Federal Circuit Relaxes PTO Fraud Standard: A Win for Trademark Owners

On August 31, 2009, the U.S. Court of Appeals for the Federal Circuit handed down its opinion in the case of In re Bose Corp., dramatically changing the standards necessary to prove fraud under the trademark application process.  The previous fraud standards had been in place since the Trademark Trial and Appeal Board’s (“TTAB”) 2006 decision in Medinol Lt. v. Neuro Vasx Inc.  The impact of the Bose decision should result in a major transformation in trademark practice.

The Medinol Standard

Before the Bose decision, TTAB enforced strict fraud standards essentially making almost any misstatement amount to fraud without requiring evidence that an applicant intended to make such misstatement.  Under Medinol, a finding of fraud was required when a trademark applicant “knew or should have known” that he or she made a false material statement to the United States Patent and Trademark Office (“PTO”).  The effects of the Medinol standard for fraud were far-reaching.

• Since almost any misstatement could be construed as fraud, if an individual filed a trademark application for multiple classes of products but was found to have made a misstatement or an honest mistake regarding one of the products, the entire registration would be canceled.
• Loss of Trademarks - Several trademark owners faced the unfortunate prospect of losing valuable trademark registration rights if they simply made honest mistakes or miscommunications with their attorneys.
• Increased Costs - To avoid losing registration rights, individuals began filing several separate applications for each class of product, ultimately raising costs.

The Bose Standard

The Bose Court changed the fraud standard under the Lahnam Act by requiring evidence that an applicant knowingly made a false misrepresentation with the intent to mislead the PTO.  The practical effects of Bose should be significant.

• Scope - The scope of the Bose standard includes trademark applications and any other filings with the PTO.
• Decreased Costs - The new fraud standard should save applicants money by reducing the numerous applications attorneys had been filing since Medinol to avoid the possibility and effects of a finding of fraud under the Medinol standard.
• Drafting of Filings - Applicants should be careful, however, under the new standard not to draft sloppy or false filings as such mistakes may prejudice a judge or the TTAB against such individual, or make it appear that such applicant has unclean hands.