• Trademark Trial and Appeal Board Tightens Rule on Fraud
  • May 19, 2009 | Authors: Jenifer Slinskey Tarasi; Paul D. Bangor; Darren E. Wolf
  • Law Firm: Thorp Reed & Armstrong, LLP - Pittsburgh Office
  • It has always been important for trademark owners to carefully consider all statements made in connection with obtaining, maintaining and/or renewing a trademark registration so as to avoid committing fraud on the United States Patent and Trademark Office (USPTO). However, trademark owners should be aware, that in the last several years, the Trademark Trial and Appeal Board (TTAB) systematically has been tightening its views on the subject of fraud on the USPTO in the context of trademark registrations (“Trademark Fraud”). Because of the tough approach that the TTAB has taken towards Trademark Fraud, it is quite possible that numerous trademark owners have committed Trademark Fraud without knowing and without any intent to do so. Therefore it is important that trademark owners and practitioners alike understand the state of the law concerning Trademark Fraud. This communiqué is intended to summarize the state of the law with respect to Trademark Fraud and provide some practical tips for avoiding problems down the road.

    What Is Trademark Fraud?

    Trademark Fraud occurs when a trademark applicant or registrant makes a false statement to the USPTO regarding a material issue, resulting in the issuance, maintenance or renewal of a trademark registration. Trademark Fraud exists only when the misstatement involves a “material issue” concerning the application or registration. That is, if the registration would not have issued, been maintained or renewed but for the misstatement, then Trademark Fraud has occurred and the registration will be irreparably tainted. The reasoning for such a tough stance on Trademark Fraud is that, in the U.S., trademark rights derive only from using a trademark in connection with particular goods and/or services. U.S. law limits the scope of a trademark registration to only the goods and/or services upon which the registered mark is actually used. The USPTO has no way to investigate or verify claims of trademark use made by applicants in support of applications for registration. Instead, the USPTO relies on the integrity of trademark owners when making such claims in their applications and other filings with the USPTO. Therefore, if errors in those claims are made, whether intentional or not, the USPTO and the TTAB will generally treat such errors as Trademark Fraud The result of such Trademark Fraud may be the denial of an entire application or the cancellation of an entire registration.

    In Medinol Ltd. v. Neuro Vasx, Inc., 67 U.S.P.Q. 2d 1205 (T.T.A.B. 2003), the TTAB cancelled a trademark registration because the statement of use filed in connection with the application listed goods for which the trademark was not actually used. In Medinol, Neuro Vasx filed an application based on its intent to use a trademark for two medical devices, “stents and catheters.” Neuro Vasx later used the mark only on catheters, but failed to delete stents when filing the statement of use required for issuance of the registration. Not having any reason to doubt Neuro Vasx, the USPTO issued a registration covering both products. When Medinol sought to cancel the registration based upon Trademark Fraud, Neuro Vasx claimed that they had made an innocent mistake and tried to amend the registration to delete stents. However, the TTAB did not allow Neuro Vasx to correct the error by deleting stents, the product to which the fraudulent claim was made. Instead, the TTAB cancelled the entire registration, setting aside the issue of whether the applicant had any specific intent to mislead the USPTO. Medinol (and subsequent TTAB decisions) have uniformly found Trademark Fraud whenever an applicant has made any claim about its use of a mark that it “knows or should have known was false.”

    A majority of the Trademark Fraud cases to date have involved situations where the owner swears under oath that it is using the mark in connection with every good and/or service listed in the application or registration. The owner may make that allegation in a new or renewal application based on existing use, in a statement of use submitted to finalize an intent-to-use application, or in any declaration of use required to maintain an existing registration. When alleging use in any of these instances, the owner is swearing, under oath, that it is “using” the mark in connection with each and every item listed in the application or registration. If the trademark is not being used with each and every good or service claimed by the owner, then the owner has committed Trademark Fraud and the application or registration will remain forever vulnerable to refusal or cancellation. Additionally, as previously mentioned, the TTAB has found Trademark Fraud while setting aside the issue of whether the applicant had any specific intent to mislead the USPTO. The cases recite a litany of failed excuses or defenses to claims of Trademark Fraud, including innocent mistake, failure to understand the statements in the forms, English as a second language and poor health. None of these defenses have been successful in defeating a claim of Trademark Fraud.

    The G&W Labs Case

    On January 20, 2009, in G&W Laboratories, Inc. v. GW Pharma Limited, Opposition No. 91169571, the TTAB addressed one of the open issues concerning Trademark Fraud. The TTAB ruled that with respect to a multi-class registration, Trademark Fraud committed in fewer than all of the classes requires cancellation as to only those classes, and not as to all classes in the registration. In this case, G&W Laboratories (“G&W Labs”) filed an opposition proceeding to prevent the registration of an application filed by GW Pharma on the basis of a likelihood of confusion with two registrations owned by G&W Labs. Each of G&W Labs’ registrations included two classes: class 5 (to cover the goods of suppositories and the like) and class 35 (to cover the services of distributorships in the field of suppositories and the like). GW Pharma counterclaimed for cancellation of the two registrations in their entireties on the ground of fraud, alleging that G&W Labs had never used its marks in connection with the class 35 services.

    In somewhat of a withdrawal from the implications of its earlier Medinol line of cases, however, the TTAB rejected the contention that fraud as to one class of a multi-class registration subjects the entire registration to cancellation. Pointing out that all of the cases considering fraud since Medinol had involved single-class applications or registrations, the TTAB stated that it had not previously considered whether fraud in less than all classes of a multi-class registration would subject the entire registration to cancellation for fraud. The TTAB reasoned that, because the U.S. registration system permits multi-class applications, such an applicant should be considered as being in the same position as if it had filed multiple single-class applications. Accordingly, the TTAB held that each class of a multi-class registration must be considered separately for fraud purposes and a finding of fraud as to one class should not, in itself, require cancellation of all classes in that registration. The TTAB acknowledged that holding otherwise would provide an incentive against filing multi-class applications, and that no justification existed for treating applications or registrations differently based solely on whether the applicant sought single-class or multi-class registrations.

    Preventing Allegations of Fraud

    While the TTAB’s decision in G&W Laboratories significantly curtails the perceived reach of its prior decision in Medinol, all owners still should carefully monitor the claims of use made in support of the acquisition, maintenance and/or renewal of their trademark registrations, particularly in view of the increased focus on Trademark Fraud in recent years and the harsh rule that has emerged. For new applications, the safest course of action is to apply only for those goods and services that the owner is certain it has used or intends to use with the proposed mark. With respect to registered marks, the owner should conduct periodic reviews to confirm whether the mark continues to be used in connection with all of the goods and services listed in the registration and, at a minimum, should perform a thorough review prior to making any claims of use to support the maintenance or renewal of each trademark registration. Also, trademark owners should consider conducting an audit of their current portfolios of trademark applications and registrations, particularly those vital to the company's business, such as house marks or brands for key product lines. If mistakes are found, the owner should consult with counsel to determine whether to file new applications to register such key marks based upon accurate claims of use to replace existing applications or registrations that are based upon faulty claims of use and thereby vulnerable to opposition or cancellation.