This article first appeared in World Media Law Report on October 15 2009.
October 15 2009 - USA Ladas & Parry LLP
Federal Circuit reverses Medinol fraud standard
In a highly anticipated decision, the U.S. Court of Appeals for the Federal Circuit overturned the
infamous Medinol trademark procurement fraud standard previously adopted by the Trademark Trial
and Appeal Board (“TTAB”).
In In re: Bose Corp., No. 2008-1448, slip op. (Fed. Cir. August 31, 2009), the Federal Circuit Court
expressly overruled the TTAB’s fraud standard articulated in Medinol Ltd. v. Neuro Vasx, Inc, 67
U.S.P.Q.2d 1205 (T.T.A.B. 2003). In Medinol, the TTAB had ruled that merely filing a false material
statement in connection with the registration or renewal of a trademark constituted fraud on the
United States Patent and Trademark Office (“USPTO”), even if such false statement was
inadvertent. Id. at 1210. The Federal Circuit in Bose overruled that standard, holding that “a
trademark is obtained fraudulently under the Lanham Act only if the applicant both knowingly makes
a false material representation and intends to deceive the USPTO by doing so.
The Bose case originated before the TTAB, when Bose opposed Hexawave, Inc.’s application to
register HEXAWAVE, on likelihood of confusion grounds. Bose Corp. v. Hexawave, Inc. 88 U.S.P.Q.
2d 1332 (TTAB 2007). Hexawave counterclaimed that Bose’s WAVE Registration was fraudulently
obtained, because Bose’s declaration of use falsely stated that Bose was using its WAVE mark in
connection with “audio tape recorders and players”. Bose’s general counsel explained that he was
under the belief that Bose’s repair and return of discontinued WAVE products to customers
constituted “use in commerce”. The TTAB rejected that notion, holding that such belief was not
reasonable (Id. at 1338.) and cited its infamous Medinol decision, wherein the TTAB ruled that “proof
of specific intent to commit fraud is not required, rather, fraud occurs when an applicant or registrant
makes a false material representation that the applicant or registrant knew or should have known
was false”. Id. at 1334. (emphasis added) The Draconian result was that Bose’s WAVE registration
was cancelled, notwithstanding its valid and continuous trademark use for other well-known
products. Bose appealed the decision before the Federal Circuit Court.
In Medinol Ltd. v. Neuro Vasx, Inc, 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003), the TTAB had earlier ruled
that where a statement of use filed by a registrant erroneously stated that all of the recited goods
were in use, such a defect constituted fraud. The Board reasoned that “a trademark applicant
commits fraud in procuring a registration when it makes material representations of fact in its
declaration which it knows or should have known to be false or misleading”. (emphasis added) Id.
at 1209. The TTAB subsequently applied this fraud standard in numerous other proceedings,
including the Bose case.
The Federal Circuit Court’s reversal in Bose is noteworthy since the court expressly ruled that by
equating “should have known” with a subjective intent to deceive, the TTAB had erroneously lowered
the fraud standard to a simple negligence standard. The court also went on to say that in order to
prove fraud in the procurement of a registration, one must establish fraud by “clear and convincing
evidence”.
Ralph H. Cathcart, Ladas & Parry LLP, New York
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