Precedential No. 36: TTAB Refuses to Find Fraudulent Intent Where Applicant Relied on Advice of Counsel
If you needed confirmation of how hard it will be to prove fraud post-Bose, then here's a case for you. The Board dismissed Brady Bunte's petition for cancellation in this consolidated proceeding, finding that he had failed to prove fraud "to the hilt." Although MCI knowingly included in its application goods for which its mark CABO PRIMO & Design had never been used, it did so after obtaining advice of counsel, and therefore the Board refused to find the requisite deceptive intent. M.C.I. Foods, Inc. v. Brady Bunte, 96 USPQ2d 1544 (TTAB 2010) [precedential].
Fraud: The Board found that MCI "made a false representation when it filed its application to register the CABO PRIMO and design mark and claimed use on products other than burritos," and that it did so "to obtain as broad a scope of protection as possible." However, it had sought the advice of counsel and discussed the list of goods it wanted to include in the application.
Because MCI filed its application to register the CABO PRIMO and design mark with the advice of counsel, the overly expansive description of goods, while a false statement, falls short of constituting a fraudulent statement which carries with it an actual or implied intent to deceive the USPTO.
The Board pointed out that "there is no evidence or testimony indicating that MCI was advised that it could not or should not apply for Mexican food products not identified by its CABO PRIMO and design mark."
The Board refused to infer intent to deceive the USPTO without some factual basis.
[I]t was incumbent upon Bunte to establish such a factual basis by, for example, eliciting further testimony as to the actual advice MCI received when it “discussed with counsel” the list of goods it intended to include in the application and whether or to what extent MCI relied on such advice. *** Bunte failed to show, by direct evidence, that MCI intended to deceive the USPTO or, by indirect evidence, that the Board could draw no reasonable conclusion other than that MCI intended to deceive the USPTO.
Although it denied the fraud claim, the Board ordered that the CABO PRIMO registration be restricted to burritos.
Likelihood of confusion: The Board then turned to MCI's petition to cancel Bunte's registration for the mark CABO CHIPS for corn chips [CHIPS disclaimed]. MCI alleged a likelihood of confusion with MCI's registered marks CABO PRIMO and design, LOS CABOS and design, and CABO CLASSICS for various Mexican food products.
The Board found the word CABO to be the dominant portion of three of the four involved marks, and as to the fourth, LOS CABOS, the word CABOS is highlighted by the word LOS. It concluded that the CABO CHIPS mark "is similar to all three of MCI’s marks in terms of appearance, sound, meaning and commercial impression."
As to the goods, the Board noted that MCI’s Mexican foods and Bunte’s corn chips are complementary products. "When such products are sold under similar marks, consumers are likely to mistakenly believe that they [the products not the consumers - ed.] emanate from the same source."
Because the involve registrations are unrestricted as to channels of trade, the Board concluded that goods move in the same channels and are sold to the same classes of consumers. As to the care with which the goods are purchased, three of the involved marks are for ordinary consumer products that may be purchased on impulse and without much care or deliberation. As to the fourth, the goods of the LOS CABOS registration are sold in bulk to distributors for sale to institutional purchasers. However, evidence was not developed as to the degree of care exercised by these purchasers, and so this factor was neutral as to the LOS CABOS mark.
Balancing the du Pont factors, the Board found confusion likely and it granted the petition for cancellation of the CABO CHIPS registration.
TTABlog comment: My first reaction is that this "advice of counsel" defense is going to close the book on most fraud claims - at least those not involving pro se applicants. As to the latter, they will just claim innocence, inadvertence, and/or ignorance of the law. So it looks like the "Golden Age of Fraud" at the TTAB has now passed.
Suppose the attorney signed the application in the first place? Seems as though, to prove fraud, one would have to find out what the attorney was told. Suppose the attorney never inquired and took the Applicant's list of goods without question? Suppose the attorney did inquire and was told that the mark was in use on all the goods? The latter case seems like fraud to me. The former? Not so clear. But highly fact dependent.
Text Copyright John L. Welch 2010.