Fraud on the PTO Jurisprudence: Further Approval for Timely Corrective Action to Avoid Cancellation

On May 13, 2009, the Trademark Trial and Appeal Board (“TTAB”) recharacterized a previously-issued opinion in its fraud jurisprudence, making it “precedential.” In Zanella Ltd. v. Nordstrom, Inc., Opposition No. 91177858 (TTAB May 13, 2009, previously issued on Oct. 23, 2008), the TTAB continued its interpretation of the Medinol line of cases (see below).

Zanella filed a Notice of Opposition to Nordstrom’s application for registration; in response, Nordstrom counterclaimed, alleging that Zanella had failed to use its registered marks in connection with all of the clothing items included in the claimed registrations. With respect to one of Zanella’s registrations, the TTAB granted Nordstrom’s counterclaim and cancelled Zanella’s registration (despite its use of the mark on some of the products listed in the description), reasoning that Zanella knew or should have known that its mark was not being used in connection with all of the goods and services claimed in several filings with the PTO. Id. at 5.

With respect to four other claimed Registrations cited in opposition to Nordstrom’s application, Normstom raised the same counterclaim seeking cancellation of Zanella’s registrations. The TTAB was less persuaded, however, and dismissed the counterclaim. It found that in each of these other instances, Zanella sought to amend its registration by deleting goods on which the mark was not being used some significant period of time before the opposition was filed. Critical to the TTAB’s decision was the fact that the amendments happened before any dispute emerged about the validity of the registrations. Id. at 6-10.

The TTAB concluded that “opposer’s [Zanella’s] timely proactive corrective action with respect to these registrations raises a genuine issue of material fact regarding whether opposer had the intent to commit fraud.” Id. at 9. The TTAB concluded that this proactivity created a “rebuttable presumption that opposer did not intend to deceive the Office.” Id. at 10. As a result, there was at least a genuine issue of material fact with respect to the intent to commit fraud, and that the registrations could not be cancelled on a motion for summary judgment. Id.

This analysis supports the TTAB’s jurisprudence in at least two prior cases:

* Grand Canyon West Ranch, LLC v. Hualapai Tribe, Opposition No. 91162008, 78 USPQ2d 1696 (TTAB Mar. 17, 2006) [precedential]: TTAB held that amendment to the description of goods/services to remove items based on non-use, if submitted prior to registration and in the absence of any allegation of fraud, could moot a claim of fraud on the PTO; and

* University Games Corp. v. Inc., Opposition Nos. 91168142 and 91170668, 87 USPQ2d 1465 (TTAB May 2, 2008) [precedential]: TTAB held that correcting a false statement during ex parte prosecution creates a rebuttable presumption that the Applicant did not have the requisite willful intent to deceive the PTO.


During a recent PBI conference in Philadelphia at which one of the topics of discussion was the Medinol fraud standard, the panel and participants discussed the possibility of re-evaluating an entire portfolio of trademarks owned by a particular registrant and requesting amendment where appropriate to eliminate those goods or services on which the mark is no longer – or has never been – used in commerce.

The Zanella opinion suggests that this proactivity is a good idea. Pivotal to the TTAB’s acceptance of this modification attempt was the fact that no opposition or petition to cancel was pending at the time that the request to amend was filed. Thus, there was no active dispute that the Registrant was attempting to moot by filing an amendment. The TTAB is typically unimpressed when the Registrant’s attempts to modify occur only after a counterclaim is filed seeking cancellation of the registration(s) at issue based on fraud. See Medinol Ltd. v. Neuro Vasx, Inc., Cancellation No. 92040535, 67 USPQ2d 1205 (TTAB May 13, 2003) [precedential] (request for partial cancellation in response to counterclaim was denied; registration was cancelled); see also Sierra Sunrise Vineyards v. Montelvini S.p.A, Cancellation No. 92048154 (TTAB Sept. 10, 2008) [not precedential] (motion to amend during the pendency of the cancellation proceeding was denied; registration was cancelled); J.E.M. International Inc. v. Happy Rompers Creations Corp., Cancellation No. 92043073, 74 USPQ2d 1526 (TTAB Feb. 10, 2005) [not precedential] (motion to amend description in response to counterclaim was denied; registration was cancelled).

Another proposal floated during the conference was re-applying for critical trademarks in classes that are very narrowly defined. Depending on the size of the trademark portfolios, however, this effort is potentially very expensive and time-consuming.

