Trademark Law Relating to Fraud Returns to Status Quo
The Federal Law has for many years provided that any registration obtained based upon the submission of fraudulent representations could be cancelled. Fraud has historically been considered different from mere submission of a "false" statement in the following way. A false statement might be made if a person simply makes a mistake in stating the facts. The mistake might be due to a misunderstanding, negligence, or inadvertence. A fraudulent statement is one made with an intention to deceive someone.
A few years ago the Trademark Trial and Appeal Board (TTAB) decided in a formal opinion that a registration should be cancelled because the owner reported in a signed statement submitted to the trademark office that the mark had been used with neurological stents and catheters. Medinol v. Neuro Vasx, Inc., 67 U.S.P.Q. 2d 1205 (T.T.A.B. 2003). When the registration was later challenged as invalid the owner admitted that not only had the mark never been used for stents, but the company had never sold stents. The TTAB declared the submission of the statement that the mark was used on stents was fraudulent and declared the registration invalid.
Medinol would not have caused much concern if the TTAB had only found that the statement that the mark was used on stents by the company when, in fact, stents were never sold by company was fraudulent because the statement was made with an intention to deceive the trademark office. The TTAB went one step further, however, and stated that "the undisputed facts in this case clearly establish that the respondent knew or should have known at the time it submitted its statement of use that the mark was not in use on all of the goods." This statement was construed by lawyers and Courts to eliminate the requirement to find that a fraudulent statement was made with a specific intention to deceive.
Lawyers argued and subsequent Courts found that making a statement to the Trademark Office when one "should have known" otherwise constitutes fraud and would support the cancellation of a registration. We are pleased to see that the U.S. Federal Court of Appeals for the Federal Circuit (CAFC) has now in the case of In re Bose Corporation corrected this odd blip in the field of trademark law. Recently the CAFC confirmed that fraud can only be found in the prosecution of a trademark application or maintenance of a trademark registration if a statement i s made with knowledge that it is false and the statement is a material misrepresentation.
The CAFC was presented with a perfect case to correct the aberrant line of cases developing after Medinol. In the Bose case a challenger asserted that the registration for the famous WAVE trademark used to identify Bose radios should be cancelled because the General Counsel of Bose represented that the mark was being used with audio tape recorders and players. Technology has evolved to the point that Bose no longer sells new tape recorders and players but Bose still repairs previously sol d tape recorders and players. The General Counsel made the statement after the change in technology but was under the mistaken impression that the repair activity constituted use of the mark with tape recorders and players. The CAFC correctly noted that fraud cannot be found if a false misrepresentation is based on an honest misunderstanding or inadvertence without willful intent to deceive. The Bose Court also determined that the proper remedy in the case of such mistakes is simply to delete from the registration the goods with which the mark was not used. No longer do trademark registration owners face cancellation of an entire registration or an entire class from a registration where a mistaken statement is submitted to the trademark office but there is no intention to deceive. The unfortunate aspect of this entire line of cases is that the Medinol Board had sufficient facts to find that the misrepresentations made by Medinol were made with specific intention to deceive and were thus fraudulent. Medinol's President would have been hard pressed to convince the Board he made an honest mistake when he stated that his company used the mark with stents when his company never sold stents.
