Federal Circuit Court Leaves One Issue Unresolved On Trademark Incontestability And Fraud On U.S. Patent And Trademark Office

A trademark registration is presumptively valid for five years. However, after that time period, the rights to the trademark may become incontestable if the registrant proves the statutory requirements. One important recent federal circuit case is Great Concepts Management Group v. Chutter, Inc., WL 6854647 (Fed. Cir. Oct. 18, 2023).

The Trademark Trial and Appeal Board's decision in Chutter, Inc. v. Great Management Group opened the door for cancellation actions and defenses based on a lowered intent requirement. This decision expanded specific intent to include reckless disregard for the truth or falsity of a material statement and applied that new view to a false Section 15 declaration that the submitting attorney did not bother to read.

Subsequently, the Federal Circuit Court, in a 2-1 decision, ruled that the Board was in error in canceling the registration of a holder of a trademark due to a fraudulent declaration filed by its former attorney.

The Central Issue in Great Concepts

The court analyzed the plain language of Section 14 of the Lanham Act. In Great Concepts, the court considered an appeal from the Trademark Trial and Appeal Board's cancellation of a federal registration based upon the registrant filing a fraudulent declaration of incontestability under Section 15 of the Lanham Act. The federal circuit court reversed the disposition by ruling that the Lanham Act does not recognize this ground for cancellation.

The federal circuit courts of appeals are now split on this issue – whether a declarant's reckless disregard of the truth of averments contained in a declaration may establish the scienter requirement for establishing fraud related to the United States Patent and Trademark Office. A future case will likely decide this issue.

Demonstrating Fraud on The U.S. Patent and Trademark Office Before the Trademark Trial and Appeal Board

Four elements are required to prove fraud on the U.S. Patent and Trademark Office. The four elements are as follows:

1. The applicant made a false representation to the U.S. Patent and Trademark Office
2. The false representation is material to the registrability of the mark
3. The applicant possessed knowledge of the falsity of the representation
4. The applicant made the representation with intent to deceive the U.S. Patent and Trademark Office

The final element is extremely difficult to prove because a trademark registration is obtained fraudulently under the Lanham Act only if the applicant knowingly makes a false, material representation with the intent to deceive the U.S. Patent and Trademark Office.

Legal Arguments in Great Concepts and Future Litigation

The legal arguments in Great Concepts concern many important issues. The lower court found that reckless disregard of the truth constitutes the intent necessary to deceive the U.S. Patent and Trademark Office.

However, a panel of the Federal Circuit Court reversed this holding and declared that a fraudulent Section 15 declaration does not constitute the basis for the cancellation of a registration under Section 14. The court held that the relevant statute permits cancellation only if the registration itself is obtained fraudulently.

Registration and incontestability are different rights under the Lanham Act. The U.S. Patent and Trademark Office Trademark Trial and Appeal Board may not cancel a trademark based on the filing of a fraudulent declaration under Section 15 of the Lanham Act. This is the central holding in Great Concepts.

The Trademark Trial and Appeal Board Has Other Methods of Punishing Fraudulent Conduct

The Trademark Trial and Appeal Board may use sanctions and other penalties against attorneys to punish fraudulent conduct. Future litigation will need to resolve the split among the federal circuit courts.

It is possible that the United States Supreme Court will render a decision that clarifies the relationship between fraudulent conduct, trademark registration, and incontestability. Patent attorneys and other professionals interested in U.S. patent law should pay close attention to future appellate cases and Supreme Court cases related to these issues.

The Dissenting Opinion in Great Concepts

Judge Reyna's dissent noted that the holding rendered by the majority would prevent bad actors who engage in fraudulent conduct from suffering punishment for their actions. Also, Judge Reyna emphasized that the fraudulent act was initially committed in the declaration, and this document was needed to keep the trademark registration intact. The dissenting opinion argued that the fraudulent conduct committed in the declaration justified the lower court's cancellation under section 14 of the Lanham Act.

Intellectual Property Litigation

Intellectual property litigation is complex and technical. Understanding the fundamentals of patent law, trademark law, and copyright law requires dedicated study and devotion. It is necessary to remain abreast of changes in the procedural and substantive aspects of intellectual property litigation. Interpreting the statutory laws relevant to intellectual property cases is one of the most important roles played by Federal Circuit Courts and the Trademark Trial and Appeal Board.

Intellectual property attorneys are immersed in the technical aspects of intellectual property law. Landmark patent cases are decided by the United States Supreme Court, the United States Court of Appeals for the Federal Circuit, and the Board of Patent Appeals and Interferences. Patent cases in the United States only have a right of appeal to the Federal Circuit. Although the United States Supreme Court does not often decide patent cases, it does have the ability to review patent cases based on its own discretion.

The field of intellectual property law is in constant flux. The legal principles, statutes, and procedural rules are always changing due to alterations in administrative agencies in the federal system. Speaking to an attorney experienced with intellectual property litigation can help you determine what you need to do to enforce your legal rights.