The fact that registrants and their counsel are even considering such expensive protective efforts suggests that the Medinol line of cases creates an artificially severe penalty for inadvertence or even carelessness in the monitoring of their trademark portfolios. Clearly, the PTO has an interest in eliminating such careless application practice, but this line of cases resembles more the attempt to “peel a grape with an axe” (in the words of one of my favorite Philadelphia judges) than to cure pure fraud.

On February 20, 2009, the Trademark Public Advisory Committee (“TPAC”) held a public webcast in which the topic of the Medinol line of cases was raised and participants complained about the Draconian nature of the punishment (i.e., cancellation of sometimes long-standing registrations) for concededly careless submissions of renewal declarations. Transcript at 137-42.

One of the members of TPAC, James H. Johnson, Jr., explained the complexity of the issue and suggested that the TTAB find a middle ground between “a death penalty and a traffic ticket.” Transcript at 140. Below is an excerpt of his remarks:

“It still remains to be seen and there’s still concern about being accused of fraud by the U.S. Government for a misstatement in the identification of goods. And if I were ever in that position, I don’t know if I would — I would have to decide whether I would want to report it to my client or just make a run for it. That would be a very serious, serious allegation and so the question that we have on TPAC and from other members of the Trademark community is whether the characterization of that behavior, that mistake, as fraud is the appropriate description and whether the remedy of canceling the registration is the appropriate remedy.

“We, of course, all share in your desire and the Trademark Office’s desire to promote the integrity of the register. No body — I mean it helps everyone to assess the risk in adopting marks and to get a clearer picture of what the situation is. But there is a difference between a death penalty and a parking ticket and that’s what we’re wrestling with.

“So what we hope to do is put together some options for looking at the issue to try to address — to balance. Creating an incentive for people to correctly state what they’re using the mark on, to be careful about that, but not creating a situation where the behavior may be mischaracterized or, you know, what is the gravity of this; how should that be addressed.”

* * *

“I invite the people who are listening to this program to give us input and guidance on this issue; how should we address, how should we resolve and balance the desire to have a register that fully reflects accurately what’s going on with the Trademark, that discourages sloppiness with regard to filing applications.

“At the same time, provides the appropriate remedy for people who make a mistake. Is it as simple as you pay a fee for the cost of amending the registration to make it — to reflect the truth or do you do something else? I don’t know. There’s probably some mid ground or some appropriate thing but that’s what we’re wrestling with and we’re hoping to make some significant progress in the next few months and maybe by the next meeting have some proposals for you, if not before then, to consider, to think about, as what the Board can do and what the Trademark Office can do to address this increasingly important issue.”

Transcript at 139-42. It will be very interesting to see where future decisions considering allegations of fraud on the PTO as justification for cancellation of a registration will fall. It may be that the TTAB continues to find reasons (a.k.a. loopholes) why Medinol simply does not apply and therefore that cancellation is not required in a particular case – as it did in the Zanella case.


In 2003, the TTAB issued a precedential opinion clarifying the requirement that a trademark must be used, and continue to be used, in connection with all of the goods or services at issue. Medinol Ltd. v. Neuro Vasx, Inc., Cancellation No. 92040535, 67 USPQ2d 1205 (TTAB May 13, 2003). Ruling on Medinol’s summary judgment motion, the TTAB concluded that the Registrant (Neuro Vasx, Inc.) committed fraud when it alleged actual use as to “medical devices, namely, neurological stents and catheters” in its Statement of Use, when it knew or should have known that it was not using its trademark in connection with stents. Id. at 1209-10. Neuro Vasx conceded that it did not use the mark in connection with stents, and requested partial cancellation of its registration by deleting the term “stents” from the description of goods. It explained that it “apparently overlooked” the fact that it had included “stents” in its Statement of Use and denied Medinol’s allegation that including “stents” in the description was the result of any fraudulent intent.

The TTAB was unpersuaded. Although the TTAB acknowledged that Neuro Vasx denied any fraudulent intent, the TTAB observed that, “[t]he appropriate inquiry is … not into the registrant’s subjective intent, but rather into the objective manifestations of that intent.” Id. The TTAB found it significant that Neuro Vasx signed its Statement of Use under penalty of perjury, including “fine or imprisonment, or both, … and [knowing] that such willful false statements may jeopardize the validity of the application or any resulting registration.” Id.

