The Bose Decision: Proving Fraud on the USPTO Made Harder

December 8, 2009

Earlier this year the U.S. Court of Appeals for the Federal Circuit (CAFC) made keeping a trademark registration easier in the face of what, in most situations, was probably an innocent mistake by the trademark owner in a filing related to the trademark application or registration.

Specifically, the CAFC reversed the Trademark Trial and Appeal Board’s (TTAB) decision in Bose Corp. v. Hexawave, Inc., 88 USPQ2d 1332 (TTAB 2007). In doing so, the CAFC put an end to a series of decisions by the TTAB in which the TTAB had thrown out trademark registrations made by entities when the TTAB had determined the entity committed fraud in obtaining or continuing the registration.

The line of fraud decisions by the TTAB began with the TTAB’s 2003 decision in Medinol Ltd. v. Neuro Vasx, Inc., 67 USPQ2d 1205 (TTAB 2003). In the Medinol case, Neuro Vasx had registered the NEUROVASX mark for “medical devices, namely, neurological stents and catheters.” In 2002, Medinol, Ltd. filed a petition to cancel the registration for the NEUROVASX mark on the ground that at the time Neuro Vasx obtained the registration it was not in use on stents, and thus the registration for stents and catheters was obtained by Neuro Vasx’s knowingly false or fraudulent statements. Neuro Vasx responded by requesting that the reference to stents be deleted from the registration.

Medinol argued that an amendment could not un-do the fraud. The TTAB agreed that merely deleting the “unused” goods did not remedy the fraud on the USPTO. If fraud is shown, then the entire registration is void. The Board observed that in almost all cases, a party caught making a false statement will argue that there was no “intent” to defraud the USPTO. The Board stated that: “[t]he appropriate inquiry is not into the registrant’s subjective intent, but rather into the objective manifestations of that intent.” Id. at 1209.

The TTAB went on to hold that “[a] trademark applicant commits fraud in procuring a registration when it makes material representation of fact in its declaration which it knows or should know to be false or misleading. Id. (emphasis added) In this case Neuro Vasx signed a sworn statement, under penalty of fine or imprisonment – or both, that the trademark was in use on both stents and catheters when it was not. As a result of the fraud, the Board ordered the NEUROVASX registration to be cancelled.

The Medinol case and its progeny caused widespread concern among trademark owners. Many trademark registrations list numerous goods and it is possible (perhaps even likely) that some of these goods have been dropped from a product line prior to the time when, for example, the registration is renewed. Whether through sloppiness or simple error, a product may not have been deleted when the filing is made for the renewal. Because of that failure, the Medinol decision meant that the registration of the mark for all of the products was in jeopardy.

The Bose cancellation was the first to make it to the CAFC. In the Bose decision, the TTAB cancelled Bose’s WAVE trademark because it found that Bose had committed fraud in its 2001 renewal of a registration for the mark WAVE by failing to delete a reference to “audio tape recorders and players” from the registration when it was renewed in 2001. The registration was initially made for “Television receivers, video cassette recorders, video cassette players, camcorders, radios, clock radios, audio tape recorders and players, portable radio and cassette recorder combinations, compact stereo systems and portable compact disc players.” However Bose had stopped manufacturing and selling audio tape recorders and players in 1996-97 (Bose did occasionally service those products, but the TTAB did not find that sufficient to maintain the trademark registration for the products).

In In re Bose Corporation, 580 F.3d 1240 (Fed. Cir. 2009), the CAFC ruled that the TTAB’s standard for determining whether fraud existed was too low. “[B]y equating ‘should have known’ with a subjective intent,” the Board “erroneously lowered the fraud standard to a simple negligence standard.” Id. at 1244. The CAFC found no substantial evidence that Bose intended to deceive the PTO in the renewal process, and it therefore reversed. The CAFC made it clear that proof of intent to deceive is required to establish fraud: “Thus, we hold 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.” Id. at 1245.

The Bose decision brings a great sigh of relief to owners of federally registered trademarks around the country who had been scrambling to review their trademark portfolios and identify those marks with incorrect descriptions of goods or services.

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For more information about "The Bose Decision: Proving Fraud on the USPTO Made Harder," contact Richard E. Petershack at rpetershack@axley.com or 608.283.6726.