The Company You Keep: A Look at How The USPTO Took Down The Trademark Company's Matthew Swyers
George: I got greedy. Flew too close to the
sun on wings of pastrami.
Jerry: Yeah, that’s what you did . . .
– Seinfeld, Episode #904 “The Blood”
Matthew Swyers is done—at least for five years, maybe forever. It didn’t matter that Swyers was a former Trademark Examining Attorney at the U.S. Patent and Trademark Office (“USPTO”) from December 2000 through September 2002 (or maybe that made it matter more). The USPTO got their man, even if he was formerly one of their own. I don’t take any pleasure in the misfortunes of others (although I know a lot of others are taking satisfaction in his comeuppance). That’s not why I’m writing this blog post. I’m writing it because I think it’s fascinating and I wanted to learn more about what happened and why. Like most attorneys practicing trademark law before the USPTO, I’m not very familiar with the Office of Enrollment and Discipline (“OED”) or exclusions on consent—why would I be? So a look into the downfall of Swyers was educational, even if I was left with a few unanswered questions.
Started From The Bottom, Now We’re Here
In the fall of 2003, Matthew Sywers formed a law firm called The Trademark Company, PLLC. At first, Swyers’ practice focused on oppositions and cancellations before the Trademark Trial and Appeal Board (“TTAB”). And during that initial time period spanning approximately 2003 to 2008, Swyers was personally handling all of the trademark prosecution at The Trademark Company. But then things changed when he started hiring non-attorneys as employees in 2008. Just take a look at the numbers:
That’s the kind of uptick that’s bound to catch someone’s eye. Like maybe the USPTO’s OED …
OED Comes on the Scene to the Theme From The Good, the Bad, and the Ugly
Yes, THIS is playing in the background when the OED makes its first appearance.
My biggest question is what led the OED to investigate Swyers? According to Swyers, none of The Trademark Company’s clients lodged a complaint with the USPTO. Rather, he believes that the USPTO initiated its investigation solely because of the high volume of trademark filings. If true, that would certainly be cause for concern. But if that in and of itself was sufficient to trigger an investigation, I know a certain someone (He-Who-Must-Not-Be-Named) who would probably be a little higher on the OED’s hit list. Interestingly, the OED never specified exactly how it came to investigate Swyers, saying only that the “disciplinary process commences when the Director of USPTO’s Office of Enrollment and Discipline (“OED”) receives information suggesting professional misconduct” and that such “allegations of misconduct can come to the attention of the OED Director . . . in any number of ways.” So we just don’t know who or what got the ball rolling.
In August of 2014, the OED began its disciplinary investigation of Swyers and The Trademark Company. As part of its investigation process, the OED can “request information and evidence regarding possible grounds for discipline of a practitioner” from pretty much anyone pursuant to 37 C.F.R. § 11.22(f):
(f) Request for information and evidence by OED Director.
(1) In the course of the investigation, the OED Director may request information and evidence regarding possible grounds for discipline of a practitioner from:
(i) The grievant,
(ii) The practitioner, or
(iii) Any person who may reasonably be expected to provide information and evidence needed in connection with the grievance or investigation.
(2) The OED Director may request information and evidence regarding possible grounds for discipline of a practitioner from a non-grieving client either after obtaining the consent of the practitioner or upon a finding by a Contact Member of the Committee on Discipline, appointed in accordance with § 11.23(d), that good cause exists to believe that the possible ground for discipline alleged has occurred with respect to non-grieving clients. Neither a request for, nor disclosure of, such information shall constitute a violation of any USPTO Rules of Professional Conduct.
These requests for information are known as RFIs. And as you’ll see, they can be impose quite a burden.
The First RFI. The first RFI was issued on August 29, 2014. In case you haven’t seen an OED’s RFI before, here’s a copy: The First RFI Sent to Swyers. The first RFI contained 8 RFIs relating to three trademark applications and directed to issues with the specimens submitted. Out of curiosity, I pulled the first trademark application for the SHE’S A 10! WEAR trademark and immediately saw the issue.
Looks like The Trademark Company had filed for the mark SHE’S A 10! WEAR and the client was using the mark SHE’S A 10! No problemo … let’s just digitally add the word WEAR to the tag. Who cares that it is just totally obvious? Oh yeah, the OED. So we get an idea of what was going on … The Trademark Company’s employees were submitting fraudulent specimens. According to public documents, Swyers claims to have responded to this first RFI in October 2014, but I wasn’t able to locate a copy of the response (it may have been included in the various documents that were filed under seal).
The Second RFI and RFIs to Clients. On December 19, 2014, the OED issued a Second RFI. This RFI identified about 500 trademark applications and focused on whether Swyers had actually personally electronically signed each of the applications bearing his name. The letter made it clear that it is a violation of the rules to have another person electronically sign your name, citing 37 C.F.R. § 2.193(c) and TMEP § 611.01(c).
At about the same time in December 2014, Swyers alleges that the OED began sending letters (also RFIs) to his clients without his knowledge requesting “assistance in connection with a review of [their] trademark application” and asking for a written response regarding whether the clients had actually provided marks/specimens to The Trademark Company. Swyers also alleged that the OED did not disclose that it was investigating him or that the clients had rights, including the ability to refuse to disclose attorney-client privileged communications.
The Third RFI. On March 30, 2015, the OED issued a Third RFI. The third RFI was a shorter two page letter, asking Swyers to confirm, or otherwise explain, that The Trademark Company’s records do not indicate who personally signed each trademark application and that Swyers does not remember who electronically signed his name to each application. It also asked for the full names, addresses, and telephone numbers for all former and current employees of The Trademark Company. On April 15, 2015, the OED followed up with a letter regarding Swyers’ failure to fully respond to the Third RFI and provide the full names and contact information for all former and current employees of The Trademark Company.
