The Lanham Act §14(3) permits cancellation of a U.S. Trademark registration, at any time, if the registration was obtained fraudulently.1 Despite the plain language of the Act, petitions for cancellation have been relatively rare, as establishing ‘fraudulent’ registration has been difficult. Prior to 2003, ‘fraudulent’ was generally determined by identifying three elements: Statements that are 1) False; 2) Material; and 3) Made Knowingly. 2 Prior to 2003, the vast majority of litigation regarding ‘fraudulent’ registrations tended to center on whether or not ‘false’ statements were "made knowingly." Given this high burden of proof, more often than not the Trademark Trial and Appeal Board ( the "TTAB") wound up dismising claims of fraud. That all changed in Medinol Ltd. v. Neuro Vasx Inc.3
In Medinol, Neuro Vasx filed an application to register the mark NEUROVASX for medical devices, specifically neurological stents and catheters.4 Neuro Vasx later filed a Statement of Use, which was signed by its Chief Executive Officer, declaring that the "applicant is using the mark in commerce on or in connection with the following goods/services: Those good/services identified in the Notice of Allowance in this Application."5, i.e., catheters and stents. The crux of the case was that at the time the Statement of Use was filed, Neuro Vasx was using the mark only on catheters and not on stents. The Registration then issued for the medical devices, both neurological stents and catheters.
Medinol Ltd., a competitor, filed a petition to cancel the Neuro Vasx Registration, alleging that at the time Neuro Vasx filed its Statement of Use, it had not used the mark on or in connection with stents, and had not, as of the date of the petition to cancel, commenced such use.6 Medinol Ltd. alleged that the false statements set forth in the Statement of Use (which stated that Neuro Vasx was using the mark on all of the goods set forth in the application) including stents, amounted to committing fraud in the procurement of the Neuro Vasx Registration. 7 In response, Neuro Vasx sought to partially cancel the Registration by deleting the word ‘stents’ from the list of goods and moved for summary judgment to dismiss Medinol Ltd’s petition for cancellation. 8
In their response to the Neuro Vasx’s motion to dismiss, Medinol Ltd argued that the fraud in obtaining the Registration tainted the whole Registration, and that Neuro Vasx could not subsequently ‘cure’ the fraud by amending the Registration. Medinol Ltd also argued that if the TTAB did not find the entire Registration fraudulent, trademark applicants would then have absolutely no incentive to be even remotely truthful when filling out an application or a Statement of Use.9 Medinol Ltd’s reasoning was that an applicant included unused goods or services, and the misstatement was later caught, the only negative consequence would be that the applicant would be forced to amend the resulting Registration to delete the unused good or service. Meanwhile, Neuro Vasx continued to maintain that this whole situation was merely an oversight and a harmless error which it was attempting to fix by amending the original Registration.10
What followed next surprised even long-time TTAB observers. The TTAB denied Neuro Vasx’s motion to dismiss and sua sponte entered summary judgment in Medinol Ltd’s favor on the issue of fraud, finding that the facts of the case established Neuro Vasx knew or should have known at the time it submitted its Statement of Use that the mark was not in use on all of its goods.11 The TTAB also indicated that it would cancel Neuro Vasx’s Registration in total provided that Medinol Ltd could prove that it had standing to petition for cancellation, which it later did.12 In their decision, the TTAB used uncharacteristically strong language, including that once it is mistakenly indicated that a mark will be used on goods, there is no going back and fixing the registration. Further, the TTAB held that the burden of having to demonstrate "made knowingly" was no longer required to establish fraudulent registration. The Court indicated to Neuro Vasx that this was not a complicated registration where an innocent mistake might sometimes occur and that the onus is on the registrant to verify the truthfulness of their registration. The TTAB further held that using the excuse that ‘I signed it, but I didn’t really know what it said’ will not be tolerated. If you knew, or should have known, that it was a mistake, then it is fraud. 13
This decision sent shockwaves through the intellectual property community. No longer would "error" or "mistake" be an acceptable defense to charges of fraud. The TTAB has subsequently been consistently unsympathetic to a whole spectrum of defenses, excuses and explanations regarding misstatements in the application process.13 Since Medinol, the TTAB has not concerned itself with subjective intent (willful intent to deceive), finding that any false statement with regard to actual use can amount to fraud.14 In essence, the TTAB has made it abundantly clear that it is willing to find fraud based solely on an errant checkmark on a trademark form.15
Not surprisingly, this has created a weapon for competitors. Market competitors now troll the application database, seeking a way to cancel their competition’s registration. However, this tactic has created a "mutually assured destruction" phenomenon, because if portions of your competitor’s portfolios are vulnerable, then portions of your portfolio are probably similarly vulnerable. What then, is an attorney to do to ensure that his client’s intellectual property does not fall prey to a Medinol – style cancellation?