On this basis, the TTAB admonished that “[s]tatements made with such degree of solemnity clearly are – or should be – investigated thoroughly prior to signature and submission to the USPTO.” Id. Accordingly, “[Neuro Vasx’s] knowledge that its mark was not in use on stents – or its reckless disregard for the truth – is all that is required to establish intent to commit fraud in the procurement of a registration.” Id. at 1210. Finally, the TTAB explained that no disputed issues of fact had been raised, and granted summary judgment in favor of Medinol on the issue of fraud. In a subsequent decision, the TTAB determined that Medinol had standing to bring the cancellation action and ordered that the registration of the mark NEUROVASX be cancelled.

Post-Medinol Cancellation Decisions

Since 2003, Medinol has become pivotal precedent in trademark application prosecution, and applicants need to be aware of the potential risk of cancellation or refusal that they face if they: 1) fail to use the mark in connection with all of the goods or services cited in the application; or 2) fail to remove specific goods or services on which they do not use the mark in question when filing any supplemental statement, including Statements of Use, Amendments to Allege Use or Declarations of Continued Use.

After Medinol, the TTAB has found the following defenses to an allegation of fraud on the PTO as invalid and insufficient to avoid cancellation:

* Failing to understand the USPTO’s requirement that the registrant must demonstrate actual use of the mark on all of the identified goods (Sierra Sunrise Vineyards v. Montelvini S.p.A, Cancellation No. 92048154 (TTAB Sept. 10, 2008) [not precedential])

* Relying on suspected “cultural differences” regarding the relationship of wine to other alcoholic beverages (Sierra Sunrise Vineyards)

* Relying on the advice of counsel – both counsel and applicant have duties to inquire about the scope of use of the mark (Herbaceuticals, Inc. v. Xel Herbaceuticals, Inc., Cancellation No. 92045172, 86 USPQ2d 1572 (TTAB Mar. 7, 2008) [precedential])

* Contending that Statements of Use are divisible into sworn and unsworn portions (Herbaceuticals)

* Asserting that the meaning of the phrase “all goods and/or services” in the body of the Statement of Use means something different from the phrase “the goods/services” in the supporting declaration (Herbaceuticals)

* Maintaining that particular goods or services were added only by Examiner’s Amendment and based on a misunderstanding of USPTO procedures (Grand Canyon West Ranch, LLC v. Hualapai Tribe, Opposition No. 91162008, 78 USPQ2d 1696 (TTAB Mar. 17, 2006) [precedential])

* Misunderstanding the requirements of the Trademark Act (Hacehette Filipacchi Presse v. Elle Belle, LLC, Cancellation No. 92042991, 85 USPQ2d 1090 (TTAB Apr. 9, 2007) [precedential])

* Having an insufficient understanding of the English language (Hachette)

* Considering shipping of products for repair purposes as “use” – which is insufficient to demonstrate “use” in commerce (Bose Corp. v. Hexawave, Inc., Opposition No. 91157315, 88 USPQ2d 1332 (TTAB Nov. 6, 2007) [not precedential])

* Misunderstanding the requirements under the Trademark Act, acting in good faith, and the poor health of Applicant were deemed (collectively) insufficient to avoid final refusal to register based on allegation of fraud (Hurley Int’l LLC v. Volta, Opposition No. 91158304, 82 USPQ2d 1339 (TTAB Jan. 23, 2007) [precedential])

* Lacking a proper understanding of the phrase “use in commerce” (Standard Knitting, Ltd. v. Toyota Jidosha Kabushiki Kaisha, Opposition No. 91116242, 77 USPQ2d 1917 (TTAB Jan. 10, 2006) [precedential])

* Relying on one-time giveaway of 25 product samples five years prior to filing the application as sufficient to demonstrate “use” in commerce (Sinclair Oil Corp. v. Kendrick, Opposition No. 91152940, 85 USPQ2d 1032 (TTAB June 6, 2007) [precedential])

* Failing to understand the legal significance of statements in a Section 8 Declaration (Jimlar Corp. v. Montrexport S.P.A., Cancellation No. 92032471 (TTAB June 4, 2004) [not precedential])

* Arguing that the registrant was using its mark in connection with “goods” identified in the Statement of Use as opposed to “the goods” identified in the Statement of Use (Nougat London Ltd. v. Garber, Cancellation No. 92040460 (TTAB May 14, 2003) [not precedential]); and

* Lacking counsel and misunderstanding of requirements for use-based application (Tequila Cazadores, S.A. De C.V. v. Tequila Centinela S.A. De C.V., Opposition No. 91125436 (TTAB Feb. 24, 2004) [not precedential]).