In re Bose Corp.: The New Sound of Fraud?

The Federal Circuit raised the bar last year on the standard of proof needed to support a finding of fraud in connection with trademark registrations in the In re Bose Corp. decision.  Applicants for federal trademark registrations make a number of representations to the United States Patent and Trademark Office (USPTO) over the life of a trademark.

When the application is first filed, representations are made regarding the description of goods and services offered under the mark, and the date of first use of the mark for those goods and services.  Specimens showing use of the mark in commerce are provided to the USPTO.  When the trademark is renewed, the owner of the mark must represent that the mark is still being used in commerce for the same goods and services.  Trademark registrations are subject to cancellation if the trademark owner makes fraudulent misrepresentations to the USPTO during the procurement or renewal of such registrations.

In several decisions beginning in 2003 and running up through its decision in Bose, the Trademark Trial and Appeal Board (TTAB) of the USPTO held that a trademark applicant commits fraud in procuring a registration if the applicant makes material misrepresentations of fact in its declarations that the applicant knew or should have known to be false or misleading.

In Bose, the TTAB canceled a Bose trademark registration for WAVE because Bose did not use the mark in connection with audio tape recorders and players at the time Bose signed a renewal declaration that it was using the mark in connection with all of the goods identified in the original registration.

On appeal, the Federal Circuit reversed the decision citing a long history of case law that only allowed cancellation of a mark if it was shown that the applicant or owner made knowingly inaccurate or knowingly misleading statements to the USPTO.  The Federal Circuit chided the TTAB for lowering the fraud standard to a negligence standard by adding the “should have known” component, and reiterated that mere negligence is not sufficient to infer fraud or dishonesty.

Thus, the Court emphasized the distinction between a false representation and a fraudulent one.  A false representation may be the result of misunderstanding, inadvertence, or negligent omission, whereas a fraudulent representation requires intent to deceive.

Intent to deceive can be inferred from indirect and circumstantial evidence, but such evidence must be clear and convincing.  The party alleging fraud “bears a heavy burden of proof,” and “any doubt must be resolved against the charging party.”

In Bose, the trademark owner alleged that, although it knew it no longer sold tape recorders or tape players under the WAVE mark at the time of renewal, it believed that its repair of tape players and recorders it previously sold under the WAVE mark constituted use in commerce with respect to those goods.

The TTAB and the Federal Circuit both agreed that the repair activities of Bose were not sufficient to continue registration of the mark with respect to tape players and recorders.  Therefore, there is no question that Bose made a false representation of use to the USPTO.  However, the Federal Circuit held that there was no evidence of deceptive intent on the part of Bose.

Although the standard for proving fraud seems to have been raised by Bose back its historically high level, it would be unwise for trademark applicants and owners to take any less care in reviewing and double-checking representations made to the USPTO.  The argument made by Bose regarding its belief that repair activities were sufficient may prove to be a special case.  It is not clear yet whether the person who signs the declaration can simply claim that he did not know the statement was false to avoid a claim of fraud.

During the application process, care must be taken in alleging the date of first use and the date of first use in commerce.  These dates are usually the same but in some cases they can be different.  The specimens submitted in connection with the application must be representative of the way in which the mark is actually used in commerce.

The applicant should take care to ensure that the description of goods and services offered under the mark is accurate, both at the time of application and at the time of any renewals.  If any of the goods or services identified in the original registration are no longer offered under the mark at the time of renewal, the description of goods and services description should be amended accordingly.

If a previous error is discovered at a later date, an appropriate amendment could help weigh against a finding of intent to deceive.  Trademark owners and applicants would be well-advised to take all reasonable measures available to them in ensuring representations to the USPTO contain no false statements.  But when faced with a charge of fraud, the Bose decision will make it easier to defend such a charge.

A partner at Carstens & Cahoon, LLP, James Gourley focuses his practice on intellectual property law, franchise law, and litigation and helps clients build strong intellectual property portfolios. 

This blog is maintained by Carstens & Cahoon, LLP to inform readers of recent developments in intellectual property. Solely informational in nature, this blog is not intended to create an attorney-client relationship or to be used as a substitute for legal advice or opinions. 

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