Medinol, Bose and the "standard of fraud"

This Kat has come across news from the US Federal Circuit court that might excite those of our readers that manage trade mark portfolios that include US trade mark registrations. These readers will be familiar with the strict fraud standard established by the US Trademark Trial and Appeal Board in the (in-)famous Medinol v. Neuro Vasx case (67 U.S.P.Q. 2d 1205 [TTAB 2003]) concerning overly broad trade mark specifications.

The cat on the left finally sees a way of escaping the strict Medinol cage


It appears that the US Federal Circuit sees things slightly differently. In its decision in "Re Bose Corp." (Fed. Cir., No. 2008-148) the US Federal Circuit court now took the view the board in Medinol had "... erroneously lowered the fraud standard to a simple negligence standard." The court further clarified 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 PTO."

What had happened? Bose Corp., the well known maker of audio equipment, had filed a Section 8 & 9 declaration of continued use and renewal of its US trade mark registration WAVE mark in 2001. In support of the renewal Bose had, inter alia, claimed that the WAVE mark had been in use in commerce on audio tape recorders and players, even though Bose had stopped producing these sometime around 1996 or 1997. However, Bose had still conducted repair works on these products until 2001 and the declarant, Bose's counsel, had erroneously believed that this was enough to constitute use under Section 8 & 9 Lanham Act.

The court ruled that "...absent the requisite intent to mislead the PTO, even a material misrepresentation would not qualify as fraud under the Lanham Act warranting cancellation..." and as such, the court appears to have abandoned the "know or should have known" standard established by the US Trademark Trial and Appeal Board in Medinol: "...there is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive." Fraud, so the court, required "clear and convincing evidence" to support an assumption of deceptive intent. Bose's counsel's belief (who had signed the declaration) that the repair work constituted use was not unreasonable and was considered to lack the "willful intent to deceive".

But note warns Merpel, this decision does not appear to per se allow an overly broad specification of goods and services if the proprietor does not use the mark on these. The Court also decided that the US Trademark Trial and Appeal Board may limit Bose's specification since "... the registration needs to be restricted to reflect commercial reality."

This Kat is no expert on US trade mark law but believes that there are some questions that remain unanswered, despite the excitement this decision appears to have generated. For example: what is the standard of proof regarding fraudulent intent? Is it enough to plead ignorance when signing the section 8 & 9 declaration? Plus, what will be the likely effect of the Bose decision on pending cases? All comments welcome!

The Federal Circuit decision can be found here.