In an August 31, 2009, opinion, the United States Court of Appeals for the Federal Circuit (CAFC) reversed the Trademark Trial and Appeal Board (TTAB or Board) on its fraud standard, adjusting the course for fraud cases at the U.S. Patent and Trademark Office (USPTO).
In the In Re Bose decision, Opposition No. 91/157,315, the TTAB found fraud during an opposition proceeding brought by Bose against Hexawave. Bose was attempting to protect its registered mark, WAVE, against an application filed by Hexawave. In the proceedings, Hexawave petitioned to cancel Bose's registration for WAVE based on fraud. Litigation on the fraud claim revealed that the General Counsel for Bose had signed a renewal application for the mark WAVE for various goods, including audio tape recorders and players. Although Bose stopped making and selling the recorders and players about four years before the renewal application was signed, the General Counsel believed that Bose's repair of the WAVE recorders and players and subsequent return of the repaired products to its customers satisfied the "in commerce" use requirement of the renewal application. The Board found that the repairs and shipments did not constitute use in commerce under the Lanham Act, that the General Counsel's belief otherwise was unreasonable, and that the use statement in the renewal application was "material." These findings led the Board to conclude that Bose had committed a fraud on the USPTO in renewing the WAVE trademark registration. Bose appealed.
In its opinion, the CAFC focused on the development of the fraud standard. It reviewed relevant case law and found the Board's addition of the "should have known" element of the fraud analysis in the Board's 2003 Medinol decision unsupported by prior case law or the trademark statute. The CAFC clarified that a negligence standard is not enough for a finding of fraud, citing cases. The Court held that "… a trademark [registration] is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO." Accordingly, the CAFC reversed the Board's decision, finding no fraud on the part of the registrant, Bose.
This holding clarifies the fraud standard for TTAB cases, keeping the meaning of "fraud" more consistent, whether it is being analyzed by a federal court or the TTAB. For applicants and registrants of trademarks at the USPTO, vigilance still is recommended when signing documents before the USPTO. However, applicants and registrants can rest a bit more comfortably after this case, as they will be held only to what they actually knew at the time of signing, not what they "should have known."