The Importance of Being Earnest (When Filing Trademark Registration Documents) - In re Bose Corp., No. 2008-1448 (Fed. Cir. Aug. 31, 2009)

October 12, 2009

General Counsel for Bose Corp., Mark E. Sullivan, had merely signed papers under an incorrect assumption about the law, but he would later be accused of fraud. Though his mistake led to a terrific ruling for trademark owners, Sullivan could have saved his company money and trouble by seeking counsel before filing his signed documents.

If businesses are to maintain their trademark registrations, the Patent and Trademark Office requires that they renew their registrations to prove that they are still using the mark in commerce. The Application for Renewal requires a signature to declare, under penalty of perjury, that the information is correct; yet, trademark owners often view these filings as a formality, a matter of course.

Hexawave, Inc. sought to register the HEXAWAVE mark, and Bose Corp., owner of the federally registered WAVE trademark, opposed Hexawave's registration. Hexawave investigated the WAVE registration and found that Bose had stopped manufacturing some of the types of goods listed in the registration before filing the Application for Renewal. Yet, Mr. Sullivan had signed and filed the renewal application, and Hexawave counterclaimed, urging the U.S. Patent and Trademark Office to cancel Bose's WAVE registration in its entirety because of the false specification of goods.

Under the old standard, Hexawave was likely correct in its assertions, and in fact, the Trademark Trial and Appeal Board ordered the cancellation of the mark. Hexawave based its counterclaim on the fraud standard announced in Medinol Ltd. v. Neuro Vasx Inc., 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003), where the Trademark Trial and Appeal Board held that "a trademark applicant commits fraud in procuring a registration when it makes material representations of fact . . . which it knows or should know to be false or misleading."

Sullivan testified that he knew that Bose was no longer making audio tape recorders that bore the WAVE trademark, but he claimed that he thought Bose's repair services for the WAVE audio tape recorders constituted use of the trademark when he signed the renewal application. The Board held that the repair services were not sufficient to constitute use of the mark and that Sullivan should have known that repair services were insufficient. After the Board ordered the cancellation of the entire registration, Bose appealed the decision to the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit, in In re Bose Corp., No. 2008-1448 (Fed. Cir. Aug. 31, 2009), overruled the Board's decision and found that, "by equating 'should have known' of the falsity with a subjective intent, the Board erroneously lowered the fraud standard to a simple negligence standard."

Ultimately, the Federal Circuit announced its displeasure with the Medinol formulation for fraud, maintaining that a fraud claim requires heightened pleading and evidentiary showings. In its holding, the Court ruled that "a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the [Patent and Trademark Office]."

The Court's decision makes it much more difficult to cancel a trademark registration on the grounds of fraud, and trademark owners should count the opinion as a victory. Ultimately, the Bose decision yields the following lessons:

For more information about the Legal Update, contact Karlyn A. Schnapp, Ph.D. or any other members of the Intellectual Property Practice Group.