In re Bose Corp.: CAFC Requires a Clear and Convincing Intent to Deceive

In re Bose Corp., No. 2008-1448, 2009 WL 2709312 (Fed. Cir., Aug. 31, 2009).
Opinion

On August 31, the Court of Appeals for the Federal Circuit ("CAFC") reversed and remanded the Trademark Trial and Appeal Board ("TTAB") decision, which ruled that fraud is committed when a registrant or applicant makes material misrepresentations it knows or should have known to be false or misleading.  The CAFC held the TTAB applied the should-have-known standard too broadly and thus ruled a registrant or applicant must have specific intent to deceive the U.S. Patent and Trademark Office in order to fraudulently acquire a trademark.  The evidence supporting the registrant's or applicant's intent to deceive must be clear and convincing.  The CAFC ruling significantly limits, if not overturns, Medinol v. Neuro Vasx, Inc., 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003), in which the TTAB adopted the should-have-known standard.

The TTABlog provides an overview of the case.  Allen's Trademark Digest, in addition to providing a detailed history of trademark fraud, criticizes the decision and asserts that the Bose holding implies that registrants and applicants have no duty of candor.  Furthermore, the article asserts the CAFC ruling is contrary to the Lanham Act and the Trademark Law Revision Act ("TLRA") statutory definitions of "use."

The dispute in Bose concerns Bose's opposition against the Hexawave trademark application.  Bose alleged Hexawave would likely create confusion with Bose's registered trademarks, including Wave.  Hexawave counterclaimed for cancellation of the Wave mark and asserted Bose fraudulently renewed the Wave mark because its general counsel knew or should have known Wave products were no longer manufactured.  Bose's general counsel signed an affidavit of continued use and a renewal application thereby claiming the Wave mark was still used in commerce.  The general counsel stated he believed the products were technically in commerce because Bose still repaired Wave products and shipped the products back to customers.

In holding as it did, the CAFC reasoned that the should-have-known standard is not applicable and the TTAB "erroneously lowered the fraud standard to a simple negligence standard." The court imposes a high standard to prove an intent to deceive in which there is "no room for speculation." Although the court did not find fraud, it held that Bose's registration must be revised to "reflect commercial reality" and remanded the case to the TTAB for appropriate proceedings.

The CAFC clarifies that negligence is not sufficient to infer fraud.  Bose likely marks the end of the should-have-known standard created in Medinol.  This decision will make it more difficult for trademark "use" fraud claims to prevail.