Are you at risk of falling for an IP scam?

26th March, 2015

Intellectual property assets are often not well understood by many Australian business owners, and this fact is taken advantage of by some overseas companies.

Unsolicited IP services have a long history and provide a lucrative income for their proponents, with little outlay. Once your money has been handed over, there is little chance of ever getting it back.

Some unsolicited service offerings are unsophisticated and can basically be characterised as scams. Others are more sophisticated, being arguably ‘legitimate’ but in reality do not provide any service of real value.

The following are three common types of unsolicited services to be on the lookout for:

1. Registration and publication services

The most common unsolicited service offerings in the IP space are those by companies providing so-called ‘registration’ or ‘publication’ services.

These companies will trawl through the official records of the Australian Patent and Trade Marks offices, looking for recently filed applications. They will then send a letter to the applicant (which often looks like an invoice), indicating that payment can be made for publication in an official-sounding journal or on a website. The cost of this service is usually around $1,000-$2,000.

In reality, the publication of a trade mark or patent in a non-official journal or on a private website is of little value and provides no legally enforceable intellectual property rights.

Companies involved in unsolicited registration or publication services will often try to justify their actions by including small print disclaimers and conditions. Unfortunately, this is often overlooked, and the overall impression of what appears to be an invoice often means it is paid without close scrutiny.

Most companies engaged in this practice are located overseas, primarily in Eastern Europe. This means taking any effective action against them, or recovering money, is practically impossible.

2. Chinese domain emails

Australian companies often receive email from domain name registrars in China, warning that another company (usually Chinese) has applied to register a Chinese domain name corresponding to the Australian company’s trade mark.

The Chinese domain name registrar will either say they are providing the notice as a courtesy, or because they are legally obligated to. However, this is rarely the case.

Generally speaking, this is a method to drum up business by the Chinese domain name registrar, by having the Australian business register the domain names as a defensive measure.

Australian businesses who do not ‘take the bait’ often find that the Chinese domains in question remain unregistered, proving that the initial warning by the Chinese domain registrar was of doubtful authenticity.

3. Renewal services

Similarly to registration and publication services, many companies trawl through official patent and trade mark databases looking for cases that are due for renewal.

The renewal company will then send an unsolicited letter (again, often appearing like an invoice), offering to renew the trade mark or patent in return for payment of the stated amount (which is usually high). These letters are often sent a long time before the actual due date, and before official reminders are sent by IP Australia, or by existing professional representatives.

If these letters are not read carefully, it can result a business paying much more than they need to for renewal of their patent or trade mark.

Treat offers with caution
Unsolicited offers for IP services should always be treated with caution. If you are unsure whether a letter or email offers legitimate services or something of value, call a reputable attorney firm. Most firms are happy to provide some brief, free advice and help you to identify questionable offers. 

For more information, the IP Australia website has plenty of information, ranging from the basic IP related questions, IP atent searches, through to detailed IP case studies and more. And if you’ve had experiences with any IP related scams, let us know in the comments below. More we can learn from others, the better equipped we can all be.