In a widely anticipated appeal, In re Bose Corp., No. 2008-1448, slip op. (Fed Cir. Aug 31, 2009), the Court of Appeals for the Federal Circuit overturned the Trademark Trial and Appeal Board’s holding in Medinol Ltd v. NeuroVasx Inc., 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003) regarding fraudulent procurement of Federal trademark registrations.
Under Medinol and its progeny, a trademark registration or renewal could be canceled as fraudulent by the TTAB if it contained a material representation that the applicant knew, or should have known, was false at the time it was made. However, as the Federal Circuit points out in its 12-page opinion strongly disapproving of the Medinol doctrine:
By equating “should have known” of the falsity with a subjective intent, the Board erroneously lowered the fraud standard to a simple negligence standard.
We have previously stated that “[m]ere negligence is not sufficient to infer fraud or dishonesty.” We even held that “a finding that particular conduct amounts to ‘gross negligence’ does not of itself justify an inference of intent to deceive.” The principle that the standard for finding intent to deceive is stricter than the standard for negligence or gross negligence, even though announced in patent inequitable conduct cases, applies with equal force to trademark fraud cases. After all, an allegation of fraud in a trademark case, as in any other case, should not be taken lightly. Thus, we hold that a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO.
Bose, slip o. at 6-7 (internal citations omitted, emphasis added)
The Court went on to further hold that the standard of proof required to demonstrate fraud is “clear and convincing evidence.” The Court also held that where a misrepresentation is made in connection with an allegation of use in a trademark application or registration, where the misrepresentation is proven without a showing of fraud, the proper remedy is not to cancel the entire registration but rather to restrict it to those goods and services where use in commerce can be actually demonstrated.
The Court did not indicate whether in cases where fraud is demonstrated, cancellation of the entire registration is proper even where the material misrepresentation concerned only some goods or services. The Court also left open the door for an exception to its holding in the event that “reckless disregard for the truth”, instead of scienter, is proven against the applicant. Bose, slip op. at 9, fn. 2.
