Precedential No. 2: TTAB Okays Fraud Pleading But Denies Summary Judgment on Intent Issue

In this second precedential ruling of 2010, the Board provides some needed guidance on how to construct a well-pleaded fraud claim. Although Petitioner DaimlerChrysler's pleading (filed pre-Bose) was not perfect, it was good enough to clear the FRCP 9(b) hurdle. But the Board denied DC's motion for summary judgment because DC failed to establish the absence of a genuine issue of material fact as to Respondent AMC’s intent to deceive. DaimlerChrysler Corporation and Chrysler, LLC v. American Motors Corporation, 94 USPQ2d 1086 (TTAB 2010) [precedential].


The pleading: DC sought to cancel AMC's registration for the mark AMC & Design for "automobile and structural parts thereof" on several grounds, including fraud. DC's amended petition for cancellation (filed on June 5, 2009) alleged the following:

21. On October 31, 2004, Registrant submitted a Statement of Use to the PTO in which Registrant represented to the PTO that it was using the AMC (and design) mark in commerce in connection with automobiles and structural parts thereof. Registrant made this representation to induce the PTO to issue a registration. …

22. On November 18, 2004, Registrant submitted substitute specimens and a Response to Office Action to the PTO in which Registrant represented to the PTO that it was using the AMC (and design) mark in commerce in connection with “automobiles and structural parts thereof.” Registrant made this representation to induce the PTO to issue a registration. …

23. On January 22, 2005, Registrant submitted substitute specimens and a Response to Office Action to the PTO in which Registrant represented to the PTO that it was using the AMC (and design) mark in commerce in connection with “automobiles and structural parts thereof.” Registrant made this representation to induce the PTO to issue a registration. …

24. As of May 26, 2009, years after Registrant represented to the PTO that it has used the AMC (and design) mark in commerce in connection with automobiles, Registrant, in fact, never offered, advertised, or sold any automobiles under the AMC (and design) mark. (See Registrant’s Responses to Petitioner’s First Set of Requests for Admission attached as Exhibit D ¶¶3, 5, 6, 8, 15.)

25. As of May 26, 2009, years after Registrant represented to the PTO that it has used the AMC (and design) mark in commerce in connection with structural parts for automobiles, Registrant, in fact, never offered, advertised, or sold any structural parts for automobiles under the AMC (and design) mark. (See Exhibit D ¶¶ 4, 7, 9, 16, 23.)

26. Registrant has never used its AMC (and design) mark in commerce in connection with automobiles.

27. Registrant has explicitly admitted that it has never used its AMC (and design) mark in commerce in connection with structural parts for automobiles.

28. The representations Registrant made to the PTO on October 31, 2004, November 18, 2004, and January 22, 2005 were each false.

29. Respondent knew that the representations were false.

30. Respondent knowingly made material misrepresentations to the PTO to procure Registration No. 2,949,439.

31. The PTO relied on the representations in issuing Registration No. 2,949,439.

32. The PTO would not have issued Registration No. 2,949,439 but for Registrant’s false representations.

33. Respondent’s actions in the procurement of Registration No. 2,949,439 constitute fraud, thereby invalidating Registration No. 2,949,439. Accordingly, Registration No. 2,949,439 should be cancelled in its entirety.

The Board pointed out that FRCP 9(b) requires that fraud be pleaded with particularity. Intent to deceive must also be pleaded, although it may be averred generally.

The Board found that DC "has sufficiently pleaded a fraud claim, including that respondent had the requisite intent to deceive the USPTO in the procurement of its registration." DC stated specifically the misrepresentations of fact and alleged that they were false and material and were relied upon by the PTO.

Further, we find the assertions in para. No. 30, combining the references “material misrepresentations” “knowingly made” and “to procure” a registration, to constitute an allegation of respondent’s intent. That is, where a pleading asserts that a known misrepresentation, on a material matter, is made to procure a registration, the element of intent, indispensable to a fraud claim, has been sufficiently pled.

The Board, noted, however that "the preferred practice ... is to specifically allege the adverse party's intent to deceive the USPTO, so that there is no question that this indispensable element has been pled."

AMC's specimen of use
The merits: The Board denied DC's summary judgment motion because it failed to show the absence of a genuine issue of material fact regarding AMC's intent. In short, DC offered no direct evidence regarding AMC's intent to deceive the PTO, nor "any indirect or circumstantial evidence which would lead us to the inevitable conclusion (which on summary judgment means the absence of any genuine issue of material fact) that respondent had the intent to deceive the office, or at least had a reckless disregard for the truth."

Finally, the Board noted that AMC apparently may not, in fact, be using the subject mark, but that was beside the point, since the motion for summary judgment was brought only on the fraud claim.

TTABlog comment: Note the Board's suggestion that "reckless disregard for the truth" would suffice for purposes of fraud. The CAFC declined to reach that issue in Bose [See footnote 2 therein].

Also note that the Petitioner set forth the specific dates for each false representation that constituted the alleged fraud. It did not make these allegations "on information and belief." It waited until after discovery was taken in order to make these concrete allegations.

TTABlog query: Who is this AMC Corporation, anyway? It appears to be some guy in Palmdale, California named Ronnie J. Simon.

Text Copyright John L. Welch 2010.