United States: Federal Court Highlights Important Considerations Concerning Foreign Trademark Owners Designating A Domestic Representative For Service Of Process At The USPTO

A recent decision at the Central District of California shines a bright light on the, perhaps unintended, consequences for ex-US trademark owners that choose to designate a domestic representative for service of process at the United States Patent and Trademark Office ("USPTO").

Under 15 U.S.C. § 1051(e), foreign trademark owners "may designate, by a document filed in the United States Patent and Trademark Office, the name and address of a person resident in the United States on whom may be served notices or process in proceedings affecting the mark."¹ This differs from a power of attorney as a domestic representative does not automatically have authority to act on the trademark owner's behalf. Rather, the purpose of the domestic representative is to bring foreign trademark applicants and registrants under the jurisdiction of the United States.

Notably, designation of a domestic representative under Section 1051(e) is not required, but optional. Accordingly, foreign trademark owners should be careful to weigh the pros and cons before simply designating a representative with the USPTO. One obvious downside is that designation of a domestic representative will make service of process much easier in the event the rights holder is sued.

In this case, Defendant TNSG Health Co., Ltd.'s ("TNSG") prior counsel, Venable LLP ("the Firm"), was permitted to withdraw as counsel from an ongoing district court litigation, with the Court directing TNSG to file a notice of appearance for new counsel within 30-days, at the risk of default judgment.² No such notice of appearance was filed.³

Contemporaneously, the Court granted Plaintiffs' Motion for Leave to file Plaintiffs' First Amended Complaint, naming additional defendants including two individuals and seven entities under a theory that the new Defendants, along with TNSG, operate a single enterprise.⁴

Plaintiffs filed proof of service for six of the new Defendants based on service through the Firm.⁵ Plaintiffs argued that service on the Firm was proper because under 15 U.S.C. § 1051(e), the Firm is the domestic representative authorized to accept service on behalf of the new Defendant, Alps Holdings at the USPTO.⁶ For the remaining Defendants, Plaintiffs argued service was appropriate through the Firm because the Defendants are alter egos of Alps Holding.⁷

The Firm filed an ex parte application for an order striking the proofs of service.⁸ However, the Court rejected the Firm's arguments that service was ineffective on the grounds that the Firm is not counsel of record for these Defendants, and the Firm's "Section 1051(e) designation for Alps Holding is not enough to find proper service."⁹ In reaching the holding, the Court relied on recent Ninth Circuit decisions finding that Section 1051(e) does not only apply to administrative proceedings before the USPTO, but permits such service on foreign defendants in court proceedings affecting the mark.¹⁰

Plaintiffs' First Amended Complaint alleges that Alps Holding submitted false specimens to the USPTO for its trademark registrations "showing counterfeited trademarks belonging to Plaintiffs."¹¹ The Court held that these claims along with Plaintiffs request for injunctive relief against Alps Holding regarding the alleged fraudulent specimens "is enough" to find that this legal proceeding is one "affecting the mark" as required by Section 1051(e).¹²

As for the alter ego theory relating to the remaining Defendants, the Court found that "Plaintiffs have more than plausibly alleged an alter ego theory" and whether or not it will be successful, is beyond the scope of the Court's current decision.¹³

Accordingly, this decision exemplifies the considerations that should be weighed when foreign trademark owners decide whether to designate a domestic representative with the USPTO pursuant to Section 1051(e). As this decision highlights, such a designation will only make service on a foreign trademark owner easier.

Footnotes

1. 15 U.S.C. § 1051(e) (emphasis added).

2. Order Denying Venable LLP's Ex Parte Application For An Order Striking Proofs Of Service, Murray Colin Clarke, et al. v. TNSG Health Co., Ltd., et al., No. 2:21-cv-03463-HDV-RAOx, at 2 (C.D. Cal. Nov. 29, 2023) (hereafter the "Order").

3. Id.

4. Id.

5. Id.

6. Id.

7. Id.

8. The Court questioned whether the Firm had standing to bring such an application but declined to decide on the issue, finding that the Firm could not demonstrate irreparable harm and thus was not entitled to ex parte relief. Order at 1. First, the Firm is not a party to the litigation. Id. Moreover, the Firm's acceptance of service and its designation as a domestic representative confers "neither a right nor an obligation to represent Alps Holdings" or any of the new Defendants. Id. Accordingly, there was no irreparable harm to the Firm absent ex parte relief. Id.

9. Order at 2-3.

10. Id. at 2 (citing San Antonio Winer, Inc. v. Jiaxing Micarose Trade Co., 53 F.4th 1136, 1140 (9th Cir. 2022)).

11. Id. at 3.

12. Id.

13. Id. at *4.

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