TTAB Says "Hasta La Vista" to GRUPO PEGASSO Fraud Claim

The Board dismissed a petition for cancellation of a registration for the mark GRUPO PEGASSO and Design (shown below) for musical sound recordings (class 9) and live entertainment services (class 41). It concluded that Registrant Vasquez is the owner of the mark, that Petitioner's Section 2(d) claim must fail for lack of priority, that the mark has not been abandoned, and finally that Petitioner's claim of fraud was meritless. IP ownership maven Pamela Chestek discusses the ownership and priority issues here at her Property, intangible blog (where she expresses confusion over the decision). I shall deal only with the fraud issue. In other words, I am abandoning abandonment. O.T.H. Enterprises, Inc. d/b/a Frontera Music v. Federico Estevan Vasquez, Cancellation No. 92050569 (September 28, 2012) [not precedential].

The dispute stems from the 1985 breakup of the Mexican band Grupo Pegasso. Petitioner claimed that Vasquez committed fraud on the PTO by knowingly misrepresenting his dates of first use, and by submitted false, altered specimens of use (album covers).

The Board pointed out that, under In re Bose, proof of fraud must include a showing of four elements:

(1) applicant/registrant made a false representation to the USPTO;
(2) the false representation is material to the registrability of a mark;
(3) applicant/registrant had knowledge of the falsity of the representation; and
(4) applicant/registrant made the representation with intent to deceive the USPTO.  

Falsity: Petitioner did not establish the first element: that Vazquez made false statements. Although the record contained contradictory evidence as to whether the group's first album was released in 1979 or 1980, Petitioner failed to meet its burden to show that the claimed date of 1979 was false. As to the specimens of use, the testimony of the only witness for Petitioner was offset by Registrant's testimony and evidence that the album covers submitted as specimens were not altered.

Materiality: Moreover, even if Vasquez's statement regarding first use were false, such a false statement cannot be fraudulent. The stated date of first use is not material to the PTO's decision to approve a mark for publication.

Intent: Finally Even assuming that the specimens of use were altered, Petitioner wholly failed to prove that Vasquez intended to deceive the USPTO . His son testified that he did not alter the specimens, nor did his father, nor did anyone he was aware of.

And so the Board dismissed the fraud claim.

TTABlog comment: Fraud may be dead in the sense that the Board never finds fraud. But it is alive and well as a pleaded claim in opposition and cancellation proceedings. It is my belief that parties include fraud claims in major part because of their in terrorem effect. Who cares if you can't prove a fraud claim, as long as it helps pressure the other side into a favorable settlement?

I've had some success getting bogus fraud claims knocked out via the discovery/settlement conference. Interlocutory attorneys seemed to be primed to review and prune the pleadings. I think the Board should require that when a fraud claim is made, the discovery/settlement conference must be held with the participation of an interlocutory attorney.

Maybe the Board should consider establishing a separate conference, like the Markman hearing required in patent infringement cases, where the fraud claimant must present his position on fraud and the other party is allowed to argue why the claim should be jettisoned. I suggest calling it a "Rogers" hearing, named after the Chief Judge who has presided over the demise of fraud at the TTAB.

Text Copyright John L. Welch 2012.