Tuesday, February 27, 2007

"KRAUSE" Application Void for Non-Use, But Opposer's Fraud Claim Fails

The Board sustained an opposition to registration of the mark KRAUSE for "museum services" on the ground that Applicant Chet Krause had never used the mark for those services. However, it rejected Opposer's fraud claim because Opposer failed to prove the requisite element of intent regarding Mr. Krause's false statements as to use. Krause Publications, Inc. v. Krause, Opposition No. 91160072 (February 15, 2007) [not precedential], affirmed without opinion, Appeal No. 07-1364 (CAFC December 7, 2007).


Chester Krause filed the subject application in 2003, claiming use of the mark KRAUSE for museum services since 1959. Opposer KPI alleged likelihood of confusion in view of its registration for the mark KRAUSE PUBLICATIONS for award competitions in the field of cutlery, as well as its prior use of that mark for publications relating to automobile restoration and collection.

Nonuse: The evidence showed that Mr. Krause is a collector of automobiles, coins, and stamps. He purchased the first vehicle for his collection in 1959 (a Model-T truck) and subsequently added many vehicles. He never advertised his collection and never made it available to the public, but he would show it upon request to those interested. Not until 1998 did Krause erect a sign to identify the location of the collection. He never referred to his collection as a "museum."

With regard to stamps and coins, they were maintained in a vault and shown to the public on request, but were not advertised. In fact, fearing theft, Krause "made extra efforts to project the image that we didn't own large collections of coins or stamps."

The Board adopted the definition of "museum" found in the Merriam-Webster Online Dictionary: "an institution devoted to the procurement, care, study, and display of objects of lasting interest or value." Considering Krause's activities as a whole, the Board concluded that Krause was not offering "museum services" when he filed the subject application. Consequently, the application was deemed void ab initio, and the opposition was sustained on the ground of nonuse.

Fraud: Opposer KPI claimed the Krause committed fraud by falsely stating the he used the mark KRAUSE in interstate commerce for museum services, and in claiming first use dates in 1959. The Board noted that fraud must be proven with "clear and convincing evidence," and that "fraud will not lie if it can be proven that the statement, though false, was made with a reasonable and honest belief that it was true."

As to the first use dates, the Board pointed out that, if a mark was in use at the time an application is filed, "a claim of first use, even if false, is not fraud." Thus, the Board reasoned, Opposer's fraud claim based on the dates of first use is legally insufficient because "fraud cannot lie based on claimed dates of first use." [TTABlog comment: This seems to be a nonsequitur, since Krause's mark was not in use for museum services as of his filing date. Apparently, "use" here means any use at all, not just use for museum services.]

As to Krause's false statements in his application and his 2(f) declaration regarding use of the mark for museum services, the Board looked to Krause's intent: "an intent to deceive must be 'willful.'"

"If it can be shown that the statement was a 'false misrepresentation' occasioned by an 'honest' misunderstanding, inadvertence, negligent omission or the like rather than one made with a willful intent to deceive, fraud will not be found. Fraud, moreover, will not lie if it can be proven that the statement, though false, was made with a reasonable and honest belief that it was true...."

Here, there was "no proof in the record that applicant did not personally believe that he was not [sic!] providing museum services when he filed his application or when he signed his declaration under Section 2.41(b)." "Because opposer [sic!] had a good faith belief that his activities constituted the rendering of museum services, the element of intent that is necessary to prove fraud is missing." [In this regard, the Board cited last year's Maids to Order decision, in which Respondent's president reasonably and in good faith averred that her company's mark was in use in interstate commerce, the Board finding it unnecessary to decide whether the mark had been in use only in intrastate commerce.]

Therefore, the Board dismissed Opposer's fraud claims.

TTABlog comment: Compare the willingness of the Board to look carefully at Chet Krause's intent, with the Board's approach in the recent Hurley decision. There, the Board found fraud because Applicants had not used their mark at all for some of the services recited in their application. In such a case of total nonuse the Board will not look at the innocence or subjective intent of the party. Here, Krause had (arguably) used his mark for his collection, and believed he had the right to label his services with the tag "museum services," just as Ms. Kern in Maids to Order believed that her mark had been used in interstate commerce.

That being said, I do think the Board was rather lenient with regard to Mr. Krause.

Text Copyright John L. Welch 2007.


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