Friday, October 14, 2022

On Second Remand from CAFC, TTAB Denies Fraud Claim in GALPERTI Cancellation Proceeding

In the long-running Galperti case (9 and 1/2 years), after two appeals to the CAFC resulted in remands, the TTAB has dismissed Galperti-USA's petition for cancellation of a registration for the mark GALPERTI for "ironmongery." The CAFC had affirmed the denial of Galpteri-USA's likelihood of confusion claim but twice concluded that the Board had erred in its approach to the evidence on petitioner's fraud claim. On this second remand, the Board dismissed the fraud claim, finding that Galperti-USA failed to prove that Galperti-Italy’s Section 2(f) averment of “substantially exclusive and continuous” use was false, and in any case, Galperti-USA failed to prove that Galperti-Italy had an intention to deceive the USPTO. Galperti, Inc. v. Galperti S.r.l., Cancellation No. 92057016 (September 29, 2022) [not precedential] (Opinion by Judge Angela Lykos).

Respondent Galperti-Italy, in seeking registration based on acquired distinctiveness under Section 2(f), averred that its use of the mark GALPERTI had been "substantially exclusive" for the five preceding years. Galperti-USA alleged that this averment was false and fraudulent. On the first appeal [TTABlogged here], the court held that the Board erred in failing to consider, on the question of falsity, whether use of GALPERTI by others was substantial or inconsequential. On remand, the Board again dismissed the fraud claim, but the CAFC found that the Board had again committed legal error when it ruled that (1) in order for Galperti-USA's own use of the mark to count, it had to show that it had acquired rights in the GALPERTI mark via secondary meaning, and (2) Galperti-USA could not rely on third-party use of GALPERTI because there was no proof of privity between Galperti-USA and the third-party users. [TTABlogged here].

Fraud on the USPTO occurs when an applicant or registrant makes a knowingly false and material representation with an intent to deceive the Office. One who alleges fraud must prove its claim "to the hilt" by clear and convincing evidence.

Respondent's mark GALPERTI was initially refused registration under Section 2(e)(4) as being primarily merely a surname. Galperti-Italy then claimed acquired distinctiveness under Section 2(f), averring that the mark had become "distinctive of the goods listed in the application through the Applicant’s substantially exclusive and continuous use in commerce for at least the five years immediately before the date of this statement." The relevant time period was September 2012 to September 2017.

Falsity: The Board first considered whether Galperti-Italy's statement was false. The evidence showed that at least three entities used GALPERTI during the relevant period: petitioner, respondent, and a third entity. The question, then, was whether the use by petitioner or the third party was "significant" or "inconsequential." However, petitioner's provided no evidence as to the extent of its or the third party's use of GALPERTI in this country, and so the Board was unable to gauge whether those uses were "significant" or "inconsequential" as compared to Respondent Galperti-Italy's sales for that same time period.

In sum, Petitioner Galperti-USA failed to prove the falsity of respondent's statement regarding "substantially exclusive and continuous use."

Intent to Deceive: The Board also found that Galperti-USA failed to prove the third element of fraud: intent to deceive the USPTO. Ms. Dina Galperti, President of the Board of Directors of respondent, signed the declaration supporting the statement in question. Based on her deposition testimony, the Board found that she believed the statement to be true. The Board noted that intent to deceive can be inferred from indirect and circumstantial evidence, but such evidence must be clear and convincing. "Simply put, the record is devoid of evidence that either Respondent’s amendment of its application to rely on Section 2(f) or Ms. Galperti’s supporting declaration were made with the intent to deceive the Office."

Conclusion: And so, the Board denied the petition for cancellation.

Read comments and post your comment here.

TTABlogger comment: It seems there are three ways to prove the intent element of fraud: (1) a smoking gun document (never happens), (2) evasive, contradictory, incredible testimony (Nationstar, Fuji), or (3) reckless disregard for the truth of the statement in question (Chutter).

Text Copyright John L. Welch 2022.


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