel, to home goods. This work makes target the leading trademark in the United States, and one of the top five globally. Development of intellectual property and a strong means to protect, our key to our success. If we are concerned about fraud, im here today shes to show the impact on our business and offer perspective on how the United States Trademark Office can improve policing. Efforts and protect innovation of american companies. When he was patio approved a fraudulent trademark application it can block efforts to trademark our own products. Target has been moving to move new brands to product. Weve had thousands of concepts and named before choosing the right one. The process to create, develop and adopt a new own brand is time intensive and the related costs are significant. We became aware of the fraudulent filing problem when we were in the process of selecting a new trademark for an Upcoming Product launch. We landed on a preferred name, but we were blocked by a prior application. We were unable to determine use in cameras in the United States, or even locate the company. We had little recourse and moved on to another market, costing us millions of dollars, time, and expense. After this finding, we audited recent trademark searches we had a doctored for other brand launches. In nearly all cases, at least one fraudulent filing would have blocked our application. A more comprehensive review of the u. S. Beautiful filings uncovered hallmarks of fraudulent fillers. First, use of the same photograph submitted for different trademarks, second, photo shop images noticeable on site. Third, stock photography submitted as original proof of use of the trademark, and finally, images of other companies trademarks still clearly visible. The vast majority works successfully registered, we reached the conclusion, with stumbled upon a systemic problem. The u. S. Patio has taken steps to address the problem, including the specimens pileup mailbox, a post registration audit program, and the u. S. Local council requirement. While all these are wellintentioned and provide some limited return, they have been largely ineffective. Suspicious actors, are successfully registering trademarks, and they are doing so at an alarming rate. We believe the u. S. Patio must do more. We asked the committee to do the following concepts, using people, products and technology to mitigate the fraudulent trademarks. First, modernize the u. S. Pto tool kit for reviewing fraudulent trademarks. We should more effectively assess fraudulent applications, develop more stringent review and apply more rigor and consistency during examination, while working within resource constraints. Second, give the u. S. Because the flexibility to set response timelines. Today, the u. S. Video must allow applicant six months to respond to an inquiry, shortening the time to respond would bring issue to a resolution sooner. Third, allowing thirdparty to object and offer evidence regarding pending applications. Today, a third party has no effect of anti timely path to prevent evidence of bad faith or talent a pending application, or for that matter, issue registration. These remedies need to be approved or new solutions developed to allow third parties to raise challenges against applications and registrations. These avenues could become a viable means for third parties to help the clutter the register. Thank you again for providing the opportunity to testify today. We want to continue working with you, as you develop the policy approaches to address the integrity of the United States trademark register. Thank you. Ill let the panel know that you were absent for a noble cause, and that when you got there, if you want to make any opening comment before we go to questions . Thank you. As i understand, a treasured colleague of ours just gave his Farewell Speech, and i was the first democrat to speak. Some of facebook into long, but we have a long and successful collaboration. I appreciate your forbearance. As youve all testified, and protect the public for, as the cochair with senator grassley update congressional trademark caucus, im glad this hearing was convened to address this issue, and i appreciate your testimony and apologize for missing the first three witnesses testimony, which i will review and writing. As im certain you said, the u. S. Peels register include something north of 200 and a half million trademark registrations, and suffers from the clutter not in, use but fraudulent, and we have seen a recent search and fraudulent finding from china. Behind 2014 in 2018, the u. S. Peel experience a greater than thousand percent increase in chinese filings, many of which appeared suspicious. The result is a registered cluttered with unused marks, a pipeline of questionable applications and the frustration of legitimate branding efforts. So i applaud the people for taking these steps, as we just heard, they may be insufficient, but i look forward to questioning you on that. We are working on potential legislation, i look forward to hearing in what detail your responses to what you think are the most important steps we should take, in partnership with the House Committee and i look forward to hearing your answers. So i will stop my introductory marks and express my appreciation. German grassley i, always look for opportunities for you to go first. Would you like . To thank you, i appreciate, it and i also appreciate senator coons on the Trademark Committee as well. I am going to start with professor