Is the Medinol Fraud Train Switching Tracks? You May Be Able to “Cure” Fraud if You Act Before You Are Challenged
By: DEAN R. KARAU
June 2009
As we have advised in the past, the United States Patent and Trademark Office’s Trademark Trial and Appeal Board (TTAB) has taken a draconian stand on what it calls “fraud.” Since 2004, the TTAB has uniformly held that if an applicant or registrant signs a declaration saying that it intends to use or is actually using its mark on the goods and services in an application or registration, but that is not accurate, an application can be denied registration, and a registration can be cancelled for all of the goods and services in each class in which the fraud is found. Even if it was a simple mistake, the TTAB has applied a strict liability standard – if you said you were using your mark with all of your goods/services but you were not, the reason why was immaterial. See, e.g., Trademark Owners Must Intend to Use Their Marks With All of the Goods and Services in Their U.S. Applications (Trademark TopicsSM, May 2009), Foreign Owners of U.S. Trademark Registrations Beware – The Medinol Fraud Train Keeps Rolling and Applies To You (Trademark TopicsSM, September 2008 ), New Precedential TTAB Decision Requires Credible Evidence to Support Bona Fide Intent to Use Mark in the U.S. (Trademark TopicsSM, May 2008), Update! Beware When Specifying the Goods Used with Your Trademark, or Risk Losing Your Trademark APPLICATION or Registration (Trademark TopicsSM, March 2007).
However, in a case it recently made precedential, the TTAB has now ruled that if an applicant or registrant corrects the “fraud” in its application or registration before someone challenges the application or registration, the applicant or registrant is entitled to a rebuttable presumption that it did not intend to commit fraud.
The TTAB’s fraud doctrine has been particularly troublesome for companies outside of the U.S., who are conditioned to include a broad array of goods and services in their trademark applications, even if they are not using or intending to use the mark with all of those goods and services in the applications. Those non-U.S. companies instruct their counsel to file U.S. applications for the same broad array of goods and services – dozens, sometime hundreds – of goods and services:
In many of those applications, the companies do not have a real intent to use the mark in the U.S. with all of those goods/services. And when the companies file post-registration documents, they often still are not using the mark with all of the goods/services in the registration. But if the applications or registrations are challenged, those companies could lose part or all of their applications or registrations. Unlike in Europe and elsewhere, if the TTAB finds what it calls “fraud,” all goods/services in the class in which the “fraud” occurred will be lost, not just those goods/services not in use.
The new TTAB position now offers owners of trademark applications and registrations a chance to correct errors before it is too late. Trademark owners and their attorneys should very carefully review each of their applications and, in particular, registrations to determine whether there are mistakes upon which challengers could base fraud claims. If there are such mistakes, trademark owners should ask their attorneys to file an amendment to the description of the goods/services to delete the problematic goods/services. (If the registration is through the Madrid System, corrections must be made through the International Bureau of the World Intellectual Property Organization.)
The cost of the correction is small, particularly when compared to the cost of losing an entire registration, or at least an entire class in a registration.