You are the president and CEO of the closely held (hypothetical) Knitco, Inc. For fifty years, Knitco has sold its highly popular KNITTY caps, mittens, and scarves in every U.S. state (except Florida and Hawaii), and has continuously held a trademark registration for its valuable KNITTY trademark for that entire time. Two years ago, however, following a worldwide decline in mitten demand, you made the pragmatic decision to cease mitten production forever and focus instead on a new line of designer scarves. Never was a better business decision made. The new line has been a huge success. KNITTY headwear and neck wraps are in such demand you can barely keep the stores stocked. Consumers are snatching up everything with a KNITTY label the instant it hits the shelves without regard to size, color, or pattern.
Unfortunately, the success attracted imitators eager to capitalize on the fame of the KNITTY brand. Especially troubling was the emergence of a line of Knitty swimwear products. Despite repeated requests and warnings, the swimwear producer refused to change the name of its products, and Knitco filed a lawsuit alleging infringement of the KNITTY trademark. The swimwear producer's response was unexpected: rather than back down in the face of a lawsuit, it petitioned the Trademark Trial and Appeal Board ("TTAB") to cancel the KNITTY trademark registration.
As you await the TTAB's ruling, you think back to when you renewed the mark last year. Having renewed the mark on several prior occasions, you confidently tackled the seemingly routine process yourself. You logged into the trademark office's website, you selected the proper filing, and you provided a means of payment. Where the form requested a description of the goods and services on which the mark was being used, you checked the handy box indicating use of "the mark in commerce on or in connection with all goods or services listed in the existing registration."
The TTAB rules that by checking that box, you committed fraud, because KNITTY was then in use only in connection with hats and scarves, but not mittens, which were among the "goods and services listed in the existing registration." The TTAB cancels the KNITTY registration. You lose your registration not only for mittens, but for hats, scarves, or any other article of clothing. You lose all of the presumptions that favor a trademark registrant and now face an uphill, fact-intensive fight in your litigation against the swimwear producer. Moreover, you may have lost rights to the KNITTY mark forever in Florida and Hawaii, markets that you have yet to tap but that the swimwear producer has saturated.
This disturbing hypothetical scenario has been played out in reality many times over the last five years. In its well-publicized ruling in Medinol Ltd. v. Neuro Vasx, Inc., 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003) the TTAB canceled a trademark owner's trademark registration based upon a finding that the trademark owner had defrauded the United States Patent and Trademark Office ("USPTO") when filing a Statement of Use. Since then, the TTAB has canceled numerous trademark registrations based upon what often appeared to be little more than innocent errors by applicants who were not well-versed in the technical aspects of trademark procedures. In effect, the USPTO has established a strict liability standard for statements made by trademark owners in connection with the registration and renewal of their marks. As a result, trademark owners face the prospect of losing valuable registration rights based upon honest mistakes in trademark applications.
A trademark can be almost anything that is used in commerce to help consumers identify the trademark owner as a particular source of goods or services. In order to register a trademark with the USPTO, a mark must actually be used in interstate commerce by the trademark owner. Applicants must certify to the USPTO that such use has been made before a registration can issue. Successful registrants must then file an Affidavit of Continued Use in the sixth year after registration as well as with each subsequent renewal of the registration (which occurs every 10 years).
In Medinol , trademark owner Neuro Vasx had registered its mark "NEUROVASX" for "medical devices, namely neurological stents and catheters." After filing its initial application, Neuro Vasx filed its Statement of Use, and in doing so, checked a box on the form indicating that the mark had been used in connection with all of the goods it had originally identified. However, at the time it checked that box, Neuro Vasx had only used its mark in connection with catheters, not with stents.
The TTAB found that Neuro Vasx's erroneous checkmark constituted a fraud upon the United States Patent and Trademark Office ("USPTO"). Even though it accepted Neuro Vasx's explanation that this was an honest mistake, the TTAB held that the Neuro Vasx's "explanation for the misstatement [ ] - that the inclusion of stents in the notice of allowance was 'apparently overlooked' - does nothing to undercut the conclusion that [Neuro Vasx] knew or should have known that its statement of use was materially incorrect." Medinol at 1210.
The TTAB has since been consistently unsympathetic to myriad defenses, excuses and explanations regarding misstatements in the application process. Because the consequences of a determination of fraud are so severe (the cancellation of the registration), trademark applicants should pause to consider three very important "checks" in connection with applications for, and the maintenance of, registered marks: the first of these checks can get you into trouble, the second may help to keep you out of trouble, and the last one has the potential to get you out of and/or mitigate trouble.
Checks That Can Get You In Trouble.
While Medinol was not the first occasion on which the TTAB found fraud based upon an overbroad statement of use ( see e.g. Western Farmers Association v. Loblaw Inc., 180 USPQ 345, 347 (TTAB 1973)), finding that the registrant had willfully and falsely included goods in the statement of use when the mark in question had never in fact been used on such goods), it was the first clear signal that the TTAB could find fraud to exist even absent any intent by the trademark owner to make a false statement. Neuro Vasx ran into trouble not for affirmatively listing excessive goods on its statement of use, but rather for inadvertently checking the ". . . goods/services [previously] identified . . ." box. Since the Medinol case, the TTAB has made it clear that innocent intent does not excuse false statements.
