Client Alert

On August 31, the Federal Court issued an important decision in In re Bose, 2009 WL 2709312, No. 2008-1448 (Fed. Cir. Aug. 31, 2009), regarding fraud while applying for or maintaining a trademark registration. The decision expressly overrules the Medinol fraud analysis which has concerned trademark owners for the past six years.

The court in Bose held 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." The court rejected the Trademark Trial and Appeal Board's (the "Board") fraud analysis set forth in the often cited Medinol Ltd. v Neueo Vasx, Inc. decision, which provided that fraud occurs while procuring or maintaining a trademark registration when the applicant or registrant "makes material representations of fact in its declaration which it knows or should know to be false or misleading." 67 U.S.P.Q. 1205, 1209 (T.T.A.B. 2003) (emphasis added).

Bose Corporation ("Bose") filed a notice of opposition against Hexawave, Inc.'s ("Hexawave") application to register HEXAWAVE, in which Bose alleged a likelihood of confusion with Bose's prior registered WAVE mark. In response to the notice of opposition, Hexawave counterclaimed for cancellation of Bose's WAVE mark, claiming that Bose committed fraud in its registration renewal application because the mark was not in use on two goods listed in the registration -- namely, audio tape recorders and players.

Bose's general counsel testified that he believed Bose was still using the WAVE mark when he signed the declaration because at that time, Bose was repairing previously sold audio tape recorders and players and shipping them back to the owners. Nevertheless, the Board ruled that repairing and shipping back goods did not constitute sufficient use to maintain a trademark registration, and it concluded that the declarant's belief that such activities constituted use was unreasonable. The Board found the false statements in the renewal to be a material misrepresentation, ruled that Bose committed fraud on the PTO, and ordered cancellation of the entire WAVE mark registration.

The Federal Circuit reversed the Board's decision, explicitly rejecting the Medinol fraud analysis. The court stated 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," and that mere negligence and even conduct that amounts to gross negligence does not itself justify an inference of intent to deceive. The court held that fraud occurs when the applicant or registrant knowingly makes a false, material representation with the intent to deceive and emphasized that subjective intent, although difficult to prove, is an indispensable element in the fraud analysis. The court stated that subjective intent to deceive may be inferred from indirect or circumstantial evidence, but such evidence must be clear and convincing.

The court agreed that Bose had "made a material misrepresentation to the PTO" in its renewal. However, it found that Bose did not have a willful intent to deceive the PTO because of the declarant's testimony that he believed the declaration was a truthful statement and because Hexawave did not point to evidence to support an inference of deceptive intent. Thus, the court ruled that Bose did not commit fraud in renewing its registration for the WAVE mark.

If you have any questions or wish to discuss how this decision may impact your company, please contact your attorney at Brinks Hofer Gilson & Lione.

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