TTAB Grants Summary Judgment Re Bogus Fraud Counterclaim

The Board granted Opposer Kastle's motion for summary judgment, dismissing Applicant Lee's counterclaim alleging fraud in the procurement of one of Kastle's pleaded registrations. Applicant claimed that opposer made arguments in these proceedings that are contradictory to arguments opposer made to the USPTO in obtaining the pleaded registration, and therefore perpetrated fraud on the Board and on the USPTO. Kastle Systems International LLC v. Lee Strategy Group LLC, Oppositions Nos. 91227930 and 91236247 (December 21, 2017) [not precedential].

The Board observed that applicant's motion was more in the nature of a motion to dismiss for failure to state a claim on which relief can be granted (i.e., FRCP 12(b)(6)). However, because the motion was filed after opposer's answer, and because there was no need to consider matters outside the pleadings, the Board construed the motion as one seeking judgment on the pleadings.

As noted, the ground for Applicant’s counterclaim of fraud consisted of statements made by Opposer Kastle during its successful ex parte appeal of a refusal to register on of its pleaded marks. [The statements concerned purchaser sophistication and the strength of the term CASTLE or KASTLE]. Applicant Lee alleged that those statements "were contradictory to claims currently being made by Opposer in support of this opposition proceeding."

The found applicant's fraud claim to be procedurally flawed and substantively meritless: "Applicant has failed to allege any facts that would, if proven, demonstrate the materiality of the allegedly false representations, Opposer’s knowledge of the falsity of its representations and Opposer’s intent to deceive the USPTO."

The Board pointed out that the Federal Rules of Civil Procedure explicitly allow for the pleading of inconsistent claims or defenses in a proceeding (see Fed. R. Civ. P. 8(d)(3) (“party may state as many separate claims or defenses as it has, regardless of consistency”)), and the Board has consistently recognized a party’s right to plead in the alternative.

Moreover, the Board observed, Applicant Lee’s counterclaim "is fundamentally flawed because it necessarily assumes that Opposer’s legal arguments in the ex parte proceeding were false, material and relied upon by the Board in rendering its decision in favor of Opposer; in other words, the Board would not have rendered its decision favoring Opposer but for the false arguments made by Opposer in support of registration."

The Board concluded that Lee "misapprehends the nature of legal advocacy and improperly accords Opposer’s legal argument the weight of evidence."

In short, "a claim of fraud based simply on a perceived inconsistency in legal argument before the Board is legally insufficient to plead a claim of fraud in the procurement."

And so the Board granted Opposer Kastle's motion for summary judgment as to the fraud claim.

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TTABlog comment: Not even close.

Text Copyright John L. Welch 2018.