beebe because i have some interest and what is going on in china. In your opinion, what is the driving the chinese to engage in such widespread fraud with respect to trademark filings . Senator grassley, thank you for your question. In my opinion, what is driving the chinese to do so is local concerns, we are a certain municipal government wants to report to the center that they are engaging in all kinds of economic conduct. Those look good in the eyes of the central government. I think there is a degree of not minding that american trademark its being adversely affected by this, chairman tell us add something about this, and i agree that this is an aspect of it. Can i ask you, are they doing enough to address this, and if not, what do you think they should be doing . Thank you. The patio is an agency that works. It is taking proactive measures to try to address this problem. However, i think we all agree that it needs to do more. Some of the things that, with michael author, that we propose our specialization of trademark examiners perhaps by a particular class of goods or services, so that they would become familiar with the kinds of fraudulent specimens that they are seeing, especially in certain cases. We also strongly support the proposal for expunge meant and export, reexamination, and other proposals we think are important are asking the patio. Ill ask you again, and then ill ask the panel if they want to comment in the same way. Is it your sense that the number of fraudulent trademark applications is a recurring problem, or has it leveled off . Do you see the number continuing to grow. Go, ahead and anybody else can comment on it as well. The pto imposed a reform effect of august 3rd, which required foreign applicants to use local u. S. Council to file their applications. This is a way that the pto can enforce against fraud because it can impose penalties on local council. The result, as news reports indicate has been there has been a decline in the number of fraudulent applications coming from china, but they have not. Stop there are still recurring, so it seems clear that they need to do more in order to address this problem and drop it entirely. If indeed body else who wants to comment on it can. Its very difficult to find out what is fraudulent and to come up with the necessary resources to do the in depth investigations that mr. Le spoke of. It is a very high burden. Did you want to comment . I would add that the decrease that we are seeing in these foreign, fraudulent trademark applications. It is too early to tell. The rule went into place, there was a massive spike right before the rule was adopted and i think the bad actors are adjusting their strategies. Weve heard from the u. S. Patio and our outside counsel, they are trying to circumvent the restriction. The u. S. Pto has communicated to us that legitimate turning credentials are being used without their credentials, and were seeing attorneys filing on behalf of their clients. We think its going to continue and even if it were to stop the problem, it doesnt deal with the actual clutter, the tens of thousands of marks the 1200 percent increase that weve seen. Thank you for your courtesy. Cinder cones . Mister chairman, you are appreciated, let me just make sure, and i may have missed this, forgive me if i did but for your clients and for the average person who may be watching this, what is the cost to file versus the cost to successfully challenged all the way through . If you have a Small Business and you have a product that youve come up with a great trademark, youre ready and your search reveals a trademark that you think may be fraudulent but you are not sure, what does that balance of the cost and time currently involved and filing and what is it involved in a post grand challenge . I can take the easy one. The cost filed hundred 75 dollars and you have to do a little bit of lake work, doing the things that our students are learning to do. The cost of challenge is quite high and quite varied and the hundreds of thousands of dollars . I will leave that to michael witnesses to answer, but for our claims, its so varied and unclear but certainly high that it makes it difficult to even step into the ring. Miss bannigan, do you have a rough number . I dont have a rough number but its in the hundreds of thousands of dollars, especially if you have to go into the complicated discovery im saying. If you get forensic experts, you have to conduct detailed depositions it takes a long time, it can take up to two years and cost a lot of money. And, if i might professor, how do you think that impacts the business positions that companies are making. May be like target, missed early . International Trademark Association has estimated that the cost of opposition could be anywhere from hundred 52 more. We have put the average number 95,000 dollars. This is a lot of money. For Small Businesses, i think its fair to say that it is too much money. Mr. Williams had testified to the degree to which these Small Businesses are making decisions based on limited resources, and they just are not able to engage in these kinds of oppositions or cancellation prostheses. I think target is the largest trademark filler . U. S. What impact is half on your business decision making, hundred thousand dollars isnt anything but im more concerned about how it impacts your brand launch, your product launch. The Financial Impact is a significant, but not so much as the cost of filing these oppositions or cancellations. We