Tuesday, December 08, 2009

TTAB Rejects Another Insufficiently Pleaded Fraud Claim

Applying its post-Bose analysis to a pre-Bose fraud allegation, the Board denied Opposer Gallo's motion to amend its opposition, finding Gallo's proposed fraud claim to be deficiently pleaded under FRCP 9(b). E.&J. Gallo Winery v. Quala S.A., Opposition No. 91186763 (November 7, 2009) [not precedential].

Gallo's fraud claim was based on Applicant Quala's failure to produce any documentation showing that it had a bona fide intent to use its mark FRUTIÑO for various beverages. The proposed amended pleading would have added the following paragraph:

7. Applicant filed the application under Section 44(e) of the Lanham Act. The application contained a sworn Declaration that all statements made therein were true. Among the statements made in the application was the statement that Applicant had a bona fide intent to use the mark on each of the goods recited in the application. This statement was false and material to the application. This constitutes fraud and, accordingly, the application was void ab initio.

The Board pointed out that a fraud claim, "and in particular those made upon 'information and belief,' must be accompanied by a specific statement of facts upon which the belief is based."

The circumstances referred to in Federal Rule 9 "'must be pleaded in detail' - '[t]his means the who, what, when, where, and how' of the alleged fraud." *** That is, the time, place and contents of the false representations, the facts misrepresented, and identification of what has been obtained, shall be stated with specificity. *** Notwithstanding the requirement for specificity in the pleading of the circumstances resulting in the alleged fraud, "[m]alice, intent, knowledge, and other condition of mind of a person may be averred generally."

Here, the Board found, Gallo did not set forth "with sufficient particularity the underlying facts upon which opposer relies or provides the basis for its belief that the allegation of fraud is well-founded. In addition, the proposed fraud claim does not include an allegation of intent to deceive, i.e., that applicant knowingly made inaccurate or misleading statements."

Therefore the Board concluded that Gallo's allegation of fraud was deficient and it motion for leave to amend "futile."

In a footnote, the Board suggested that if Gallo is considering an amended motion for leave to add its fraud claim, it should note that proof of a lack of bona fide intent on the part of Applicant may render the re-pleading of the fraud claim unnecessary. Indeed. if Gallo could not prove its fraud claim without first proving a lack of bona fide intent, the fraud claim would be "superfluous" and the Board could see "no point in opposer pursuing this claim at trial." It would be "a waste of the parties' resources and those of the Board."

TTABlog comment: Applicant is a Colombian company, so the chance of obtaining deposition testimony regarding the "who, what, when, where, and how" of the alleged fraud are not good. Moreover, just how much is needed in the way of facts to satisfy FRCP 9(b)?

In short, it seems that pursuit of the fraud claim is not likely to bear FRUTIÑO.

Text Copyright John L. Welch 2009.


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