Wednesday, September 23, 2009

TTAB Requires Amendment of Fraud Counterclaim in Light of Bose

[Re-posting: I'm traveling to New Orleans.] Hat tip to DW, who pointed me to a recently-issued order in Societe Cooperative Vigneronne Des Grandes Caves Richon-Lezion and Zicron-Jacob Ltd. v. Albrecht-Piazza, LLC, Opposition No. 91190040, in which the Board required the applicant-counterclaimant to amend its fraud-based petition for cancellation in light of the CAFC's decision in In re Bose Corporation, Appeal No. 2008-1448 (Fed. Cir., Aug. 31, 2009). The Board would not accept a "knew of should have known" allegation, and pointed out that "pleadings of fraud made 'on information and belief' where there is no separate indication that the pleader has actual knowledge of the facts supporting a claim of fraud also are insufficient."


On review of the pleadings the Board notes that applicant’s counterclaim to cancel opposer’s pleaded Registration No. 1362300 does not state a legally sufficient claim of fraud. The counterclaim alleges that opposer filed a registration renewal declaration asserting continued use with all the existing goods but, based on information and belief, at the time the declaration was filed, applicant was no longer selling some of the goods listed in the registration.

Fraud in procuring a trademark registration or renewal occurs when an applicant knowingly makes false, material representations of fact in connection with his application. Torres v. Cantine Torresella S.r.l., 808 F.2d 46, 48 (Fed. Cir. 1986). There is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive. Smith Int'l, Inc. v. Olin Corp., 209 USPQ 1033, 1044 (TTAB 1981). The standard for finding intent to deceive requires more than proof that the trademark applicant should have known of the falsity of its material representations of fact. See In re Bose Corp., __ F.3d __, __ USPQ2d __ (Fed. Cir., August 31, 2009).

Fed. R. Civ. P. 9(b) requires that the pleadings contain explicit rather than implied expression of the circumstances constituting fraud. King Auto., Inc. v. Speedy Muffler King, Inc., 667 F.2d 1008, 212 USPQ 801, 803 (CCPA 1981). The Board will not approve pleadings of fraud which rest solely on allegations that the trademark applicant made material representations of fact in its declaration which it "knew or should have known" to be false or misleading. In re Bose Corp., __ F.3d __, __ USPQ2d __ (Fed. Cir., August 31, 2009). Pleadings of fraud made "on information and belief" where there is no separate indication that the pleader has actual knowledge of the facts supporting a claim of fraud also are insufficient. Id.

Applicant is allowed until thirty days from the mailing date of this order to file an amended counterclaim with a legally sufficient pleading of fraud, failing which the counterclaim will be dismissed and a new schedule will issue.

Text Copyright John L. Welch 2009.


At 11:15 AM, Anonymous said...

With all due respect to those who suggested that the Bose decision will not have any impact on TTAB practice regarding fraud, this Order and the following language should disabuse anyone of the notion that fraud relating to use is a dead issue in the TTAB:

Pleadings of fraud made “on
information and belief” where there is no separate
indication that the pleader has actual knowledge of the
facts supporting a claim of fraud also are insufficient

Seems to me you don't have actual knowledge without extensive discovery and you can't recommend taking extensive discovery to a client because the costs are very high and odds of success are nil.
I don't blame the Board given the decision by the CAFC which said that filing false sworn declarations with the PTO are ok unless someone can prove you had an evil state of mind.

At 8:03 PM, Blogger Missionite said...

Well you can hardly blame the CAFC given the previous decisions by the Board which said any slight error or typo in an opposer's application could allow the newcomer to void the entire senior mark through cancellation.
Or on the other hand a newcomer who follows in good faith the instructions of the trademark office online application system and chose what appeared on the surface to be accurate Goods and Services as suggested by the TEAS system, and than lost their mark entirely because one service out of 100 didn't match up precisely with a service they had used, or alternately the dates they had used them, allowing an opposer with the means and resources to destroy their mark without having to actually defend the merits of their case as it pertains to the other 99 items.

The threshold for Fraud elsewhere in the justice system was never as low as it was set by the TTAB prior to Bose, and a pushback was sorely needed. I believe there is still plenty of room for prosecution of those who engage in blatant attempts to acquire more rights than they would otherwise be entitled to. The new middleground is those who make simple mistakes, honest errors, or who have minor differences of opinion are now not at risk of losing everything they have worked for simply because an attorney found a "gotcha!"

At 9:01 PM, Anonymous said...

Regrettably, I can indeed blame the CAFC for not bothering to read the Trademark Law Revision Act of 1988 and the definition of "use" required in the Act.
TLRA was intended to eliminate obaining or keeping registrations that were not in use on all goods. Period. Newcomers are supposed to read the law before they start filing sworn declarations.
If an owner or lawyer can submit a sworn declaration to the PTO that is false with no consequences, there is no room for prosecution of those who file such documents, and only a fool - or lawyer who wanted to lose their client - would recommend wasting the client's money and their time pursuing a fraud claim relating to "use" in the TTAB under the current law.

At 9:11 AM, Anonymous Paul Reidl said...

The refusal to accept "on information and belief" pleadings is troubling for the reasons stated by Joe. Let's suppose that a party does a pre-filing use investigation. The investigation turns up no use on the goods, ever. There is no evidence of use on the corporate web site. The declaration was signed by the CEO. Can you plead fraud, or must you also have evidence of the state of mind of the CEO? If the latter the fraud doctrine is dead, right?


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