The U.S. Court of Appeals for the Federal Circuit has issued a significant decision to trademark owners on the issue of fraudulent procurement. In its decision, a panel of the Federal Circuit rejected the Medinol standard of fraud that has applied since 2003, and held that “a trademark is obtained fraudulently only if the applicant or registrant knowingly makes a false material representation with the intent to deceive the PTO.” In re Bose Corp., Case No. 08-1448 (Fed. Cir., August 31, 2009) (Michel, C. J.).
On its face, this decision is of immense relief to trademark registrants. Since its 2003 Medinol v. NeuroVasx decision, the Trademark Trial and Appeal Board has repeatedly cancelled trademark registrations that were procured based on material representations that a registrant “should have known” to be false, regardless if such representations were made through inadvertent mistake or mere oversight. The Medinol “should have known” standard of fraud essentially lowered the fraud standard to one of negligence, and, many would argue, improperly subjected trademark registrants to cancellation of their trademark registrations when no bad faith or knowing intent to deceive the U.S. Patent and Trademark Office (PTO) existed.
This issue often arose in the context of a use declaration where an applicant or registrant makes a representation that its trademark is in use on all the recited goods or services when that is not the case. Under Medinol, inaccurate statements regarding use constituted fraud even when such inaccurate statements were made inadvertently and there was no deliberate intent to deceive the PTO. The long-awaited decision in Bose heralds a return to the pre-Medinol fraud standard, which requires a specific intent to deceive. Equating the fraud analysis here to that used in Kingsdown Medical Consultants v. Hollister, the Federal Circuit's 1991 landmark en banc patent-based ruling regarding fraud on the PTO during patent prosecution, the Federal Circuit insisted that fraudulent procurement under the Lanham Act also requires "a [knowing] false, material representation with the intent to deceive the PTO."
While the Federal Circuit’s decision in Bose will likely result in a significant decrease in fraud-related cancellation proceedings at the PTO, and in fraud claims brought as a defense in trademark litigation, there are a number of important questions that remain unanswered:
- What is the standard of proof required to show a “subjective” or “willful” intent to deceive the PTO when a declarant denies such intent?
- How much proof will be required to show fraud by “clear and convincing evidence,” the standard of proof deemed required under Bose?
- Whether a reckless disregard for the truth or falsity of a statement made to the PTO would be sufficient for a finding of fraud and what sort of conduct would qualify as reckless?
- Is it enough to plead inadvertent mistake or ignorance when signing a section 8 and 9 declaration?
- How will the decision in Bose affect future fraud cases?
These and other questions will likely be answered in future cases applying the Bose holding. In the meantime, good practice continues to call for trademark owners to maintain vigilance in confirming that filings with the PTO are accurate.
Carefully review all trademark applications and renewals before filing. Collect and retain a representative sample of specimens evidencing use in commerce for each of the goods or services listed in the trademark application or registration. If possible, the statement of goods and services in trademark applications should be defined as broadly as possible (i.e., “juice” instead of “apple juice, orange juice and pineapple juice.”)
Periodically review your existing trademark portfolio confirming current use of all goods or services listed in trademark registrations and applications.
Discuss with counsel any potential “use” issues before instituting an enforcement proceeding involving a registered mark. Consult with counsel about the possibility of raising a fraudulently procured registration as a defense to an infringement claim.