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I Can’t Believe It’s Not Fraud! A Review of Commonly Rejected Fraud Claims by the TTAB

February 4, 2016TTAB Proceedings

Back in the Medinol days, a claim for fraud on the U.S. Patent and Trademark Office ("USPTO") was a player in Trademark Trial and Appeal Board ("TTAB") proceedings. Parties were alleging fraud left and right: the applicant or registrant knew or should have known this or that. But as we all know, the Federal Circuit put that all to bed when it issued In re Bose on August 31, 2009, holding that "should have known" is not the appropriate standard for fraud on the USPTO. Rather, there has to be subjective intent to deceive—regardless of how difficult that may be to prove. Oh, and don't forget that a party alleging fraud bears a heavy burden of proving fraud "to the hilt" with clear and convincing evidence. In re Bose Corp., 580 F.3d 1240 (Fed. Cir. 2009).

It's clear the TTAB took the Federal Circuit's decision to heart. Since September 1, 2009, the TTAB has sustained a fraud claim only once in Nationstar Mortgage LLC v. Ahmad, 2014 TTAB LEXIS 350 (TTAB Sept. 30, 2014). But that case is really the exception that proves the rule: you've got almost no shot on a claim for fraud in a TTAB proceeding. Even Nationstar feels like the TTAB decided they just needed to sustain a fraud claim at some point after Bose, as there was no real evidence of a subjective intent to deceive in the case (at least no evidence markedly different than evidence the TTAB has rejected time and time again since Bose). If you perform a search of TTAB cases involving fraud claims since Bose on Lexis or Westlaw, you'll see there's about 80 or so cases (although admittedly some of the results deal with fraud only in passing rather than substantively). In reviewing the cases, many of the same issues come up time and time again. Most often, a fraud claim fails for lack of any evidence of a subjective intent to deceive. If you're thinking about asserting a claim or counterclaim for fraud on the USPTO in a TTAB proceeding, consider the typical deficiencies, as well as arguments the TTAB typically rejects, listed below.

Pleading Fraud Based on What an Applicant or Registrant Should Have Known

This one almost goes without saying, except that some attorneys still do it. The Federal Circuit made it clear that "knew or should have known" is insufficient to support a claim for fraud on the USPTO. Therefore, it should come as no surprise that, after Bose, the TTAB consistently finds fraud claims to be insufficiently pled when they are based on an allegation of "knew or should have known." Asian and Western Classics B.V. v. Selkow, 2009 TTAB LEXIS 643, *6 (TTAB 2009); Qualcomm Inc. v. FLO Corp., 2010 TTAB LEXIS 52, *4-5 (TTAB 2010); Paul Audio, Inc. v. Zhou, 2011 TTAB LEXIS 386, *41 (TTAB 2011).

Pleading on Information and Belief

The TTAB has made it clear that you cannot plead a fraud claim "on information and belief" when there are no allegations of the specific facts upon which the belief is reasonably based. ShutEmDown Sports, Inc. v. Lacy, 2012 TTAB LEXIS 44, *32 n.25 (TTAB 2012); Asian and Western Classics B.V. v. Selkow, 2009 TTAB LEXIS 643, *3 (TTAB 2009) ("Allegations based solely on information and belief raise only the mere possibility that such evidence may be uncovered and do not constitute pleading of fraud with particularity."); Brown v. Bishop, 2010 TTAB LEXIS 313, *15 (TTAB 2010) ("Petitioner's allegations . . . are based on 'information and belief' . . . these allegations fail to meet the Fed. R. Civ. P. 9(b) requirements"); Great Adirondack Steak & Seafood Cafe, Inc. v. Adirondack Pub & Brewery, Inc., 2015 TTAB LEXIS 321, *21-22 (TTAB 2015) (applicant "has not supported its allegations made 'on information and belief' with any specific factual allegations").