The Fourth RFI. On May 18, 2015, the OED issued a Fourth RFI. It is 36 pages long asks a lot of questions about the following topics: (1) Swyers knowingly allowing others to sign his name on trademark application and declaration submissions, (2) submitting phony specimens, (4) aiding the unauthorized practice of law and failing to properly supervise non-lawyers, (5) failing to keep client property safe (i.e., not properly using a trust account) and false or misleading statements made to clients, (6) sharing fees with non-lawyers, (7) improperly limiting liability for malpractice, (8) false § 2(f) certifications submitted to the USPTO, (7) interfering with the OED’s investigation. Take a look – it’s brutal.
The Fifth RFI. On June 29, 2015, the OED issued a Fifth RFI. This RFI asked for additional invoices sent by The Trademark Company to clients in connection with particular marks and the actual specimens provided by clients to The Trademark Company.
The most interesting violation to me was Swyers’ failure to personally sign (i.e., manually enter) his electronic signature on the various trademark applications and other submissions. I think there are a lot of lawyers and firms violating this rule. For sure, lawyers at some law firms have their paralegals (or secretaries) sometimes sign their name electronically on trademark applications and other submissions – with those lawyers’ specific consent after some level of review (something lacking in the case of The Trademark Company). But that is a rule violation and a practice that firms should start correcting immediately. The other violations are clearly egregious and, therefore, less interesting even though they may be more shocking in how brazen The Trademark Company went about committing those violations.
Sue, Swyers, Sue … Swyers Runs to the Eastern District of Virginia
As you saw, things were getting way out of control with those RFIs and the very short response times given to respond to them. So on January 6, 2016, Swyers filed a lawsuit in the Eastern District of Virginia. His complaint alleged violation of due process in violation of the Fifth Amendment and unreasonable search in violation of the Fourth Amendment.
The USPTO never answered the complaint, instead opting to file a motion to dismiss on March 26, 2016. In short, the USPTO argued that the court lacked jurisdiction to hear Swyers’ case until after the conclusion of USPTO’s disciplinary administrative proceedings pursuant to 35 U.S.C. § 32. On May 27, 2016, the Eastern District of Virginia agreed and granted the USPTO’s motion to dismiss. A copy of its order can be viewed here.
Swyers’ Appeal to the Federal Circuit
It looked like Swyers was not going to go quietly into the night. He filed a notice of appeal with the Fourth Circuit, which transferred the appeal to the Federal Circuit. The appeal has been fully briefed (here’s Swyers’ opening appellate brief if you’re interested). As of the date of this blog post, the appeal is still pending and oral argument has not yet been scheduled by the Federal Circuit. But then he waived the white flag …
Disciplinary Complaint & Surrender
On March 11, 2016—just before filing its motion to dismiss with the Eastern District of Virginia, the OED filed its complaint against Swyers. The counts in the complaint generally mirror the violations explored in the RFIs: assisting others in the unauthorized practice of law, failing to review trademark applications and submissions before filing, misrepresentations to clients, failing to personally sign his own electronic signature on trademark applications, declarations, and other trademark filings, submitting fraudulent, digitally altered specimens, failing to deposit client funds in a trust account, and sharing fees with non-lawyers, tampering with witnesses and failing to respond to RFIs.
On December 20, 2016, Swyers executed an Affidavit for Consent Exclusion pursuant to 37 C.F.R. § 11.27. Based on Swyers’ consent to exclusion, the USPTO issued its final order in its disciplinary case against Swyers on January 26, 2017. The order excludes Swyers from practice before the USPTO in trademark and non-patent matters. And according to 37 C.F.R. § 11.60(b), Swyers is going to have to wait at least five years before applying for reinstatement. But according to the final order, by submitting a consent to exclusion, the USPTO will make certain presumptions if Swyers asks for reinstatement, including presuming that (i) the allegations against him in the disciplinary complaint are true and (ii) he could not have successfully defended himself against such allegations.
Interestingly, even though Swyers executed and submitted his Affidavit for Consent Exclusion and the USPTO issued its final order, Swyers has not yet dismissed his pending appeal at the Federal Circuit. But a dismissal may be around the corner.
Too Close to the Sun on Wings of Pastrami
Trademark mills beware! Learn from the mistakes of Matthew Swyers and The Trademark Company. You’re just an OED investigation away from ruin.
We don’t know Swyers’ profit margins, but we know he ramped up The Trademark Company to the point it was doing brisk business. According to the OED’s complaint, The Trademark Company conservatively collected at least $3.5 million for trademark applications alone. Of course, that number is much too low when discussing The Trademark Company’s overall business. It does not take into account fees charged for office action responses; other trademark filings such as extensions, statements of use, post-registration filings; trademark searches; trademark enforcement work; and TTAB oppositions and cancellations (as well as non-trademark services offered by The Trademark Company like copyright registration services). Despite the apparent economic success of The Trademark Company, it appears that greed for higher volume and profits propelled The Trademark Company to employ unprofessional and unethical systems in order to keep up with that volume of trademark prosecution and maintain the highest profit margin it could.
OK – so what happens now? Today, if you go to The Trademark Company’s website, you’ll see they’ve removed all trademark prosecution services, rendering it more like The Non-Trademark Company (just compare it to past versions of the website on archive.org). But what is Swyers going to do with the thousands of existing trademark clients of The Trademark Company (he’s still listed as the attorney of record)? And with the possibility of being barred by the State of Virginia in addition to being banned from practice before the USPTO, what is Swyers ultimately going to do with The Trademark Company itself?