In canceling the NEUROVASX registration, the TTAB wrote, "[we] recognize that it is difficult, if not impossible, to prove what occurs in a person's mind, and that intent must often be inferred from the circumstances and related statement[s] made by that person." ( Medinol at 1209, quoting First Int'l Serv. Corp. v. Chuckles Inc. , 5 USPQ2d 1628, 1636 (T.T.A.B. 1988)). The Board has since found fraud and canceled registrations under a number of varied circumstances. For example, in Hawaiian Moon, Inc. v. Rodney Doo Opposition No. 91165327 (T.T.A.B. April 27, 2006, not citable as precedent ) the mark HAWAIIAN MOON was cancelled when it was revealed that a miscommunication between counsel and trademark owner had led to the inadvertent execution of an Amendment to Allege Use of the mark on all goods listed in the underlying application. In Jimlar Corp. v. Montrexport S.P.A., Canc. No. 92032471 (T.T.A.B. June 4, 2004, not citable as precedent ) a foreign trademark owner made a renewal filing asserting the continued use of MONTREX, and making no changes to the preexisting list of goods. Registration of the mark was cancelled despite the fact that the owner's representative was genuinely unaware that certain goods were no longer in U.S. circulation under the mark. In J.E.M. International, Inc. v. Happy Rompers Creations Corp., Canc. No. 92043073 (T.T.A.B. February 10, 2005, not citable as precedent ) a trademark owner failed to divide its application into use based and intent to use applications, and instead simply selected the "YES" option when it electronically filed its Statement of Use, thus inadvertently indicating that the mark IT'S A GIRL THING was in use on "all goods and/or services in notice of allowance." The mark was cancelled despite the owner's "lack of knowledge as to Trademark Office procedures. . ." ( J.E.M. at 6)
None of the explanations offered by the trademark owners in the above examples - none of which were questioned by the TTAB - rise to the level of a willful intent to deceive that is usually associated with fraud. In each case, the error leading to a finding of fraud was based upon carelessly checking a box. However, since Medinol , the TTAB has not concerned itself with subjective intent, finding that any false statement with regard to actual use can amount to fraud. Thus, the TTAB has made it abundantly clear that it is willing to find fraud based solely on an errant checkmark on a trademark form.
Checklists And Double Checks
Given that any misstatement in connection with an allegation of use, statement of use, or statement of continued use, including inaccurate checkboxes, can be grounds for cancellation of the registration, all trademark owners should double check all of the goods and services on which a mark is being used prior to filing such statements. These matters should not be treated as simple routine form filings, nor should the fact that a mark was successfully registered for certain goods and services lead one to assume that a renewal can automatically be obtained for the same goods and services.
In all of the trademark proceedings mentioned above, the trademark owners could have avoided cancellation through the use of a simple checklist. Trademark practitioners should extract each individual item from the list of goods and services in a draft application, notice of allowance, or registration, and request and ensure that trademark owners verify (by initials, checkmarks, or any other method) the use of the mark in connection with each and every product. It is critical to double-check the scope of use for a particular mark before filing any document with the USPTO, and a simple checklist can help prevent unfortunate consequences.
Gut Checks
In the wake of the Medinol decision, trademark owners who discovered, post-filing, that they had made a similar "checkbox" mistake may have felt compelled to do nothing in the hope that their error would never be discovered. However, TTAB comments in two recent decisions may have expanded the options available to those trademark owners who realize they have made a mistake, thus providing an incentive for trademark owners to check the accuracy of statements contained in USPTO filings that have already been completed.
In Hurley Int. LLC v. Volta , 82 U.S.P.Q.2d 1339 (T.T.A.B. 2007), the TTAB considered another instance in which a trademark owner had overstated the goods and services on which a mark was being used. The pro se applicants argued unsuccessfully that their case should be distinguished from Medinol and that their application should be amended, not canceled, because their mark had not yet been registered. Unpersuaded, the TTAB canceled the application, noting that the applicants had "provided no compelling argument as to why the law allows for cancellation of a registration after it is obtained through fraud, but does not allow for the prevention of a registration when fraud is revealed and the issuance of a registration is imminent." Hurley at 1344. The Board noted, "however, that a misstatement in an application as to the goods or service on which a mark has been used does not rise to the level of fraud where an applicant amends the application prior to publication." Id. at note 5.
In Herbaceuticals, Inc. v. Xel Herbaceuticals, Inc., Canc. No. 92045172 (T.T.A.B. March 7, 2008) the TTAB suggested in dictum that a fraudulent statement of use will void the registration "in the international class or classes in which fraud based on nonuse has been committed." (Canc. at 12). This dictum suggests that a mark registered in multiple international classes may survive, at least in part, a fraud-based cancellation proceeding (assuming, of course, that the Statements of Use in connection with those additional classes are not themselves overbroad).
Read together, Hurley and Xel suggest a possible softening trend in the strict liability approach to incorrect statements announced in Medinol . In effect, the TTAB may have signaled a willingness to grant applicants a "grace period" between application and publication, during which applicants and their attorneys may double check and amend statements of use without fear of repercussion. Additionally, even where such checks reveal a misstatement post-publication, the TTAB may no longer cancel an application or registration in toto, but rather cancel the application or registration only with respect to those classes of goods or services to which the misstatement relates.
Conclusion
In the post- Medinol world of trademark prosecution, simple mistakes such as checking a box at the wrong time can have far-reaching consequences. Check the facts before you check that box.
David Leit is a Member of Lowenstein Sandler PC where he focuses his practice on intellectual property and technology. Frank J. LeFebvre is an Associate in Lowenstein Sandler's Corporate Department, where he focuses his practice on intellectual property.
Published June 1, 2008.