Alleging Fraud Based on Incorrect Dates of First Use

A very common allegation is that an applicant committed fraud by listing false or incorrect dates of first use in the trademark application. But the TTAB holds that doesn't constitute fraud because the first use dates are not material to the USPTO's decision to approve a trademark:

We must emphasize, however, that even if we found that registrant's statements were false with respect to the September 9, 1979 dates of use, such false statements would not rise to the level of fraud. Specifically, as explained in Hiraga v. Arena, 90 USPQ2d 1102, 1107 (TTAB 2009), the critical question is whether the mark was in use in connection with the identified goods as of the filing date of a use-based application. That is, if the mark was in use in commerce as of the filing date, then the claimed dates of first use, even if false, do not constitute fraud because the dates of use are not material to the Office's decision to approve a mark for publication, citing, Colt Industries Operating Corp. v. Olivetti Controllo Numerico S.p.A., 221 USPQ 73, 76 (TTAB 1983) ("The [Trademark] Examining Attorney gives no consideration to alleged dates of first use in determining whether conflicting marks should be published for opposition."). Here, the evidence establishes that registrant was clearly using the mark at the time he filed his application.

OTH Enterprises, Inc. v. Vasquez, 2012 TTAB LEXIS 374, *56 (TTAB 2012); Decho Corp. v. Mueller, 2011 TTAB LEXIS 241, *33-34 (TTAB 2011) ("The fact that a party set forth erroneous dates of first use, by itself, does not necessarily constitute fraud."); Willis v. Can't Stop Productions, Inc., 2011 TTAB LEXIS 296, *7-8 (TTAB 2011)("a claim of fraud based on an assertion of a false date of first use will not lie unless there is no use of the mark on or before the filing date"); Bio-One, Inc. v. ALEG, Inc., 2012 TTAB LEXIS 72, *7-8 (TTAB 2012); Slaska Wytwornia Wodek Gatunkowtch "Polmos" SA v. Stawski Distributing Co., Inc., 2010 TTAB LEXIS 342, *14 (TTAB 2010) ("If a mark was in use at the time an application is filed, a claim of first use, even if false, is not fraud.")

This one is pretty clear. If all you've got is false dates of first use, your fraud claim is going to get bounced.

Alleging Fraud Based on Lack of Use as of the Filing Date of a Use-Based Application or of an Amendment to Allege Use

OK - let's say that it's not just that the first use dates are incorrect, but the applicant was not using the mark at all when it filed its use-based application, amendment to allege use, or maintenance documents. It's clear that an applicant's false representation of use could constitute fraud on the USPTO, but it is also very clear that you are going to have a very, very difficult time proving that the applicant made the false representation with an intent to deceive the USPTO.

For example, just a couple of weeks ago, when addressing use as of the filing date of a use-based application, the TTAB held that, in light of Bose's rejection of the should have known standard, the applicant's belief that it was using the mark is sufficient regardless of whether that belief is reasonable:

In fact, Mr. Gomez testified during his discovery deposition that he believed he was using the involved mark the $NOB for magazines and other products prior to Registration's filing date. Whether this belief was accurate or reasonable is not relevant to the fraud inquiry. Accordingly, Petitioner's fraud claim also fails.

Lockstock Publications, Inc. v. J. Thomas Investments, Inc., 2016 TTAB LEXIS 24, *10 (TTAB Jan. 15, 2016). Even an admission by the applicant that it was not using the mark will not constitute fraud without an intent to deceive. Way v. Falwell, 2011 TTAB LEXIS 150 (TTAB 2011); MCI Foods, Inc. v. Bunte, 2010 TTAB LEXIS 381 (TTAB 2010) (refusing to infer fraud despite MCI's admission that it never used the CABO PRIMO mark on tortilla chips). Moreover, if the applicant falsely stated that the mark was in use in commerce because it did not understand what constitutes use in commerce, then the TTAB won't find fraud either. Parametric Technology Corp. v. PLMIC, LLC, 2010 TTAB LEXIS 64, *4 n.3 (TTAB 2010) ("even if we were to address PTC's claim of fraud as argued, it most likely would be dismissed inasmuch as a misunderstanding of what constitutes use in commerce is not necessarily fraud").

