Challenging Trademark Applications and Registrations on Fraud and Nonuse Claims

The Board does not sustain fraud claims often, especially since the Court of Appeals for the Federal Circuit's ("CAFC") seminal case of In re Bose, 580 F.3d 1240, 91 USPQ2d 1938 (Fed. Cir. 2009). Before In re Bose, the Board had determined that fraud was committed when an applicant or a registrant made a material misrepresentation that it knew or should have known to be false or misleading. However, the CAFC reversed and remanded the ruling, finding that there must be a specific intent to deceive the United States Patent & Trademark Office when acquiring a trademark registration that pertains to a material fact. A party alleging fraud in a proceeding bears the heavy burden of proving fraud with clear and convincing evidence. Today, the Board will not find fraud, if a false statement is made but with a reasonable and honest belief that it was true. Moreover, absent the intent to deceive even a material misrepresentation would not qualify as fraud. See King Auto. Inc., v. Speedy Muffler Inc., 667 F.2d 1008, 212 USPQ 801 (CCPA 1981).

However, intent to deceive the USPTO can be inferred from indirect and circumstantial evidence. Case law has also supported the proposition that intent to deceive may be inferred if the accused party's testimony lacks credibility, see Global Maschinen GmbH v. Global Banking System, 227 USPQ 862 (TTAB 1985). An example of where the Board found clear and convincing evidence of fraud can be seen in Nationstar Mortgage LLC v. Mujahid Ahmad, 112 USPQ2d 1361 (TTAB 2014) [precedential]. See also, our firm page entitled, How To Avoid Fraud On The USPTO, for more information on this topic. It is safe to say, it is incredibly difficult to prove a fraud claim, although many Opposers and Petitioners still assert claims of fraud, rarely will the fraud claim be sustained. If a claim of fraud is sustained based on a false statement of use, even as to one item in a long list of items, the remedy will be to hold the application or registration void as to the entire class. See Meckatzer Lowenbrau Benedikt Weib KG v. White Gold, LLC, 95 USPQ2d 1185 (TTAB 2010) [precedential].

See Grand Canyon West Ranch, LLC v. Hualapai Tribe, 88 USPQ2d 1501 (TTAB 2008) [precedential], where the Board granted applicant's motion to delete the unused services in the application, but then the opposer obtained leave to add a fraud claim and because the fraud claim was proven, the opposition was sustained on that ground. This case is a good example of an opposer proving fraud on a false verification of use, and the Board holding the application void as to the entire class. See also, Herbaceuticals, Inc. v. Xel Herbaceuticals, Inc., 86 USPQ2d 1572 (TTAB 2008) [precedential].

Lacking a bona fide intent to use on all of the goods or services:

If you cannot prove a specific intent to deceive to show fraud, and the application was filed based on a bona fide intent to use, perhaps you can prove that the applicant lacked the bona fide intent to use the mark on all the goods or services. If the applicant lacked the intent to use on all of the goods or services in the application, the application will be deemed void ab intio. See Saul Zaentz Company dba Tolkien Ent. v. Joseph M. Bumb, Opposition No. 91170589 (May 18, 2010).

Lacking a bona fide intent to use on some of the goods or services:

However, if use was made on some goods, but not on others, the remedy only knocks out the goods and services where there was no bona fide intent to use, and does not knock out the entire class of goods as a fraud claim does.

No use on any of the identified goods or services:

Another scenario may occur where the applicant files a use-based application under 1(a) of the Trademark Act, and does not use the mark with any of the identified goods or services on or before the trademark filing date. If this is the case, then the application will be declared void ab initio, and any resulting registration is subject to cancellation. See ShutEmDown Sports Inc. v. Lacy, 102 USPQ2d 1036 (TTAB 2012) [precedential]; Laboratories du Dr. N.G. Payot Etablissement v. Southwestern Classics Collection Ltd., 3 USPQ2d 1600 (TTAB 1987); See also, MeUndies, Inc. v. Drew Massey dba myUndies, Inc., Cancellation No. 92055585 (August 13, 2014).

Use on some goods and services:

If the applicant files a use-based application under 1(a) of the Trademark Act, and only uses the mark in connection with some of the goods or services, the applicant can amend the application to remove those goods where no use was made. See Grand Canyon West Ranch, LLC v. Hualapai Tribe, 78 USPQ2d 1696 (TTAB 2006) [precedential]. Thus, the goods and services without use will be knocked out, but the application will stand with the goods and services where use was made. Another option for the applicant is that the applicant can cure this defect by requesting to amend the application to a 1(b) intent to use basis. If you have questions concerning a fraud claim or a claim of nonuse, please contact the firm for a courtesy consultation.