An initiative by the Chinese government to encourage its citizens to obtain United States trademark registrations and other intellectual property led to a substantial increase in filings in the United States Patent and Trademark Office. The initiative may have started prior to 2012, but it appears to have resulted in a flood of fraudulent trademark applications from individuals and other entities that were domiciled outside of the U.S. starting around 2016.

The USPTO took at least two actions in response to the initiative and the resulting flood of fraudulent applications. Specifically, the USPTO started to require all foreign domiciled trademark applicants to hire U.S.-based attorneys to prosecute trademark applications on their behalf.  The USPTO also started to audit trademark registrations to determine whether the registrants were actually using the associated marks in commerce.

The Chinese government is paying its citizens a subsidy of roughly $800.00 per registration as part of this initiative. Since the median monthly income for a Chinese citizen is approximately $1,000.00, the subsidy, potentially, represents a lucrative opportunity to those citizens. Accordingly, enterprising Chinese citizens have changed tactics.

Now, Chinese citizens are looking to acquire dormant trademark registrations. These are existing trademark registrations for marks that are currently active and that are not being used by their owner. The registrations are not fraudulent, per se.

Also, these registrations can be maintained, provided that the marks are used in commerce in a legitimate manner.