thought 30 of those brands, and a brand is not come up with a room full of lawyers. I work with 50 team members of target, who come up with ideas, the actual product, the name, the packaging, the marketing that will go into a product launch. This includes merchandizing teams, marketing, creative, Product Design and development, research scientists, the whole gamut of people researching a brand that will resonate and provide our guests the wow factor, the something new and different when they its expected to come to target for our own brand products. The time lost, the opportunity, all that if it will pivot from the preferred name and, move to a secondary name, it cost this time in, terms of millions of dollars. The opposition and the cancellation proceedings for a company like target, we are well versed in that and willing to spend the money, but it is the time. The waste of time in order to get to that resolution, it could take anywhere from six to eight months two years to get resolved. We just cant wait. Discredit register as our twice it, undermines the integrity of the u. S. Trademark system. Let me ask. You about potential legislation or solutions. One option is to clarify a resumption of irreparable harm and in front of it legislations, way youre seeking relief, how with that presumption change or improve the system . That presumption would help somebodys filing the infringement in Federal District according to actually stop the use, the problem is, that an opposition or cancellation procedure, that doesnt matter. One of the difficulties as, we heard that time is money, and time is the big problem to stop these launches, an opposition is essentially many litigations. So the fraudulent, if they default maybe it goes away, but if they do not default, all they have to do is file an answer, and then the case goes into discovery. And then grind for years, so thats part of the problem. The irreparable harm presumption would help for district litigation, but not necessarily the problem before the. Proposal to give the director the authority to it reexamined registered trademarks on their initiative, and then to have expansion proceedings to illuminate registrations four marks that have never been used or that seemed visibly fraudulent are, to the more widely embraced potential proposals. Id be interested in, this is my last question, in any once response to both of those will be sufficient. We believe there are a good start. The target is in support of much of the legislation coming out of the house. But getting it at the application face, and for expensive. And what we would not say that one thing in the expunged and language, theres a clause within the drafted language that gives us serious pause. It creates a loophole that these Fraudulent Companies could expose. From the time of registration all the way up to the time the filing of the expunge meant, that stems the right of any fraudulent and try to use it post registration we know this applications, by law need to be committed at the time of filing. We are eager to work with members of congress to understand what that language is in there and to come up with better language. Thank you, any other comments before i yield . I agree that expunge meant is a great start, and that it would be very helpful. A lowcost, no burden alternative. It would allow many more people to challenge these remarks, but youre still relying on thirdparty to challenge the marks. There still has to be some kind of reasonable basis for them to think that it is a fraudulent mark. So it doesnt completely solve the problem. Thank you. Actually, sandra blumenthal, im not missing you, and let somebody go before me, and then deferred to senator coons, so im going in turn. Before i start, at like to enter into the record the registered trademarks, along with the press release outlining the ways that don has competed id like to make sure that senator coons under blumenthal professor beebe, if you go back through the research, two thirds found fraudulent, would you run through that for the purposes of my colleagues . With the professor , i did research on the chinese applications in class 25 of the least classification scheme. That is trademark applications in the apparels sector. We look at the year 2017. Applications from china. We then took a random sample of those applications, and each of us personally studied each application, and coated each application according to various indicators of fraud. Through the course of this process, we came to see that one quarter of the applications we were looking at contained doctored photographs, clearly doctored photographs, and this is consistent with press reports about the degree to which these applications contain photoshopped specimens of use. We also came to see, as mr. Le had a testified that some applicants would just place brand name cars on top of a tshirt, take a photograph, and then submitted this to pto as a specimen of use. We had the impression that people took things from their closets, from their kitchens, depending on the particular classes we were seeing outside of class 25, in order to engage in this application process at pto. The result of our analysis was our estimation that two thirds of the applicants filed in 2017, solely in class 25, apparel, were fraudulent. Nevertheless, as i said in my opening testimony, 60 of these were approved for publication by pto, and 39 proceeded to registration. These are very disturbing statistics, obviously, and we suspected