TTAB Grants Apple's Motion to Dismiss Seven Fraud Claims and Two Others

The Board granted Apple Inc.'s motion to dismiss all nine counts of this petition for cancellation of the mark APPLE for various educational and training services (in class 41). Petitioner Charles Bertini, appearing pro se, alleged seven counts of fraud, abandonment, and likelihood of confusion with his asserted common law mark APPLE JAZZ for entertainment services. However, the Board granted leave to petitioner to re-plead the abandonment claim and several of the fraud claims should petitioner be able to allege sufficient facts to support them. Charles Bertini v. Apple Inc., Cancellation No. 92068213 (October 9, 2018) [not precedential].

Likelihood of confusion: Because Apple's registration was more than five-years old [i.e., a "mature" registration, as I like to say - ed.] at the time the petition for cancellation was filed, Petitioner Bertini's Section 2(d) claim was time-barred by Section 14 of the Trademark Act.

Bertini argued that because Apple pleaded ownership of the subject registration in an affirmative defense (on the issue of priority) in another opposition proceeding brought by Bertini, the 5-year statute of limitations was tolled. Not so, said the Board. While tolling may be invoked when a registration is pleaded in an affirmative claim against a party (See TBMP § 307.02(c)(1) and cases cited therein), it is not true when the registration is merely included in an affirmative defense.

Fraud:  Bertini's first fraud claim was based on the now-discarded "knew or should have known standard," asserting that Apple's declaration that it believed itself to be owner of the applied-for mark was false and fraudulent. However, there was no evidence that others had clearly established legal rights in marks superior to Apple's rights and no evidence that Apple knew so and believed that consumers would be confused by the respective uses of the marks. See Daniel J. Quirk, Inc. v. Village Car Co., 120 USPQ2d 1146, 1149 (TTAB 2016) (“Fraud will not lie against an applicant who holds an honest, good faith belief in its right to register a mark and signs an application with the statutorily prescribed ownership statement which is phrased in terms of subjective belief.”). The Board cited Professor McCarthy's observation that:

[A]n allegation of fraud based in the application verification is a serious charge which is not easily proven ... Applicants and registrants should not be subjected to harassment by loosely framed and ill-considered charges of fraud. It is apparent that the courts and the Trademark Board have little patience with ill-founded fraud charges. 6 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 31:77 (5th ed. 2018).

The next three fraud claims were based on Apple's alleged failure to use the mark APPLE on or before the filing of its statement of use, but the Board pointed out that since Apple had also applied for an insurance extension of time, Apple had until the extended date to prove use. Furthermore, Bertini's allegations that the alleged false statements were made with the knowledge and intent to obtain a registration were conclusory and not supported by sufficient facts.

The fifth and sixth fraud claims asserted that Apple's specimens submitted with its statement of use and with its Section 8 & 15 declaration did not show use of the mark functioning as a service mark for the services, and were fraudulently submitted. The Board pointed out that this does not constitute an available claim: "It is well-settled that the adequacy of specimens submitted during the prosecution of an application is solely a matter of ex parte examination and, therefore, does not constitute grounds for opposing the registration of a mark."

The seventh fraud count was based on an allegedly false statement in Apple's Section 8 & 15 declaration that: "[T]here is no proceeding involving said rights pending and not finally disposed of either in the United States Patent and Trademark Office or in a court." Bertini again pointed to the other proceeding, but the Board point out that Apple's rights in the registered mark were not challenged in that proceeding; the registration was raised only as part of Apple's affirmative defense. [In any case, how is that statement, which relates only to Section 15 incontestability, relevant to the Section 8 requirement of continued use? In other words, how is a false statement in a Section 15 declaration material to the validity of the registration? - ed.].

Abandonment: Bertini failed to plead specific facts regarding Apple's alleged abandonment, but alleged only that the mark has not been used with "at least some services." The Board found that insufficient to satisfy the requirements of notice pleading.

Order: The Board allowed Petitioner until October 31, 2018 to file an amended petition to cancel with a legally sufficient claim of abandonment, and also to file an amended fraud claim based on the filing of the statement of use and Respondent’s failure to use the mark in connection with particular services "if Petitioner is able to allege sufficient facts to support a conclusion that Respondent intended to deceive the USPTO."

The first, fifth, sixth and seventh fraud counts were dismissed with prejudice as being either implausible or futile based on the alleged facts and relevant law. The Board advised Bertini to "review Rule 11 of the Federal Rules of Civil Procedure and ensure that he has a sound factual basis for alleging any grounds to refuse registration other than abandonment."

The likelihood of confusion claim was dismissed with prejudice, since the claim was untimely and any attempted amendment of the petition would be futile.

Read comments and post your comment here.

TTABlog comment: Again I suggest that the Board hold a Markman-type hearing as soon as fraud is pleaded, in order that these bogus claims can be discarded as early as possible in the proceeding.

PS: as a commenter noted, if one asks for Board participation in the discovery/settlement conference, the fraud claim(s) can be reviewed at that time. I've used that approach successfully on several occasions to get rid of fraud claims.

Text Copyright John L. Welch 2018.