Accordingly, if you think that an applicant did not use the mark as of the filing date of a use-based trademark application, make sure you include a claim that the application is void ab initio for lack of use. You'll have a much better chance of winning on that claim than a fraud claim where you have to prove a subjective intent to deceive the USPTO. This will allow the USPTO to resolve the proceeding on that ground rather than fraud as it did in ShutEmDown Sports:

Because we find that respondent's allegation of use of his mark for the identified goods, at the time of filing of his application was false, we hold that the application was void ab initio, and we need not decide the fraud claim.

ShutEmDown Sports, Inc. v. Lacy, 2012 TTAB LEXIS 44, *32-33 (TTAB 2012).

Alleging Fraud Based on a Deficient Specimen

In looking through the file history of a trademark registration, you may notice that an applicant submitted a specimen that did not adequately evidence use of the mark. And as sometimes happens, the examining attorney accepted the inappropriate specimen anyway. But an applicant's provision of an insufficient specimen does not provide a basis for arguing fraud on the USPTO. Harry Winston, Inc. v. Bruce Winston Gem Corp., 2014 TTAB LEXIS 284, *43, n.69 (TTAB 2014) (rejecting allegation of fraud based on an inadequate specimen because “an alleged error in the examination of an application or of an application for renewal cannot form the basis of an inter partes challenge to the registration of the mark”); Decho Corp. v. Mueller, 2011 TTAB LEXIS 241, *32-34 (TTAB 2011) (applicant's specimen consisting of a mock-up of a homepage still in development found insufficient for fraud); Intellogy Solutions, LLC v. IntelliGolf, Inc., 2013 TTAB LEXIS 390, *11 (TTAB 2013) (submission of press release instead of advertisement could not have misled examining attorney because it was apparent as to what it was on its face); Great Adirondack Steak & Seafood Cafe, Inc. v. Adirondack Pub & Brewery, Inc., 2015 TTAB LEXIS 321, *21-22 (TTAB 2015) (insufficiency of specimen "is an ex parte examination issue and not a proper basis for a claim of fraud"); Novozymes Bioag, Inc. v. Cleary Chemicals, LLC, 2013 TTAB LEXIS 632, *5-7 (TTAB 2013) (submission of a 2008 specimen that was substantially similar to the specimen used in 2007 is not fraud because the USPTO does not require a specimen to be "an archival example of the exact matter . . . which was in use as of the application filing date").

Alleging Fraud Based on a Lack of Bona Fide Intent to Use a Mark

Succeeding on a claim of fraud based on a lack of bona fide intent to use a trademark is a long shot. First, you'll have to prove that the applicant had no intent to use the mark. But even if a party is successful proving that an applicant did not have a bona fide intent to use a trademark in an intent-to-use application, the TTAB will not find fraud unless an intent to deceive can be proven. Melwani v. International Whisky Co. Ltd., 2011 TTAB LEXIS 403, *24-25 (TTAB 2011) ("to that extent, its statements of bona fide intent were false. However, as to the intent element, there is no direct evidence of intent").

Alleging Fraud Based on the Selection of the Wrong Class for Goods or Services

Listing goods or services in the wrong class is very unlikely to support a fraud claim because the TTAB generally holds that any such misclassification is not material to the USPTO's decision to approve a trademark application. In Message in a Bottle, the TTAB explained why misclassification does not support a fraud claim:

The examining attorney thus was well aware of the nature of opposer's services at the time the mark was approved for registration in Class 38. If the examining attorney believed that Class 38 was not acceptable, he could have changed the classification. See TMEP § 1401.03(b). If the class number designated by the applicant is incorrect, the Office will change the classification either during or prior to examination.

Message in a Bottle, Inc. v. Cangiarella, 2010 TTAB LEXIS 251, *20 (TTAB 2010) (addressing fraud claim that goods were misclassified as services).

