Tuesday, September 8, 2009

Inaccurate Listing of Goods in Trademark Registration No Longer Basis For Automatic Cancellation: Federal Circuit Reverses Trademark Offices Stance

The recent Federal Circuit decision in In Re Bose Corporation (No. 2008-1448, Slip Op. August 31, 2009) has changed the prevailing standard for finding fraud on the Trademark Office where an applicant inaccurately identifies goods or services sold under the mark. The BOSE trademark registration had been canceled by the Trademark Trial and Appeal Board (TTAB) for fraud on the Trademark Office because a declaration filed in connection with renewing the registration had listed goods (audio tape recorders and players) that were no longer being made. Bose’s explanation that it thought that shipment of tape players for warranty work met the commerce requirement was rejected as unreasonable, and the TTAB applied its standard that an applicant commits fraud by making a representation that it knows or should know is false.

In reversing, the Federal Circuit held that fraud on the Trademark Office must be shown by clear and convincing evidence of a false statement of material fact made with deceptive intent: “There is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive.” Because direct evidence of intent to deceive is rarely available, fraud may be inferred from indirect and circumstantial evidence, but the inference must be clear and convincing, and must indicate sufficient culpability to require a finding of intent to deceive.

This ruling eliminates what had been a “quick and easy” basis for attacking a trademark registration. Under the prior line of TTAB authorities (now reversed), one slip in the identification of goods could be grounds for cancellation of the entire registration. If a listed item was not in commerce at the time of the declaration, cancellation for fraud was virtually automatic if requested by an adversary. Now the standard is much higher and there will be far fewer cancellations.

Even though the threat of Draconian consequences for an incorrect listing of goods or services in a registration has been minimized, trademark owners are still advised to review their existing registrations carefully for any inaccuracies and to correct them by amendment. In addition, scrupulous accuracy in future statements of use, whenever filed, should be the norm.

Each case a business may face is unique and may require legal advice. Please consult an attorney about specific concerns in this area. For more information, contact Joseph W. Mott at jmott@jsslaw.com or 602.262.5866.

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