Fraud and Lack of Bona Fide Intent: Some Thoughts on Remedies
Several TTABlog readers and I have been trying to crystallize our understanding of the remedies available under a claim of fraud (based on non-use) and those available under a claim of lack of bona fide intent. The bottom line is that fraud is the "nuclear" option, while a false statement that falls short of fraud may not be, unless the false statement pertains to all the goods or services in a class.
Fraud: If one proves fraud based upon a false verification of use, even as to one item in a list of items, the Board will hold the challenged application or registration void as to the entire class of goods or services involved. This was recently confirmed by the Board in Meckatzer Löwenbräu Benedikt Weiß KG v. White Gold, LLC, 95 USPQ2d 1185 (TTAB 2010) [precedential]. ("In re Bose did not change the consequences of fraud, when it is proved. A finding of fraud with respect to a particular class of goods or services renders any resulting registration void as to that class.") See also, Herbaceuticals, Inc. v. Xel Herbaceuticals, Inc., 86 USPQ2d 1572 (TTAB 2008) [precedential] [dictum] ("the registration is void in the international class or classes in which fraud based on nonuse has been committed.") [Note that the Xel decision was subsequently vacated (here) because the grant of partial summary judgment on the fraud claim was based on a pre-Bose standard.]
In short, Bose raised the barrier for proving fraud, but it did not affect the severity of the remedy (at least according to the TTAB).
Lack of Bona Fide Intent: Nearly every TTAB decisions on this issue has involved the lack of bona fide intent as to all the goods in an application. The application is deemed void ab initio. See, e.g., The Saul Zaentz Company dba Tolkien Enterprises v. Joseph M. Bumb, Opposition No. 91170589 (May 18, 2010) [not precedential].
However, in contrast to fraud, a successful claim of lack of bona fide intent knocks out only the particular goods or services as to which there was no intent, not the entire class. See The Wet Seal, Inc. v. FD Management, Inc., 82 USPQ2d 1629 (TTAB 2007) [precedential]. ("contrary to opposer's contention, an application will not be deemed void for lack of a bona fide intention to use absent proof of fraud, or proof of a lack of bona fide intention to use the mark on all of the goods identified in the application, not just some of them. Thus, we will decide this issue in terms of whether the items, if any, for which opposer has shown applicant's lack of bona fide intention to use the mark should be deleted from the application.").
Non-use Without a Fraud Claim: In a use-based application or registration, a false declaration will not result in the application being declared void ab initio unless fraud has been claimed and proven. Otherwise, just as in Bose, where the fraud claim ultimately failed, the application or registration may be amended to remove the particular "non-used" goods or services. See Grand Canyon West Ranch, LLC v. Hualapai Tribe, 78 USPQ2d 1696 (TTAB 2006) [precedential]. )"... in the absence of a fraud claim, an applicant who bases its application on Section 1(a) (use in commerce) but who did not use the mark on some or all of the goods or services identified in the application may 'cure' this problem by amending its basis to Section 1(b) (intent to use)."
[You may recall that in the Grand Canyon West case, the Board granted Applicant's motion to deleted the "unused" services. Opposer then obtained leave to add a fraud claim, and the Board sustained the opposition on that ground. Grand Canyon West Ranch, LLC v. Hualapai Tribe, 88 USPQ2d 1501 (TTAB 2008) [precedential].]
Combining Fraud with Lack of Bona Fide Intent: What about alleging that an Applicant's or Registrant's lack of bona fide intent amounts to fraud? Why not? I'm not aware of a decision on point, but I don't know of any to the contrary either. [In the recent White Gold vodka case, cited above, the Petitioner alleged fraud based on lack of bona fide intent (since Registrant had allegedly put the mark into use on only one of thirty items in its identification of goods), but that fraud claim was knocked out on summary judgment due to the inadequacy of the pleading in light of Bose.]
So that's my summary of the remedies situation as I understand it. Comments and corrections welcome.
Text Copyright John L. Welch 2010.