Bose Corp. v. Hexawave, Inc.
Fraud on the Trademark Office Standard
Introduction
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.” Therefore, the CAFC found no evidence that Bose intended to deceive the USPTO in its renewal application. Thus, the CAFC reversed the Board’s decision.
New Fraud on the Trademark Office Standard
Fraud in procuring a trademark registration occurs when an applicant, with intent to deceive the USPTO, knowingly makes false, material representations of fact in connection with the application. See In re Bose Corp., 580 F.3d 1240, 1245, 91 USPQ2d 1938, 1941 (Fed. Cir. 2009). Further, a fraud claim will not succeed if the evidence shows that the applicant made a false statement with a reasonable and honest belief that it was true. Rather, the evidence must show an intent to mislead the USPTO into issuing or maintaining a registration.
The standard for finding intent to deceive is stricter than the standard for negligence or gross negligence. Furthermore, the evidence of deceptive intent must be clear and convincing. Absent the requisite intent to mislead the PTO, even a material misrepresentation would not qualify as fraud under the Lanham Act warranting cancellation.” Bose, 91 USPQ2d at 1940.
Conclusion
The Bose ruling will likely have a dramatic impact on fraud claims in trademark opposition and cancellation proceedings. Since the Board laid down the “should have known” standard for 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 opposing parties 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 of – or the bona fide intent to use a – mark in commerce in applications, statements of use and maintenance filings.