we would find similar numbers and certain other classes of goods and services. What extent do you think that some of the changes that pto would impact that number, if we were to implement them . What extent would impact that . I think it would cut the number by half, the im really estimating. Now we only have one third of the applicants. As has been explained, the fraudulent flyers are now seeking other ways to circumvent what patio has done, using u. S. Local council, so im not sure that it would be that effective at the moment. Miss bannigan you were talking about declaring, the one thing that you said that you need to make sure that you dont have unintended consequences. How do you strike the balance as a matter of the actions that we will take . Its hard to strike the balance between protecting the trademarks and clearing the register. I think that some of the suggestions that patio has put out, and start to get at the issue and we need to look at how to address the issue of deadwood as a whole, not just going after fraud not is going after the stakes, but looking for the best solutions to get this registered clear and get these marks available for our businesses. The most comprehensive solution might be to require applicants and registrants to submit proof of use for all goods, but that is very burdensome, both on the filler and on the pto that has to review it. With all good under the trademark . We register a trademark a register in classes of goods which, can be very broad. For instance, a class 25 is clothing. He registered in class 25, but then you also specifically name the goods that you intend to use the mark on, so you can, get one application register for sweaters, pants, quote. In order to get the registration you have to show proof of use on one of those goods. So if you send a picture and showing your mark on a tshirt, you can get it in all three categories. What im suggesting here is you could require the applicant show you all three categories. Then again, it creates more work. Just test. Test. Test. Test. Had hade opportunity to look at the proposals id be interested in things that you be what you think are good ideas and then i will defer to senator blumenthal. I look to those legislation for a verbal harms and senator and i think its very good, because not only provides for the presumption of irreparable harm but also makes the presumption rebuttal. So that an accuser can come forward to counter whether there is irreparable harm, perhaps Something Like delay, so it strikes a nice balance and it teaches the objectives being protected from continuing infringement. Anyone else . Ill say that ive reviewed the irreparable harm the proposed legislation as well, and completely agree. It is such an important concept, and will be so helpful if we can pass that legislation. Ill say quickly, we think the proposed legislation is very good, but we share the concern about the particular phrase and the expungement section. How do could be going to do this . Id rather lose early then lose late. Im sorry for your loss. Senator blumenthal . Thanks mister chairman, and thanks to the Ranking Members for being so active on this subcommittee. Ive been very impressed by the energy and comprehensiveness of your approach to this subject area. As all of us know, here and around the nation, millions of americans purchase a lot of good online yesterday which was cyber monday but also every day of the year, especially as we go into the holiday season. They rely on amazon and other platforms to actively police their market places for fraudulent sales. Too often, distrust is misplaced. They exploit low quality goods and counterfeit goods, many times these sellers imitate well known companies apply unlawfully using their trademark logos, creating the false impression that the retailers, the genuine brand name product, theres significant cost to consumers who received effective and even dangerous products and on businesses. Businesses and connecticut and all around the country that suffer lost sales and damaged reputation. Trademarks are important to online markets, and that leads to my question. Im concerned that countries like amazon are taking insufficient steps to police their sights again trademark fraud and counterfeit goods, on their platforms that are so important to the nation. Amazon Just Announced a new product to combat counterfeit goods. My question is twofold. Are these platforms doing enough, including amazon, and have you noticed any noticeable effect. The open the floor to whoever on the panel which is to answer, one or more of you. And i cant believe no one has an answer. We confront this an hour practice every day with products being sold on these retail websites. The difficulty, of course, is a lot of time the reason there are so many being sold. Part of the problem and they work with brand owners, but the retailer will get sued win their own policy doesnt take down the infringing good or the counterfeit good, but its a difficult issue, because a lot of the time, the retailer doesnt want to be the arbiter of whether something is or is not an infringement. You mean the platform doesnt want to be the arbiter . Right. Amazon does not want to say what is the legitimate and what is kind of felt, but they could if they have expanded more resources to do it, couldnt day . In some cases are obvious cases and a platform like amazon is good at taking down counterfeit products. It is difficult given the number of things that have been sold on