Ttab Decisions and Developments

• Jurisdiction: United States,Federal
• Citation: Vol. 46 No. 4
• Publication year: 2021
• Author: Jane Shay Wald
• topic: Trademark,Intellectual Property,Civil Procedure

TTAB DECISIONS AND DEVELOPMENTS

Jane Shay Wald
Irell & Manella LLP

The Board Found Fraud
After All This Time
And We Applaud Them Here, In Rhyme

This New Matter quarter brings us two of the three Board cases finding fraud on the PTO since In re Bose Corp., 580 F. 3d 1240 (Fed. Cir. 2009) overruled the Medinol Doctrine. You'll recall that the Medinol Doctrine evolved from the TTAB's holding in Medinol Ltd. v. NeuroVasx Inc., 67 USPQ2d 1205 (TTAB 2003) regarding fraudulent procurement or maintenance of Federal trademark registrations. Under Medinol and its progeny, the TTAB could cancel a registration as fraudulent if it contained a material misrepresentation that the applicant knew or should have known was false at the time it was made. The case led to successful petitions to cancel registrations that, for example, had over-claimed goods in one class, based on a misunderstanding. The Federal Circuit in Bose found the Board had erred in Medinol by equating "should have known" of the falsity with a subjective intent, thereby improperly lowering the fraud standard to a simple negligence standard. Bose therefore held that a trademark is obtained or maintained by fraud only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO.

In re Bose stemmed the Medinol-era tide of Board cases accusing applicants and registrants of fraud. The fraud-finding pendulum swung to such an extreme that from the period 2009 to 2014 the Board found no fraud on the PTO, despite a steady stream of cases alleging it. The first and last (until now) post-Bose fraud-finding case was Nationstar Mortgage LC v. Ahmad, 112 USPQ 2d 1361 (TTAB 2014). That case caused hopeful speculation that the Board had relented and would find fraud again, at least in the most egregious cases. But no. Except for Nationstar, the Board did not, until now, find fraud in 12 years. Cases pleading fraud—and in the opinion of many practitioners and commentators actually evidencing it—fell short of the fraud standard the Board felt bound by. Until now.

The first fraud case since 2014 concerned the activities and representations of the U.S. distributor of Petitioner's FUJIIRYOKI mark for massage chairs. The subject application was filed by distributor William Shen, and he assigned the resulting registration to his company (the Respondent). "Merely being a distributor (or the CEO of a distributor) does not confer ownership of a mark for the goods being distributed. On the contrary, as between a manufacturer and distributor, the manufacturer is presumed to own a trademark applied to the goods." If there is no agreement pertaining to ownership of a trademark between a foreign manufacturer and an exclusive U.S. distributor, the presumption that the manufacture of the goods is the owner of the trademark is rebuttable.

[Page 31]

The Board set out factors in considering the presumption, and found against Respondent on all of them. The Board found numerous examples of Respondent's intentionally deceptive actions, including submitting a specimen showing Petitioner's massage chair, with faked text claiming Respondent was the manufacturer of the chair, not merely the distributor. Mr. Shen's testimony for the corporation, per the Board, "carries no conviction of its accuracy and is grossly evasive, inconsistent, and self-serving," with "ever-changing rationales for his justification in registering the FUJIIRYORKI mark." The Board found that Respondent's emails to Petitioner asking for authorization to print Petitioner's company name on some new merchandise was an admission that Respondent knew it had no rights in the mark and no right to register it. The emails also bolstered the Board's finding that Respondent intended to deceive the PTO by claiming that he owned the mark when he knew he did not. "Indeed, the record of Shen's conduct, his grossly evasive testimony, and his self-serving claims, taken as a whole, establish he intended to deceive the USPTO." Therefore, Petitioner established that Respondent's false and material claim of ownership of the mark and declaration that no other entity had the right to use the mark in commerce were made knowingly and with intent to deceive the USPTO. Fuji Medical Instruments Mfg. Co., Ltd. v. American Crocodile International Group, Inc., Cancellation No. 92062760 (July 28, 2021).

Twelve Years Of Bose
Misunderstood?
The Board Here Knows
And Made It Good

In Finding Fraud
Yet Keeping Bose
Uncompromised. Demanding.
The Board Succeded, Heaven Knows
With Precedent. (Outstanding!)

The second fraud-finding case since 2014 arose in a combined Opposition and Petition to Cancel, Opposer/Petitioner alleges prior use of its mark DAN TANA's for restaurant services and marinara sauce. Its restaurant operates at one location, in West Hollywood, California. Applicant seeks to register DANTANNA'S for spices and DANTANNA'S TAVERN for restaurant and bar services.

The facts in the Chutter case leading to the finding of fraud were not contested. Respondent (Defendant) filed its Combined Declaration of Use and Incontestability under Sections 8 & 15, bearing the signature of its attorney, Frederick K. Taylor. The petition stated the fact that "no proceeding involving said rights pending and not disposed of in either the U.S. Patent and Trademark Office or the courts exists" and repeated this in the supporting declaration under 18 U.S. C. Sec. 1001. This representation was not true because both a Board proceeding and a civil action were pending against Defendant involving its right to register and use the mark DANTANNA'S. Attorney Taylor admitted he knew when he filed the Combined Declaration that both the Board proceeding and civil action were pending. Mr. Taylor testified...