Anne Gilson LaLonde: Thinking Ahead to Avoid a "Fraud" Charge: False Claims of Use to Procure or Maintain a Trademark Registration at the USPTO
Historically, allegations of fraud on the United States Patent and Trademark Office (USPTO) were rarely successful, but Medinol v. Neuro Vasx, Inc., 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003) changed the landscape to one in which the stakes for the applicant and registrant are much higher. In Medinol, the Board clearly stated that, in certain circumstances, an applicant or registrant could commit unintentional fraud on the USPTO, with the consequence being the invalidation of the entire application or registration. Anne Gilson LaLonde explains the current standards for proving fraud on the USPTO, the possible consequences of committing fraud, and strategies for avoiding the “fraud” charge. She writes:
The Board [in Medinol] . . . laid out the relevant standard [for fraud]: “A trademark applicant commits fraud in procuring a registration when it makes material representations of fact in its declaration which it knows or should know to be false or misleading.” It ruled that the correct inquiry is not whether the registrant subjectively intended to make a false or misleading statement but instead whether the registrant knew or should have known that its statement was false or misleading. The registrant’s statement that it used its mark on stents when it knew the statement to be false or had “reckless disregard for the truth” “is all that is required to establish intent to commit fraud in the procurement of a registration. While it is clear that not all incorrect statements constitute fraud, the relevant facts in this record allow no other conclusion.” In a draconian step, the Board refused to allow the registrant to amend its registration to simply delete its falsely-represented goods, and it cancelled the registration in its entirety.
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If the applicant or registrant “had a reasonable or legitimate basis for the [false] representations,” then it has not committed fraud. In Maids to Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d 1899 (T.T.A.B. 2006), the registrant had allegedin its application, its Section 8 declaration, and its application for renewal, that it hadused and was using its mark on cleaning services in interstate commerce. Based in Illinois,the registrant had on two occasions cleaned houses in Wisconsin and cleaned inColorado and San Diego each one time. It had also sent advertising materials to companiesoutside of Illinois. The Board found that the registrant had a reasonable basis for its good faith belief that it had used the mark in interstate commerce at the time of each of its filings, regardless of whether it had actually met the legal standard. The Board concluded that the “belief is sufficient to negate an inference of fraud upon the USPTO in obtaining and maintaining the registration.”
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Is it possible to cure a misstatement of trademark use? Maybe, if it is discovered early. If the misstatement of use is caught prior to publication of the mark and the application is amended, the Board has stated (in dictum) that it will not find fraud. The Board has also not faced the situation where an applicant tries to amend its description of goods before an opposition proceeding or a registrant tries to amend its description of goods before a cancellation proceeding. While it is possible that seeking to amend before one is challenged by another party could prevent a finding of fraud, it does seem unlikely that the Board would find misstatements not fraudulent because they are corrected before another party points them out.
(citations omitted)