1. Monitor Your Marks. Meticulously monitoring your trademark usage is the best protection against Medinol fraud.16 You should ensure that all signed filing alleging use accurately reflect the usage. You should develop a checklist system with your client’s marketing department that mandates physical evidence of each use before any filings that allege use are sent to the PTO.17
2. Conduct a "Fraudit". On at least a yearly basis, conduct an audit of key trademark registrations within a client’s portfolio.18 You should review all filings that involve identifications of goods and services that are supported by a declaration. Then for each of those filings, make a detailed checklist of exactly what goods and services are alleged and attempt to verify the accuracy of the declaration, specifically keeping Medinol fraud concerns in the forefront.19
3. Keep Multi-Class Registrations to a Minimum. Taking into account Medinol’s reach, multi-class trademark applications should be kept to a minimum.20 Although using the multi-class form saves your clients (or you) from the administrative burdens of staying abreast of separate registrations for the same mark, it exposes all classes of use vulnerable to cancellation when fraud is found in conjunction with one.21 A much safer practice is to file separate registrations of the same mark for each class of use, and thus avoid your client’s portfolio crumbling like a house of cards if one registration is found to be fraudulent.
4. Amend Discovered Errors Prior to Publication. As Medinol showed, amending a registration to remove an overbroad use does not protect it from cancellation. 22 However, a subsequent case suggests (in dictum) that an amendment filed prior to publication "does not rise to the level of fraud." Hurley Int. LLC v. Volta, 82 U.S.P.Q.2d 1339, 1344 n.5 (T.T.A.B. 2007). Hence, if you discover an error or mistake before publication, you may want to amend it, especially if the response to the mistake follows closely in time to the discovery of said mistake. It would appear that the Hurley ruling has created a "grace period" in between application and publication, which allows attorneys to amend statements of use without fear of repercussion.23
5. File New Registrations for Vulnerable Marks. If you discover a mistake after publication, you should file a new application for the mark with a more narrow statement of use.24 Putting your head in the sand and crossing your fingers in the hopes that no one will notice is not a course of action that will benefit anyone. It will in fact leave your clients powerless to police their own marks, as the accused infringers will be able to raise fraud as an affirmative defense in any subsequent litigation.25
6. Beware of International Trademark Registrations Under the Madrid Protocol. The post-Medinol trademark climate in the United States does not mesh will with the Madrid Protocol. Pursuant to the Madrid Protocol, a mark owner can file a "root" registration in one signatory country and then easily register the mark in other signatory countries.26 Medinol causes problems with this arrangement because, unlike the United States, most foreign countries don’t require use of a mark, or intent to use a mark, before approving trademark protection.27 Consequently, foreign mark owners frequently provide very liberal descriptions of goods and services associated with their marks.28 In the post-Medinol world, you need to ensure that your foreign clients (who may still be relying on the Madrid Protocol) have fully compliant statements of use in their U.S. Extension applications.29
In our post-Medinol world, attorneys and their clients simply cannot afford to ignore the factual representations made during the prosecution and maintenance of their trademark applications and registrations. Using these procedures and other common-sense measures, attorneys and their clients can safeguard their trademark portfolios and defend against those portfolios’ vulnerability to attack on the basis of fraudulent misrepresentations. Cancellation of a whole portfolio can be prevented. Be diligent in preparing your statements of use, monitoring your marks, and re-registering marks that are currently protected by fraudulent registrations.
1 15 U.S.C. § 1064(3) (2008).
2 Mister Leonard Inc. v. Jacques Leonard Couture Inc., 23 U.S.P.Q.2d 1064, 1066 (T.T.A.B. 1992).
3 Medinol Ltd. v. Neuro Vasx Inc., 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003).
6 Laura Goldbard, Stroock Special Bulletin, June 26, 2006.
12 Checking Trademark Fraud: A Post Medinol Guide to Best Practices for Trademark Applications and Renewals, David Leit and Frank LeFebvre, The Metropolitan Corporate Counsel, June, 2008.
13Checking Trademark Fraud: A Post Medinol Guide to Best Practices for Trademark Applications and Renewals, David Leit and Frank LeFebvre, The Metropolitan Corporate Counsel, June, 2008.
16Johnson, James H. Legal Alert, Sutherland, August, 2008.
18Mitchell, Christoper P. Post Medinol Filing Considerations, http://ipipblog.wordpress.com (February 19, 2008)
20Johnson, James H. Legal Alert, Sutherland, August, 2008.
22Medinol Ltd. v. Neuro Vasx Inc., 67 U.S.P.Q.2d 1205 (T.T.A.B. 2003)
23Checking Trademark Fraud: A Post Medinol Guide to Best Practices for Trademark Applications and Renewals, David Leit and Frank LeFebvre, The Metropolitan Corporate Counsel, June, 2008.
24Johnson, James H. Legal Alert, Sutherland, August, 2008
26 Laura Goldbard, Stroock Special Bulletin, June 26, 2006.
27Johnson, James H. Legal Alert, Sutherland, August, 2008.
28Mitchell, Christoper P. Post Medinol Filing Considerations, http://ipipblog.wordpress.com (February 19, 2008)
29Johnson, James H. Legal Alert, Sutherland, August, 2008.
Joseph F. Emmerth is an associate with the family law firm of Sullivan Taylor & Gumina in Wheaton, Illinois. He received his J.D. from DePaul University College of Law in 2005, where he was an Intellectual Property Scholarship and Dean’s Scholarship recipient. Mr. Emmerth is a member of the DuPage County Bar Association and the Illinois State Bar Association, where he currently serves as a member of the Judicial Evaluation Committee for Outside Cook County. Joseph would like to thank Maria Brink and Ivan Moody for their assistance in the preparation of this article.