Once upon a time, and for decades thereafter, trademark fraud claims were highly disfavored. They were criticized as unproductive litigation diversions — “often pled,” but “rarely proven.”
To succeed — during that lengthy period of time — the alleged fraud had to be “proven to the hilt,” with “clear and convincing evidence,” leaving nothing to “speculation, conjecture or surmise.” All doubts had to be resolved against the party making the claim and in favor of the accused. In those days, falsity was not necessarily fraud — fraud was really fraud.
And, given the seriousness of the charge, the focus properly was directed to whether the accused had the requisite subjective intent to deceive the United States Patent and Trademark Office (USPTO), while knowingly making false statements of material fact.
Mere inadvertence, sloppiness, carelessness, ignorance, honest mistakes and misunderstandings, and negligent — even grossly negligent — falsity or omissions were excused because they could not satisfy the very significant and difficult burden of proving fraud to deceive the USPTO.
Then, for a relatively brief period of time, the fraud pendulum swung in the opposite direction — let’s call it the Medinol era — from 2003-2009. During that period, the Trademark Trial and Appeal Board (TTAB) of the USPTO, granted fraud-based trademark oppositions and cancellations at a record pace, even on summary judgment (sometimes even sua sponte, as was the case in Medinol), by employing a much easier-to-prove strict liability or negligence standard, requiring only that the accused “should have known” the material statement was false.
During this period, the focus emphasized the applicant’s duty of candor and the solemnity of sworn statements made to the USPTO. The TTAB adopted a far more black and white analysis of most statements made to the USPTO, with no tolerance or excuse for confusion regarding language barriers, unfamiliarity with U.S. trademark law, or even the pro se status of an applicant. The “objective manifestation of intent,” replaced or at least colored the subjective intent to deceive the USPTO standard.
Then came Bose in 2009, and the pendulum swung back again: “Subjective intent to deceive, however difficult it may be to prove, is an indispensable element in the [fraud] analysis.” The Federal Circuit refrained from deciding whether reckless disregard for the truth will suffice, since it disagreed with the TTAB that the facts of the Bose case even satisfied the lower recklessness standard of proof.
For the past 5 years, those who closely follow trademark fraud case law might have concluded that no set of facts could meet this stringent standard, but then came Nationstar Mortgage, the first finding of trademark fraud by the TTAB since Bose. Time will tell whether the decision in Nationstar Mortgage encourages more trademark fraud challenges.
Hopefully the TTAB’s focus on “evidence that applicant did not have a good faith reasonable basis for believing that he was using [his] mark in commerce for all the services identified in the application” is not a signal that it believes another swing of the pendulum is appropriate. After all, the Federal Circuit in Bose made perfectly clear: “We do not need to resolve the issue of reasonableness as it is not part of the analysis”. “Unless the challenger can point to evidence to support an inference of deceptive intent, it has failed to satisfy the clear and convincing evidence standard required to establish a fraud claim.”