Further Development in Fraud on USPTO

Further Development in Fraud on USPTO

There is very recent case where Federal Circuit reversed and remanded the TTAB’s order of cancelling the registration in its entirety. In re Bose Corporation, 2009 WL 2709312 (C.A.Fed), Hexawave counterclaimed for cancellation of Bose’s WAVE mark, asserting the Bose committed fraud in its registration renewal application when it claimed use on all goods in the registration while knowing that it had stopped manufacturing and selling certain goods. But, “[a]the time [of]…renewal, Bose continued to repair previously sold audio tape recorders and players, some of which were still under warranty”, and therefore “…in his belief, the WAVE mark was used in commerce because “in the process of repairs, the product was being transported back to customers.” The Board [TTAB] concluded that the repairing and shipping back did not constitute sufficient use to maintain a trademark registration for goods. And “…transporting repaired goods constituted use was not reasonable.” Finally, the Board [TTAB] found that the use statement in the Section 8/9 renewal was material. As a result, the Board [TTAB] ruled that Bose committed fraud on the PTO in maintaining the WAVE mark registration and ordered the cancellation of Bose’s WAVE mark registration in its entirety.

But, Federal Court said that “[b]y equating “should have known” of the falsity with a subjective intent, the Board erroneously lowered the fraud standard to a simple negligence standard.” “Knowing conduct thus stands in contrast to negligent conduct, which typically requires only that the defendant knew or should have known each of the facts that made his act or omission unlawful….” Further, court state that “[m]ere negligence is not sufficient to infer fraud or dishonesty.” And, 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. There is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive. Finally court hold that Bose did not commit fraud in renewing its WAVE mark and the Board erred in canceling the mark in its entirety. Though [court] agree with the Board, however, that because the WAVE mark is no longer in use on audio tape recorder and players, the registration needs to be restricted to reflect the commercial reality.

Thus from the above cases it can be inferred that though intent to deceive is a critical factor in a fraud determination it shall not be inferred too easily, and mere mistake or negligence shall not be equated to fraud.