Thursday, September 29, 2016

Precedential No. 27: TTAB Rejects Fraud Claim in QUIRK Cancellation Proceeding

The Board dismissed a petition for cancellation of registrations for the marks QUIRK and QUIRK AUTO PARK for "automobile dealership" because petitioner failed to prove its claim of fraud on the USPTO. Petitioner asserted that respondent's underlying applications were executed fraudulently because respondent knew of and failed to disclose petitioner's allegedly prior rights in the marks QUIRK and QUIRK WORKS TO SAVE YOU MONEY for auto dealerships. However, petitioner failed to establish its prior rights, and it also failed to demonstrate that respondent intended to deceive the USPTO. Daniel J. Quirk, Inc. v. Village Car Company, 120 USPQ2d 1146 (TTAB 2016) [precedential].

As we all know, fraud must be proven "to the hilt" with clear and convincing evidence. To prevail on its fraud claim, petitioner was required to prove that:

(1) Petitioner was the user of the same or a confusingly similar mark at the time the oath was signed;
(2) Petitioner had legal rights superior to Respondent’s rights at the time Respondent signed the applications for registration;
(3) Respondent knew that Petitioner’s rights in the mark were superior to Respondent’s and either believed that a likelihood of confusion would result from Respondent’s use of its mark or had no basis for believing otherwise; and that
(4) Respondent in failing to disclose these facts to the USPTO, intended to procure a registration to which it was not entitled.

Fraud will not lie against a party who holds an honest and good faith belief in its right to register a mark, and who verifies the statutorily prescribed ownership statement, which is phrased in terms of subjective belief.

As to the first requirement, the evidence showed that petitioner was using the term QUIRK at the time respondent filed its underlying applications. As to priority, however, petitioner's evidence fell short of proving it was the first user of the QUIRK marks.

The parties proceed via Accelerated Case Resolution (ACR), stipulating that each could rely on the evidence submitted with their earlier, unsuccessful cross-motions for summary judgment. Petitioner relied on its own interrogatory responses, which was allowable because the responses had been submitted with its summary judgment motion. Nonetheless, the Board gave the responses limited weight. Although oral testimony may suffice to establish priority, petitioner's interrogatory responses "are not oral testimony, and are not conclusive on the question of priority." The Board deemed the interrogatory responses ineffective to prove petitioner's priority.

Because petitioner failed to prove superior rights in the mark QUIRK, its fraud claim failed. The Board nonetheless proceeded to consider the issue of fraudulent intent, finding that the record evidence was insufficient.

Respondent acknowledged that, at the time its underlying applications were signed, it was aware that petitioner was using its mark QUIRK in Southeastern Massachusetts. However, respondent stated that it believed that no likelihood of confusion would result from concurrent use of the marks because respondent was located in Maine, 250 miles from petitioner. There was nothing in the record to indicate that this was not an honest belief that respondent had superior rights because petitioner's use was merely intrastate. While that belief may have been mistaken, that does not amount to fraud.

Petitioner contended that "[t]he simple act of causing the .... Applications to be filed ... demonstrates the intention to procure registrations to which [respondent] was not entitled." The Board, however, observed that the mere filing of an application does not provide an inference that the applicant intended to deceive.

Petitioner also contended that deceptive intent may be inferred from respondent's unprompted disclosure to the USPTO of petitioner's use. The Board, however, saw that disclosure as demonstrating the opposite of a bad intent.

Finally, petitioner asserted that intent may be inferred from the fact that, based on his education, intellect, and experience in signing important documents, respondent's president would appreciate "the legal consequences - and pitfalls - of singing oaths while withholding personal knowledge of information to the contrary." The Board was unimpressed, noting that Mr. Quirk demonstrated candor in his communications with the USPTO.

To prove fraud, petitioner was required to provide specific facts supporting an inference of respondent's fraudulent intent. No evidence illuminated respondent's beliefs as to its rights in the QUIRK or QUIRK-formative marks, or its beliefs as to the likelihood of confusion between the involved marks. In short, petitioner failed to show, by direct or indirect evidence, that respondent intended to deceive the USPTO.

And so the Board dismissed the petition for cancellation.

Read comments and post your comment here.

TTABlog comment: The treatment of petitioner's interrogatory responses as being insufficient to prove priority was an interesting quirk in the decision. Perhaps interrogatory responses are downgraded because they are typically prepared by the attorney involved, as opposed to live testimony under oath and subject to cross-examination. But then, why accept affidavits or declarations?

In the third requirement for fraud, listed above, the "no reason for believing otherwise" language is interesting. Does this suggest that fraud may be based on reckless disregard for the truth? On willful blindness?

Text Copyright John L. Welch 2016.


At 2:07 PM, Anonymous Anonymous said...

Can the Petitioner file a concurrent use application to protect the rights he has to the area he was using the mark before the application was filed?

At 10:15 PM, Anonymous Anonymous said...

Does anyone believe that finding a potential conflict in a search report prevents one from signing the application declaration? I think not. The cited mark may have been owned by a company that is now out of business, or has been the subject of an assignment in gross or a naked license (and thus invalid), or for a number of other reasons not give rise to actual knowledge of superior rights. I would argue that to be aware of superior rights giving rise to fraud would require either knowledge of a court case establishing said superior rights against that very applicant, a contract between the cited mark owner and said applicant, or other positive proof of actual knowledge.


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