IP scams, low-ball schemes and unsolicited notes

Claire Foggo

Have you received an unsolicited email or letter requesting payment in relation to your intellectual property rights?

If so, it may be a scam.

New Zealand businesses are increasingly being targeted by IP-related schemes specifically designed to get them to needlessly part with their cash.

You may have received an official-looking "reminder" letter from a company that your trademark registration is about to expire.

If this is not from your usual trademark lawyer or the Intellectual Property Office of New Zealand, you may end up paying heavily for your trade mark renewal.

For example, we are aware that Patent & Trademark Organisation LLC (a US entity which includes an Auckland address on its letterhead) sends unsolicited letters offering to renew New Zealand trademark registrations at a significantly increased cost.

In addition, it does not provide you with any additional services provided by trademark lawyers and agents, such as acting as address for service and keeping readily accessible database records of your trademark portfolio.

Those falling for such "offers" find they cost more and also have to pay again for their usual agents' services.

Businesses such as this which have traditionally focused on luring unsuspecting businesses in Europe and the US have now become increasingly active in New Zealand.

Like share "low-ball" offers, they are not illegal, so trademark owners need to be vigilant – be suspicious of any IP-related correspondence not from your usual trademark lawyer or agent.

Inclusion on database of trademarks or patents

One step further are the database scams. Designed to appear like an invoice for registration of an overseas or "international" trademark, the scam in these letters can be tricky to spot.

Scammers obtain your details by searching online trademark registers for recently published applications.

They then contact you directly, requesting a "filing fee" for registration of your trademark.

In fact, in return for your payment of around $US2500, details of your trademark registration will simply be published for a period of time in the scammers' online database.

The database has no value whatsoever – as details of your registration are freely available from the relevant trademark registry's online records.

These schemes have been ruled illegal and shut down in the US, but we are now aware of others operating, particularly out of Eastern Europe.

An example is Czech Republic-based Worldwide Database of Trademarks and Patents, whose pro-forma-style “renewal” paperwork requests $US2327.

Notification of overseas domain name registrations

Many different entities, primarily based in Asia, have contacted our clients claiming that someone has applied to register domain names which incorporate their brands (eg, www.simpsongrierson.cn).

An example of this emanates from the “Department of Asian Domain Registration Service” in China.

Sometimes these entities say they are just checking that you have authorised these registrations, while at other times they offer to register the domain names on your behalf (and at your considerable cost) instead.

If you respond to these entities you may find that they register the relevant domain names themselves and then try to sell them to you at a highly inflated price.

Even worse, they could be operating a phishing scam and contacting you as a ploy to obtain your credit card details.

Chinese trademark squatting

China has a "first to file" trademark registration system, so the applicant who is first to file a trademark application is deemed to be the rightful owner of the mark.

Most other countries, including New Zealand, have a "first to use" system, which means that if you are the first to use a mark you have rights in it and can probably block an application filed by a third party for it.

Unfortunately, China's system has encouraged the practice of trademark squatting – squatters commonly file hundreds of applications for trademarks they never intend to use.

Sometimes they will contact you with an offer to sell the registration, or sometimes you will simply be shocked to find that your brand has already been registered and you need to negotiate its purchase from the registrant.

Most concerning are unsolicited approaches by Chinese lawyers apparently offering to litigate on your behalf to retrieve your rightful trademark - these lawyers are often in on the scam, having an indirect connection to the squatter in the first place.

What to do?

If you receive unsolicited IP-related correspondence:

  •   Be aware that, unless it's from your usual IP provider, it could be a scam.
  •   Contact us in the first instance so we can assess its relevance.
  •   Don't engage with the sender.
  •   Never disclose your credit card or other financial details.

Claire Foggo is a senior associate at Simpson Grierson.

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2 Comments & Questions

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Interesting! Last year I got an email from a Chinese company advising me that they were going to register a trade mark exactly the same as my company held. I looked at the scammers website and got an address (which was obviously fictitious). I got hold of Trade NZ (a branch of Min Foreign Affairs) and got good advice which pointed to a scam. Also, I had contacts on China who were prepared to "follow up" the scam. After these steps, I responded to the email i got from the scammers calling their bluff - suggested they meet my Chinese reps. The response I got was quite aggressive and included a demand for $US56k. I forwarded the information on the scam that I received from Trade NZ. I didn't hear from the scammers again. The point of my story is that Trade NZ is very willing to look into international scam activity plaguing NZ business.

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We have also received the Chinese emails re our trademark and an inquiry about another company wanting to register the name in China. As per our policy, we just clicked delete and have had no further contact.
It will be interesting to see what happens after I post this comment.
Gordon Anderson

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