'; Trademark owners need to prepare for increased likelihood of post-registration audits

Trademark owners need to prepare for increased likelihood of post-registration audits

November 22, 2019

When filing a Section 8 or 71 Declaration of Use to maintain a trademark registration, the USPTO may require more evidence of use than in the past. On November 1, 2017, the United States Patent and Trademark Office (USPTO) launched an audit program to cancel registrations or delete from registrations goods and services that are not in use.

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After a pilot program revealed that 51% of audited registrations failed to verify a previously claimed use of a mark for certain goods or services, the USPTO decided to make the program permanent. According to the USPTO, its analysis of audit results between November 1, 2017, and June 28, 2019, revealed high deletion rates (50.1%) and led the office to conclude, “The troubling statistics to date suggest a lack of care, lack of knowledge about what the law requires, or both by trademark owners and their counsel.”

The USPTO is now auditing approximately 10% of registrations for which Section 8 or 71 Declarations are filed, and the Office recently doubled the number of registrations it audits to 5,000 per year.

“The increasing likelihood of an audit is something all trademark owners should be prepared for,” says Tamara Miller, a shareholder in Leydig’s Chicago Office. “That preparation involves educating trademark owners about the audit program and proactively deleting goods and services that are not in use before submitting a declaration to the Trademark Office claiming use.”

A registration is subject to an audit after the filing of a Section 8 or 71 Declaration if the registration includes at least one class with four or more goods or services, or if it includes at least two classes with two or more goods or services.

If the USPTO audits a registration, the examining attorney will require proof of use for two goods or services for each audited class. For multiclass registrations with classes containing only one good or service, proof of use will only be required for a class if the specimen of record for that class is not acceptable.

If the owner provides proof of use for the audited goods or services, the USPTO will issue a Notice of Acceptance. If the response does not include acceptable proof of use, or if any of the audited goods or services are deleted in the response, the owner will then be required to provide proof of use for all of the remaining goods and services in the registration.

Ultimately, a failure to respond or provide required proof of use for any audited items can lead to the cancellation of a registration, warns Kyle Migliorini, an associate in Leydig’s Chicago office.

“As the USPTO becomes more aggressive in auditing registrations, trademark owners should be careful before submitting a Section 8 or 71 Declaration. The process to accumulate proof of use evidence for all claimed goods and services in a registration can be costly and time-consuming, so owners should be encouraged to delete goods and services that are not in use prior to receiving an audit.”