Latvian Citizen Fined US$4.5 Million and Sentenced to More Than 4 Years of Imprisonment for Fraudulent Trade Mark Renewal Scheme
Misleading renewal notices to trademark owners continue to cause confusion and, in some cases, unnecessary fees paid to fraudulent schemers that do not result in renewal of a trademark registration. Recently, a Latvian citizen was sentenced to more than four years in U.S. prison and fined over US$4.5 million in restitution, after he pleaded guilty to a three-year scheme that defrauded thousands of U.S. trademark owners of over US$1.2 million.
The scheme involved sending renewal notices which appeared to come from an official body and misrepresented the trademark registration’s expiration date, accompanied by an invoice for renewal fees at inflated prices. Many victims paid the invoices, thinking that their registrations would be renewed by the relevant intellectual property office, but the perpetrator accepted payment without undertaking the renewal. In the case of U.S. registrations, the accused could not renew the registrations as the renewal period was not yet open and he was not a licensed attorney in the United States.
Similar scam invoices have been an ever present threat across the world for many years and we have seen identical invoices to those described in this prosecution. Whilst it is encouraging that authorities have successfully prosecuted a major perpetrator of trademark renewal fraud, this case demonstrates that many IP owners (including sophisticated companies) continue to fall victim to these scams.
In June 2021, the Australian Competition and Consumer Commission released its regular “Targeting Scams” report. This investigation found that fraudulent billing scams caused the highest losses across all types of scams, costing Australian businesses A$128 million in 2020. These schemes included payment redirection scams (through business email compromises and phishing) as well as fake invoices for directory listings, advertising, domain name renewals or office supplies similar to those described in this article. For Australian readers, now is a particularly important time to be vigilant, as unsolicited invoices are often sent to trade mark owners at the end of the 30 June financial year.
This underscores the importance of ensuring that owners of registered intellectual property rights (including patents and designs) train their staff to recognize false billing scams including fraudulent IP renewal invoices.
Official correspondence will come from @uspto.gov or similar sender for other IP offices.
In Australia and New Zealand, official correspondence is rarely sent by email and is instead accessed electronically via the electronic services portals on the IP Australia and IPONZ websites.