MarkIt to Market® - October 2021: Ignorance is NOT Bliss: Reckless Disregard for the Truth Supports a Finding of Fraud

Sterne, Kessler, Goldstein & Fox P.L.L.C.
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Sterne, Kessler, Goldstein & Fox P.L.L.C.

In a recent precedential TTAB case, Chutter, Inc. v. Great Management Group, LLC and Chutter, Inc. v. Great Concepts, LLC, 21 USPQ2d 1001 (TTAB 2021), the Trademark Trial and Appeal Board found that reckless disregard for the truth is sufficient to prove fraud, and ruled for the petitioner in a cancellation action based on fraudulent statements made in a maintenance filing.

In this case, counsel for Great Concepts, LLC, the owner of US Trademark Reg. No. 2929764 for the mark DANTANNA'S for restaurant services, signed a Combined Declaration of Use and Incontestability, making a representation that “no proceeding involving said rights pending and not disposed of in either the U.S. Patent and Trademark Office or the courts exists.” See Combined Declaration of Use and Incontestability under Sections 8 & 15 filed March 8, 2010 in Reg. No. 2929764. This statement was, in fact, false, because at the time of filing the Declaration, both a Board proceeding and civil action involving the Registrant’s right to register and use the mark DANTANNA’S were pending. Counsel for Great Concepts, LLC testified that he did not review the Declaration carefully enough before signing to see that the statement was incorrect. The record also demonstrated that when this falsity was brought to counsel’s attention (evidently more than once), he took no action to notify the USPTO about the false statement.

The Board found that counsel’s actions amounted to reckless disregard for the truth, which supported a finding of fraud upon the USPTO. This is an important precedential finding because in the fundamental fraud case In Re Bose Corporation, 772 F.2d 866 (Fed. Cir. 1985), the Court ruled that the intent to deceive must be “willful,” and few TTAB fraud cases have been found to meet this standard. In applying case law from the Supreme Court and various other circuits, the Board in this case found that counsel’s reckless behavior was, in fact, willful, and therefore the record supported the “intent to deceive” requirement to prove fraud. Ultimately, the Board granted the petition to cancel this registration on the basis of fraud.

Trademark practitioners and trademark owners should take notice of this case. Documents need to be closely read and carefully considered before they are submitted to the USPTO—both by the client and the attorney. Simply claiming that you did not read a Declaration closely enough is not enough to circumvent a fraud claim, and fraud may jeopardize the validity of an application or registration, as it did in this case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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