Alleging Fraud Based on Falsely Declaring That No Other Person Has the Right to Use the Mark in Commerce

When an applicant files a trademark application, it must execute a declaration that "to the best of the signatory's knowledge and belief, no other persons, except, if applicable, concurrent users, have the right to use the mark in commerce, either in the identical form or in such near resemblance as to be likely, when used on or in connection with the goods/services of such other persons, to cause confusion or mistake, or to deceive." Consequently, opposers who have prior rights in a confusingly similar mark will often allege that the execution of the declaration by the applicant was fraudulent. In order to properly plead a claim of fraud on this ground, an opposer must plead the following elements: (1) there was in fact another use of the same or a confusingly similar mark at the time the oath was signed; (2) the other user had legal rights superior to applicant's; (3) applicant knew that the other user had rights in the mark superior to applicant's, and either believed that a likelihood of confusion would result from applicant's use of its mark or had no reasonable basis for believing otherwise; and (4) applicant, in failing to disclose these facts to the USPTO, intended to procure a registration to which it was not entitled. Qualcomm Inc. v. FLO Corp., 2010 TTAB LEXIS 52, *5-6 (TTAB 2010).

Although this is a legitimate basis for alleging fraud on the USPTO, it is incredibly difficult to prevail on this type of claim. Basically, in addition to the silver bullet that there was no intent to deceive, the defending party can defeat this claim by stating it had a belief that the marks were not similar, that the other user's rights were not superior, and/or that there was no knowledge of the other user. As a result, this type of fraud claim is routinely rejected by the TTAB. Katz Communications, Inc. v. Katz Marketing Solutions LLC, 2013 TTAB LEXIS 77, *52-53 (TTAB 2013) (opposer failed to prove applicant's knowledge by neglecting to submit a copy of the cease and desist letter it sent to applicant prior the filing of the application); Eddy Packing Co., Inc. v. HEB Grocery Co., 2010 TTAB LEXIS 108, *52-55 (TTAB 2010) (no intent to deceive and also noting that the examining attorney did not rely on applicant's representation because of several references cited during prosecution); Cavern City Tours Ltd. v. Hard Rock Cafe Int'l, Inc., 2011 TTAB LEXIS 337, *12-22 (TTAB 2011) (refusing to charge applicant with knowledge of opposer's mark due to status as an international corporation and expansion plans announced on radio); Bresette v. Sigma Holding Corp., 2014 TTAB LEXIS 160 (TTAB 2014); Pandol Bros., Inc. v. Pandol, 2013 TTAB LEXIS 394, *28 (TTAB 2013) ("respondent's testimony suggests that he believed, albeit incorrectly, that he was entitled to register PANDOL and PANDOL FAMILY FARMS as trademarks"); Intellogy Solutions, LLC v. IntelliGolf, Inc., 2013 TTAB LEXIS 390, *5 (TTAB 2013) (no legal duty to search for or investigate potentially conflicting marks).

Alleging Fraud Based on Incorrectly Claiming to Be the Owner of the Trademark

Like the preceding category of fraud, a fraud claim based on an incorrect claim of ownership often fails because of the difficulty of proving an intent to deceive the USPTO if the applicant believed it was the owner. In Galaxy Metal, the opposer claimed that the applicant had committed fraud by representing that it was the owner of the METAL GEAR trademark when it was an importer and the real owner was a foreign manufacturer. But the TTAB denied the fraud claim because the opposer had not proven a subjective intent to deceive the USPTO, as the applicant's principal testified in his deposition that he believed applicant was the owner and even an incorrect belief does not equate to a subjective intent to deceive. Galaxy Metal Gear, Inc. v. Direct Access Technology, Inc., 2010 TTAB LEXIS 359, *16-18 (TTAB 2010); Slaska Wytwornia Wodek Gatunkowtch "Polmos" SA v. Stawski Distributing Co., Inc., 2010 TTAB LEXIS 342, *15-23 (TTAB 2010) (denying fraud claim because the evidence was unclear as to whether the distributor or the manufacturer was the owner of the mark).

Alleging Fraud Based on False or Incorrect Information in the Signatory's Position Field

The TTAB has rejected the notion that submitting an incorrect title in the "Signatory's Position" field constitutes fraud on the USPTO. Multi Access Ltd. v. Wang Lao Ji Food and Beverage, 2014 TTAB LEXIS 159, *13-20 (TTAB 2014). In Multi Access, Kevin Zhang identified himself as the "Owner" of U.S. Registration No. 2,153,322 even though he was simply Wang Lao's Chinese attorney when he filed Section 8 and 9 Declarations. However, the TTAB rejected the plaintiff's contention that Mr. Zhang's misrepresentation that he was the owner constituted fraud, especially since the Section 8 and 9 Declarations also contained an Owner section that identified the owner as Wang Lao. And of course, there was no evidence that Mr. Zhang typed "Owner" into the Signatory's Position field with an intent to deceive the USPTO.

