Why a trademark scam may be perfectly "legal": Internet #499
Protecting your business names and ideas is crucial in this entrepreneurial age -- but it also opens the door to a potential trademark scam.
In this week's issue, we show how scammers use official-looking names and documents to try to dupe victims into paying for listings, registrations and other services that either don't exist or have little or no value.
Before we begin, you may want to spend a moment looking at this week's most popular articles from our other sites:
Easy Knitting Patterns for Kids and Beginners: Check out these great kids knitting patterns I take with me when I work with intermediate child knitters.
Seasonal Summer Produce Ideas: Here are a few of the recipes I've used in the last few weeks to make sure your produce is eaten when it's fresh.
Now, here we go...
Bogus Invoice Conceals a Trademark Scam
A new surge in patent and trademark scam tricks sets out to fool inventors and businesses into paying hundreds or even thousands of dollars for worthless registrations and reminder services.
The scam artists try to hoodwink victims by sending official looking invoices seeking payments. Oftentimes they stay inside the law by burying a disclaimer in the small print.
But the documents appear so genuinely official that it's easy to see how recipients could be tricked into paying.
For example, Scambusters founders Audri and Jim Lanford had recently registered a new trademark. They then received a half dozen related trademark registration "bills" in the space of just one month.
All the documents referred to their company and the newly registered trademark. Most were for plaques, directory listings or some type of international registration.
The most convincing one of them bore the name of what appeared to be an official organization and a California address.
The text of the document did actually use the name of government departments and said that on receipt of payment, the trademark would be recorded with the US Customs and Border Protection (CBP) bureau, which is genuinely part of the Department of Homeland Security.
A payment of $375 was "now due," the document said. But right next to this, the document declares: "This is not a bill. This is a solicitation. You are under no obligation to pay the amount stated above unless you accept this offer."
Says Audri: "This one almost got me. In fact, it's so well done that I sent it to my attorney to confirm that it was in fact a scam.
"There is no question that this would get paid routinely in many companies."
In fact, there is some potential substance behind this "solicitation" if you were a manufacturer. The CBP does indeed maintain a record of trademarks to prevent importation of goods that infringe it.
But this is not the same as registering a name with the US Patent and Trademark Office, which is the key source of legal protection for company names and inventions inside the US.
Plus, if you do want to register with the CBP, you can do it yourself and the fee is only $190 for 20 years. For more on this, see: IPR - How to apply, update, or record trademark with CBP.
Some other bogus invoices are more obvious trademark scams. They come from Eastern Europe or China and offer inclusion in dubious publications like an international register or catalog of trademarks.
If such publications exist, they provide no legal protection for trademarks, but the perpetrators still ask victims to pay between $1,500 and $2,800.
All you get for your money is a "complimentary" copy of the publication!
Patent scams operate in the same way, but this category also includes invention marketing scams, which we wrote about in a previous Snippets issue, Ticket and Lottery Scammers Score in World Cup 2010.
In all cases the scammers, or gray-area operators such as the CBP monitoring and registration service mentioned above, get their information from public records.
For instance, the US Patent and Trademark Office lists all registered trademarks and their owners, with full names and addresses.
One critical piece of information they publish is the date of registration and, by implication, when it's due for renewal.
This enables the trademark scam artists to send out what appear to be official reminders, warning recipients that their legal protection will lapse if they don't take immediate action and pay them now.
Another related scam tries to trick businesses and individuals into buying domain names at inflated prices.
Again, we reported on domain scams in a couple of earlier Scambusters issues:
Domain Hijacking: A Dirty Business
In the latest version, owners of trademarks receive an email or letter supposedly from a domain registry service, telling them that someone has tried to register websites with the trademarked name.
The so-called domain registry then offers you the opportunity to "protect your interests" by registering domains with them, covering every possible variation of the name.
Alternatively, victims who already own the ".com" domain name are warned that they need to buy all of the others in order to protect their trademark.
While this may have an element of truth, you can easily register alternative domains yourself with established and reputable registrars in the US for a few dollars each a year.
Furthermore, courts in the US have already established that companies whose names are "hijacked" for domain registration can take legal action to reclaim them.
In an entrepreneurial age when millions of enterprising people are setting up businesses and developing inventions and ideas, the whole notion of trademark, patent and domain name protection has become increasingly important.
Trademark scammers know this. And they know how easy it is to trick people into paying registration fees and directory listings by using scare tactics, along with official looking names and documentation.
If you receive any kind of renewal or listing notice, whether as a private individual or a business person, here are the four simple things you should do to avoid a scam:
- Read every word of the document. If it's a "legal" trick, it will say somewhere that it's a solicitation, not a bill.
- Even without this, research the exact name of the organization that sent out the bill.
- Contact (or visit the website of) the organization where you originally registered the name, patent, domain or trademark.
- If you're still unsure, seek professional advice -- speak to your attorney.
And don't pay for a directory listing. It's probably just another trademark scam.
That's it for today -- we hope you enjoy your week!