Wednesday, February 25, 2009

TTABlog Special Report: Two TTAB Fraud Decisions Now Await CAFC Review

TTAB practitioners should keep their eyes on two TTAB fraud decisions now on appeal at the U.S. Court of Appeals for the Federal Circuit, because one or both may provide some welcome CAFC guidance on this vexing issue. In each case, the American Intellectual Property Law Association (AIPLA) has filed an amicus brief arguing that the TTAB's fraud standards are inconsistent with the elements of common law fraud set out by the CAFC in prior rulings. The AIPLA asserts that the Board has wrongly replaced the "critical element of deceptive intent" with a loose "knew or should have known" standard that fails "to capture only mental states characterized by recklessness or deceptive intent," resulting in essentially a "strict liability regime." And as to the issue of materiality, the Board fails to consider whether the "non-used" goods or services are so closely related to the other goods or services in the challenged application or registration that the erroneous inclusion of the "non-used" items "had any significant impact on the public."

In Bose Corp. v. Hexawave, Inc., 88 USPQ2d 1332 (TTAB 2007) [not precedential], the TTAB’s fraud jurisprudence may have reached its high (or low) point. The Board found that Bose had committed fraud in its 2001 renewal of a registration for the mark WAVE for, inter alia, audio tape recorders and players. [TTABlogged here] [AIPLA amicus brief here].

Bose acknowledged that it stopped manufacturing and selling audio tape recorders and players in 1996-97. Nonetheless, it did not delete those goods from the WAVE registration when filing for renewal. Bose contended that the renewal was proper "because owners of audio tape recorders and players continue to send their previously purchased goods to opposer for repair services and upon completion of the repair services opposer 'transports' them back to the owner." Bose acknowledged that it did not re-label or make any alteration to the products, apart from the technical repair. The Board noted that Bose offered no case support for its theory that "transporting" a product back to its owner after repair constitutes use of a trademark on the product as contemplated by Section 45 of the Trademark Act. The Board acknowledged that a sale of goods is not necessary to establish trademark use; shipment of samples and prototypes may suffice, but the entity causing the shipment must be the owner of the goods at the time of transportation. Here, "the scenario presented by opposer does not constitute use sufficient to maintain a registration for goods."

The question then became "whether it was reasonable for opposer to believe that it did." The Board found that it was not, because Bose "could not point to case law that supports" its interpretation of the statute.

[W]e do not find it reasonable to believe that an application of a mark at some point in the past to goods which have been sold, still serves to constitute use when those goods, now owned by another, are subsequently shipped again in connection with a repair service.

The Board therefore ruled that Bose committed fraud in maintaining its registration.

The AIPLA brief asserts that there were no findings that Bose "acted with an intent to deceive (or so recklessly as to be equivalent to an intent to deceive), that audio tape recorders and players are so different or unrelated to the other goods in Bose's registration that including them in the renewal expanded the scope of the registration in any material way, or that such inclusion injured anyone." Consequently, the AIPLA asserts, fraud was not established.

In Grand Canyon West Ranch, LLC v. Hualapai Tribe, 88 USPQ2d 1501 (TTAB 2008) [precedential], the Board found fraud despite the Tribe’s amendment of its application for the mark GRAND CANYON WEST to delete the "unused" services before Opposer made its fraud claim, and despite the fact that those services had been added to the application in an unverified response to the Examining Attorney’s proposed recitation. [TTABlogged here]. [AIPLA amicus brief here].

In an earlier ruling, the Board had sustained in part the opposition of Grand Canyon West Ranch on the ground of non-use of the subject mark for some of Applicant’s services, and it granted Applicant's motion to deleted those "unused" services. At that point Opposer
had not pleaded fraud, and in fact had affirmatively stated that it was not seeking summary judgment on the ground of fraud. Grand Canyon West Ranch, LLC v. Hualapai Tribe, 78 USPQ2d 1696 (TTAB 2006) [precedential]. Only after the Board’s first decision – i.e., after the motion to amend was granted and the application was amended – did Grand Canyon move to add a fraud claim. Nonetheless, the Board found fraud, pointing out that Applicant had not sought to amend its application until after it was opposed.

The Tribe argued that the offending language was added during prosecution, when Applicant's attorney inadvertently agreed to the identification proposed in an examiner's amendment. It also argued that the "examiner's amendment is unlike the verified statement of goods in an affidavit of continued use ... or a statement of use." The Board was not sympathetic:

The accuracy of the information applicant provided in agreeing to the examiner's amendment was no less critical to the application than the information applicant provided in the application as filed. The integrity of the registration system rests on the accuracy of the information provided in either form. Applicants must ensure that all information they provide is true and accurate whether or not it is verified.

The Board therefore sustained the fraud claim (but noted that its ruling does not affect any common law rights the Hualapai Tribe may have, nor does it prohibit the Tribe from filing a new application to register its mark for the pared-down list of services).

As in the Bose case, The AIPLA brief contends that there were no findings that the Hualapai Tribe "acted with an intent to deceive (or so recklessly as to be equivalent to an intent to deceive), that the types of transportation or services at issue are so different or unrelated to the other services in the Hualapai's application that including them expanded the scope of the application in any material way, or that such inclusion injured anyone." Again, the AIPLA asserts that fraud was not established.

[The Las Vegas Trademark Attorney blog provides the latest twist in the GRAND CANYON WEST tale, in a posting here]

Text Copyright John L. Welch 2008-9.


Post a Comment

<< Home