Sunday, September 27, 2009

New Fraud Standard Set for US Trademark Office Practice

On August 31, 2009, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) reversed the U.S. Trademark Trial and Appeal Board's (the “Board”) recent decision in Bose Corp. v. Hexawave, Inc., 88 USPQ2d 1332 (TTAB 2007). Read here: Bose Decision.  In 2001, the Board held that Bose Corporation had committed fraud in its renewal application for its U.S. trademark registration. Accordingly, the Board cancelled Bose’s trademark registration.

In its decision, the CAFC ruled that "[b]y equating 'should have known' with a subjective intent," the Board had "erroneously lowered the fraud standard to a simple negligence standard." The CAFC found no evidence that Bose intended to deceive the USPTO in its renewal application and it therefore reversed the Board’s decision.

The Bose ruling will likely have a dramatic impact on the future of fraud claims in trademark opposition and cancellation proceedings at the Board. Since the Board laid down the “should have known” standard for committing fraud on the Office, there has been an explosion of fraud claims in opposition and cancellation actions, which were generally used to gain leverage over the opposing party for negotiation purposes. The CAFC’s ruling for a more stringent “willful intent” standard will likely impact the success of fraud claims and the frequency of their use in Board proceedings. Applicants should, however, still use care when asserting use – or the bona fide intent to use – a mark in commerce in an application, statement of use and maintenance filings.

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