Court Overturns Fraud Standard Applied to Trademark Filings in U.S. Patent & Trademark Office
September 4, 2009
Thomas P. "Tom" Arden- Chicago
The Court of Appeals for the Federal Circuit on August 31, 2009, overturned a strict standard governing statements filed to maintain trademark registrations and in support of trademark applications. In In re Bose Corporation, the court held that a trademark owner renewing a registration who claimed continued use on all goods listed in the registration did not commit fraud on the Patent & Trademark Office (PTO) even though the owner had discontinued producing one of the products covered in the registration. In so ruling, the court held proof that the trademark owner should have known its declaration of continued use was false is not sufficient to show fraud. Rather, a knowing misrepresentation must be shown.
For the past several years, trademark registrations and applications covering multiple items have been vulnerable to claims of fraud if declarations stating a mark was in use were overly broad by including goods and services that actually were not being offered or sold at the time of filing the declaration. The Trademark Trial and Appeal Board (TTAB) in a 2003 decision, Medinol, Ltd. v. Neuro Vasx Inc., held that fraud could be found if an applicant or registrant makes an erroneous statement of use that it “should know” is false. In that case, the Board found the owner of a registration for stents and catheters committed fraud on the PTO when it filed a statement of use declaring the mark was used on all goods listed in the application, although the owner had only used the mark on catheters. The Board in Medinol reasoned that the oath signed when filing a statement of use has “such degree of solemnity” that declarations of use “clearly are – or should be – investigated thoroughly prior to signature and submission to the USPTO.” The Board in Medinol rejected the remedy proposed by the registrant of simply deleting “stents” from its registration and instead imposed the harsh penalty of cancellation of the entire registration. The Medinol decision sent a strong message to trademark owners to ensure that any discontinued items listed in a registration be deleted from maintenance or renewal filings.
The TTAB in Bose considered facts similar to those in Medinol. The filing at issue in Bose was a declaration in a renewal application that the mark was currently in use for a variety of electronic devices listed in a registration. One of the devices, however, was in fact no longer sold. The registrant defended the overbroad declaration on the ground that it continued to repair the discontinued product and believed repair shipments constituted use of the mark in commerce. The Board rejected the use in commerce argument and ruled that the asserted belief of use was not reasonable. Following the strict standard set forth in Medinol, the Board cancelled the entire registration.
“Intent to Deceive” Is Key
In reversing the decision in Bose, the Court of Appeals revisited Medinol and overturned its holding that fraud could be established without showing the registrant actually knew the statement submitted was false. The court clarified that simple negligence or even gross negligence in failing to delete discontinued items from a registration cannot rise to the level of fraud. The court held that “a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO.” The court remedied the situation simply by striking the product no longer sold from the registration under attack.
The Bose decision will have a significant impact on TTAB proceedings by markedly raising the burden of proving fraud on the Patent & Trademark Office. Previously, a party could simply show that its opponent had not sold or offered products included in an application or registration at the time it filed a statement of use or renewal application. The additional “should have known” standard could easily be met, as it is self-evident that a firm should know what it is offering to the public. After Bose, it is not sufficient to show that a declaration of use of a mark was erroneous, which the trademark owner should have known; rather, proof of knowing misrepresentation will be required.
The Bose decision also may have a consequential effect on practitioners and trademark owners who renew registrations. Ensuring that a mark is used on all goods in a registration and deleting goods no longer offered when renewing a registration have been major priorities for practitioners and trademark owners. Now that the Medinol standard no longer applies, those responsible for maintaining trademark registrations may be more inattentive to the details of culling from registrations or applications those items not being sold. This result would be unfortunate. No one should sign an oath without ensuring his or her statement is correct. If nothing else, continued caution would avoid the necessity of defending a fraud claim in the first instance. Thus, although the consequences of negligently retaining items covered by an application or registration are now much less severe, continued diligence in prosecution and renewal practice continues to be sensible.
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