Alleging Fraud Because the Filer Was Not Authorized to Practice Before the USPTO

The TTAB has rejected the argument that a submission by one not authorized to practice before the USPTO constitutes fraud on the USPTO. In Multi Access, Kevin Zhang, a Chinese attorney, misrepresented that he was authorized to practice before the USPTO when he responded to Post Registration office actions. The plaintiff contended this constituted fraud on the USPTO, but the TTAB disagreed:

Petitioner suggests that respondent is guilty of fraud based upon Mr. Zhang’s misrepresentation to the Office that he was authorized to practice before the USPTO when he responded to Post Registration office actions. See generally TMEP §§ 600; 608. We decline to make an inference, based on a paucity of evidence, about intent to deceive the USPTO. Even if the USPTO noted that Mr. Zhang was not authorized to practice in USPTO matters, the Office would have issued a notice of incomplete response and granted respondent time to perfect a response to the Post Registration Office Actions. See TMEP § 611.05. In any event, a Board proceeding is not the proper forum for investigating allegations of unauthorized practice before the USPTO. See Trademark Rules 11.20, 11.22, 11.32.

Multi Access Limited v. Wang Lao Ji Food and Beverage, 2014 TTAB LEXIS 159 (TTAB 2014).

Alleging Fraud and Relying on Only on Inferences From Filed Documents

The USPTO has also made it clear that you can’t simply rely on inferences being drawn from documents filed with the USPTO. This would essentially be the equivalent of requiring the defendant to rebut unproved allegations of fraud. Multi Access Limited v. Wang Lao Ji Food and Beverage, 2014 TTAB LEXIS 159 (TTAB 2014). Therefore, in order to prevail on a claim for fraud, you'll have to submit evidence of an intent to deceive—whether through deposition testimony or discovery responses.

Alleging Fraud and Relying on Deposition Testimony Regarding the Accurateness of Statements Made to the USPTO

Because the TTAB has made it clear that a subjective intent to deceive the USPTO is an indispensable element of fraud on the USPTO, there has to be a meaningful inquiry into the state of mind of the person who committed the fraud. Therefore, presenting deposition testimony in which the witness is simply questioned about the accuracy of filings made with the USPTO is insufficient. Harry Winston, Inc. v. Bruce Winston Gem Corp., 2014 TTAB LEXIS 284, *48-49 (TTAB 2014). Even if a witness testifies that the documents submitted to the USPTO were inaccurate, such testimony does not reach the issue of subjective intent to deceive. Id.

For example, in Enbridge, the opposer relied on deposition testimony by the applicant that it had not used the mark in connection with certain services and had no plans to do so, as well as an admission in the applicant's answer that it had not used one of the listed services, to seek summary judgment on its fraud claim. One of the deposition excerpts relied upon was the following exchange:

Q. And I apologize if I've asked this, but has Excelerate ever considered getting into the marine transportation of oil?

A. No.

However, the TTAB denied the opposer's summary judgment motion, holding that both the deposition testimony and admission did not address whether the applicant had the required intent to deceive the TTAB. Enbridge, Inc. v. Excelerate Energy Ltd. Partnership, 2009 TTAB LEXIS 642 (TTAB 2009).