my nowadays. Its an ongoing process and its an ongoing struggle. When the brand owner doesnt get relief applied for and sometimes they end up having no choice but to sue the platform in district court. In your experience, are those lawsuits and that litigation an effective deterrent . Or something more needed . I think more is always needed in any type of situation. These products are in effect a deterrent but the problem is, as we open up commerce to these electronic marketplaces theres a flood of different sellers so its hard for the brand owner and for the platforms to keep up and figure out what is genuine and whats not genuine because a lot of these products are being resold through third parties and they might actually be illegitimate. That depends upon whether thats permissible. I do think there is a need for cracking down on counterfeiting and sales on different platforms. Thank you. I have another question which more of you will want to answer and maybe not. As you all know, less than two months after Donald Trumps inauguration, the Chinese Government registered 38 trademarks for the president of the United States and his business is, all but three were in the president s own name, pretty unprecedented i think. Correct me if im wrong, these registrations ended in multi year legal battle between trump and the Chinese Government. Coincidently, right after he took office, beijing has continued to improve trademarks for trump related businesses throughout his presidency and also for his daughter, ivanka and numerous of them. I am deeply concerned that the Chinese Government is using or at least was using its trademark system to improperly influence the United States policy and by the way, it is implicated and the constitutional prohibition against the monuments and is the subject of a lawsuit that we had blumenthal versus trump and 200 members of the United States congress was joining me in that effort and trademarks are far from the Central Point of the lawsuit but they are implicated. At the very least, these trademarks create the appearance that china is interfering with his own system to support the president of the United States and his businesses. Let me ask you, do such trademarks create harms potentially for competitors in seeking trademarks also from the Chinese Government . Would you agree that a political politically connected company when its treated differently with respect to trademark law can create the appearance and the urology of unfair competition . We cant order you to answer but yes sir. Senator blumenthal, its a delicate question. But i think based on my knowledge of the chinese registration practices which is highly irregular, what they did with the trademark registration as you mentioned, i think it was obviously an effort to initiate themselves to president trump. But one would be certain that the bt all would never do anything and so it is it is discouraging to those who would engage in competition in china and its conduct that reminds up of how professional our own Trademark Office is by comparison. I think thats a really good point and im very well stated way to put it, thank you. You on the stump of the panelists match tonight. laughs this is a very erudite panel so i dont know if thats a compliment. Thank you. I want to go back and would you like to ask anything . My last question would be is there any proposal do you think there any proposal do you think is not currently captioning performed by vitac clear either the clutter of the existing registry or help them better determine when filings are fraudulent whether from china or elsewhere. We have both commented on a specialized review team. There are a number of telltale signs that were seeing. Theres a laundry list, five to ten different attributes that you could find in these applications. Theyre singleclass applications. There are 40plus different classes. They are all filed single class. They use photoshoped images, they use duplicative images that can easily be found on the internet. They attest that is use in commerce in the United States and finally weve seen even some tags that are in foreign currency, not even in u. S. Dollars, all these telltale signs can be identified and we take it a step further that, yes, theyre taking them on a casebycase basis or mitt hit miss. If there was a specialized review team that could pool their knowledge over time, develop consistency in their examination and share that knowledge. Its been done on the patent side. And you have it on the trademark side. The u. S. Pto with no extra funding, no legislative requirement, adopted a specialized review team for cannabis products. Were asking that it will be done in this case as well. Professor, lets just say we eliminated the future flow of fraudulent trademark applications from china. To what extent would we have solved the problem . To a very large extent, i think, based on our understanding of the data. There are still applicants from other countries who are engaging in some degree of fraud on pto in order to establish an early priority date for their application. But i think the main source of this problem the root cause of the clutter problem right now appears to be sourced out of china . I believe so, yes. Has there been any Research Done about how they actually how theyre actually going about doing this . Is this just a Cottage Industry that bubbled up organically or is this something where clearly entities within china are promoting this sort of activity. We are only