On August 31 2009, in a much-anticipated decision, the Court of Appeals for the Federal Circuit in In Re Bose Corporation held that:
"a trademark 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."
Thus, the court reversed the Trademark Trial and Appeal Board's finding of fraud against trademark owner Bose Corporation.
The board found that Bose had committed fraud in its Section 8 renewal of the WAVE mark for a variety of goods, including "audio tape recorders and players". At the time the renewal was signed, Bose continued to repair (and ship back) the previously sold audio tape recorders and players to its customers, and believed that this qualified as use. However, the board held that it did not qualify as use in connection with the goods, and that the misstatement in the renewal was not reasonable. Therefore, the board ordered cancellation of the WAVE registration.
Prior to this decision, the decision in Medinol v Neuro Vasx, Inc(1) set the Trademark Trial and Appeal Board standard for fraud analysis, applying what the Court of Appeals for the Federal Circuit deemed was a simple negligence standard for fraud.
Under Medinol, any material misstatements made to the US Patent and Trademark Office during the trademark prosecution or renewal process, regardless of intent, constituted fraud and rendered the registration subject to cancellation because the party "should have known" such statements to be false or misleading.
The Court of Appeals for the Federal Circuit clarified that the standard for fraud requires a "willful intent to deceive" on the part of the applicant or registrant.
Proof of subjective intent to deceive is an indispensible element in the analysis and must be established by clear and convincing evidence.
This ruling will have a significant impact on the future of fraud claims in the Trademark Trial and Appeal Board. Since the board's decision in Medinol and the application of the 'should have known' standard, there was a proliferation of fraud claims for cancellations of registrations based on a party's misstatements regarding the use of its mark in commerce. These fraud claims were often used defensively in trademark disputes. The Court of Appeals for the Federal Circuit's establishment of the more stringent 'wilful intent' standard will likely affect the success of fraud claims and perhaps the frequency of their use in Trademark Trial and Appeal Board proceedings.
Nevertheless, great care should still be taken in asserting use of a mark in commerce in prosecution and maintenance practice.
For further information on this topic please contact Michelle Mancino Marsh or Michelle C Morris at Kenyon & Kenyon LLP by telephone (+1 212 425 7200), fax (+1 212 425 5288) or email (firstname.lastname@example.org).
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