Alleging Fraud Based on Falsely Stating That Wording Has No Significance

Cleary, a fraud claim can be based on an applicant's intentionally false representation that a term has no significance if made with an intent to deceive. Caymus Vineyards v. Caymus Medical, Inc., 2013 TTAB LEXIS 343 (TTAB 2013) (denying motion to dismiss and finding that defendant had sufficiently pleaded a claim for fraud). But surviving a motion to dismiss and prevailing on the claim are two different things. On the merits, the TTAB has rejected this claim twice since Bose. In Bell's Brewery, the applicant failed to disclose that BELL HILL had any geographic significance. However, because of the remoteness of the geographic reference of BELL HILL—which was a reference to the name of a road—the TTAB held that the applicant did not commit fraud. Bell's Brewery, Inc. v. Bell Hill Vineyards, LLC, 2009 TTAB LEXIS 699, *18 (TTAB 2009) (also noting the lack of evidence regarding applicant's intent to deceive); Slaska Wytwornia Wodek Gatunkowtch "Polmos" SA v. Stawski Distributing Co., Inc., 2010 TTAB LEXIS 342, *14 (TTAB 2010) (denying fraud claim because there was no clear evidence that ZYTNIA translated to rye in Polish).

Alleging Fraud Based on a Misrepresentation in a Claim for Acquired Distinctiveness Under Section 2(f)

Another potential basis for alleging fraud is when an applicant submits a Section 2(f) declaration that the mark at issue has acquired distinctiveness through substantially exclusive and continuous use in commerce for the preceding five years. In Alcatraz Media, the TTAB rejected a fraud claim brought on the ground that the defendant's Section 2(f) declaration was false.  Alcatraz Media, Inc. v. Chesapeake Marine Tours Inc., 2013 TTAB LEXIS 347 (TTAB 2013). Despite testimony from the defendant's president that she was aware of third-party use of marks including ANNAPOLIS TOURS during the five years preceding the Section 2(f) declaration, the TTAB found that the plaintiff simply did not prove any subjective intent to deceive the USPTO.

Alleging Fraud When the Allegedly False Statements Were Disclosed During Prosecution

If an applicant discloses a false statement to the examining attorney during prosecution, then there is no fraud because there would be no material reliance by the USPTO and no intent to deceive by the applicant. Thomas G. Faria Corp. v. Complete Innovations, Inc., 2011 TTAB LEXIS 327, *21 (TTAB 2011) (applicant disclosed purportedly false statements to examining attorney to figure out how to complete process); Diak v. Crafts American Group, Inc., 2013 TTAB LEXIS 560, 18-19 (TTAB 2013) (disclosing the existence of third party to examining attorney precluded fraud).

Alleging Fraud Based on False or Misleading Arguments Made in an Office Action Response

In Reliance Standard, the applicant argued that opposer had committed fraud by arguing that it sold its insurance and annuity products to employers rather than individuals in order to overcome a Section 2(d) likelihood of confusion refusal. Although the TTAB found that opposer had made a false statement that was material, it found that there was insufficient evidence of an intent to deceive because the specimen of record disclosed opposer's sales to individuals. Reliance Standard Life Ins. Co. v. American National Insurance Co., 2012 TTAB LEXIS 168, *36 (TTAB 2012).

Alleging Fraud Based on Use of a Mark for Goods or Services Outside the Scope of Registration

In Dragon Bleau, the applicant argued that the opposer engaged in fraud by agreeing to limit its clothing goods to the field of martial arts in order to obtain a trademark registration and then thereafter using its mark for goods outside the limitation. But the TTAB held that the limitation did not constitute a false statement:

In other words, we do not understand the statements at issue as constituting representations that Opposer would not use or enforce its VENUM marks as to goods outside the martial arts-related clothing segment, but rather as simple statements of limitations Opposer agreed to during examination of what became its '787 Registration, in order to overcome the Section 2(d) refusal issued by the Examining Attorney. The statements to which Applicant refers were not false—the goods in Opposer's application were indeed so limited by the amendment.

We do not understand Opposer's limitation of the goods in its application as a promise that if the registration were to be granted, Opposer would assert it against others only with respect to the identified goods. The issuance of a registration for specified goods or services and the scope of protection to which that registration later may be entitled are not the same thing—registrations are frequently asserted against applications or uses involving non-identical goods. Thus, Applicant has not alleged any false statements on which a fraud claim in a Board proceeding can lie. Because a false statement is one of the critical elements in proving fraud, the fraud claim is insufficient.

Dragon Bleau (SARL) v. VENM, LLC, 2014 TTAB LEXIS 352, *9-10 (TTAB 2014).

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