going on media reports which we cite in our written testimony, a wall street journal, a few other articles, and thats fairly thin information that we have at the moment and it may be something worth investigating further either by media or by government teams. But it does appear to be an organized effort. Cottage industry is probably too polite a term. I think its more organized than that. I think sabotage is too strong a term, probably. But still this does seem to be an organized effort with many motives behind it. And, mr. Williams, again, i worry that the thing that i worry most about here are the if you take a look at target has to budget for the litigation and all the work that theyre going to have to do and they have the scale to deal with it. Not that im diminishing the significance to you all and your ability to bring markets to product. If we dont fix this, this is going to devastate any sort of innovation, the next target, the next big enterprise that starts small. Would you agree with that . Im not sure that it will completely prevent them from coming to market but it will show them down. So i think its really valuable to be considering these kind of actions, the idea of being able to file claims anonymously, to prevent retaliation from folks. And hopefully those entrepreneurs stick with it and move forward but with certain financial circumstances in place, it really might take out some companies that have great promise. A question from senator blumenthal about i forget who it was. But the platform if you think about the ecommerce providers, they may or may not know about the legitimacy of a trademark on a retail platform for which theyre selling a product. But at target, not everything you sell is your brand. There are products that have their own trademarks associated with it. Before you put something on the shelf of target or make it available online, what sort of Due Diligence do you do as a Large Corporation to make sure what youre selling is actually something thats protected by legitimate trademark . For our recently launched marketplace, we are not going full in with the marketplace and launching to where any third party can start selling. Its a cure rated assortment. To date there havent been any allegations for counterfeiting going on. Its typically more expensive, higher price point items. The issue were confronted with is the reverse of that, its not an infringement or counterfeiting of our own brands or other thirdparty brands, its the reverse, you have a cluttered register that legitimate filers like target, like Small Businesses cant get their marks registered because theres a mind field of fraudulent ta fraudulent trademarks who are blocking this business. No matter the size of the company, fraudulent trademarks impact them. And its not just to make targets business work better. Its to make it more fair, efficient and rigorous. Not being a skilled attorney like my colleagues to my left over here and fairly new to politics, i may be asking i know im asking you either a dumb question or one i dont know the answer to. But im thinking more about a product that has thats operating under a fraudulent trademark and yet theyre still selling it. What obligation is that retailer who benefits from the transaction of being a part of that sales transaction, what obligation do they have now as a matter of law to do the homework to make sure theyre not theyre not actually promoting a product with a fraudulently trademark and benefitting from it . Targets policy is, first, by contract, for every vendor, suppliers agrees that the products they sell us are not only good for what theyre supposed to be sold for, but dont infringe the intellectual Property Rights of others. To say that we vet the hundreds of thousands of products that we sell in our stores, we dont do that. But once we get a claim, we take it very seriously. We work with the vendor to verify that. If its found to be infringing, theyll take it down and deal with the issue. Okay. Thank you. Senator blumenthal, you have any other tough questions . No. As i said in my opening statement, i hope this is a continued dialogue. Youve given us something to think about that goes beyond the language thats being vetted in the house. I hope were moving forward with a mark here shortly and in the interest of working with our colleagues in the house, it will be something that ultimately produces a bipartisan positive outcome. Your testimony has been very enlightening. Im particularly interested in Digging Deeper into the research that youve done and youre watching what were doing here and not waiting for us to call you for feedback is welcome. Make sure that you stay in touch with our staff. The staff on the house side, were very interested in your feedback and your comments and new things that come up. We will hold the record open for a week for the week for any information that any of the members would like to submit and, again, thank you all for being here and indulging us in the calendar change. Committee is adjourned. This morning testimony from Inspector General Michael Horwitz on a recent report alleging abuses of the Foreign Intelligence Surveillance Act known as fisa. Hes expected to address the justice departments decision to start the investigation into the fbis russia inquiry. The Senate Judiciary committee holds the hearing and it starts live at 10 00 a. M. Eastern here on cspan3. Next, remarks from attorney general william barr. He responded to the articles of impeachment and