Authored by Haviland M. M. Kebler, Esq. and Melanie McComb
“The grant and protection of intellectual property rights involves a pact with the general public; this case represents a violation of that pact.” In a compelling dissent, Judge Reyna challenges the majority’s ruling in favor of Great Concepts, LLC. The dissent asserts that the decision undermines the specialized experience in regulating conduct before the United States Patent and Trademark Office (“USPTO”) and the statute that Congress entrusted it to administer.
The action was brought to the Appellate Court after the Trademark and Trial Appeal Board (“TTAB”) ruled to cancel Great Concept’s trademark. There is a longstanding precedent that the USPTO has the authority to cancel trademarks due to the rights and benefits conferred to applicants. However, the majority has departed from convention asserting that the “USPTO is without authority to cancel a trademark in situations where a registrant defrauds the agency with false declarations intended to deceive the agency into granting incontestable rights for its continued use of a mark.”
In the course of maintaining a registration, an applicant has an option to simultaneously file a Section 15 declaration, which requires declaration that the mark is free and clear of encumbrances and this is explicitly stated twice in the declaration. In the underlying TTAB case, Great Concepts, LLC submitted a Section 15 declaration which asserted the absence of adverse judgements or pending proceedings involving the mark, however counsel was involved in a cancellation proceeding and civil action concerning the mark. When confronted, Great Concept’s counsel claimed ignorance of the legal requirements for filing a Section 15 declaration, admitted to directing a paralegal to file it, and not reading the document before signing. Consequently, the TTAB found that Great Concepts had committed fraud.
Under the law, fraud requires an intent to deceive. Here, the question hinges on whether counsel has the requisite intent. In its opinion, TTAB supported its determination that there was fraud with circumstantial evidence surrounding the Section 15 declaration filing. On appeal, Great Concepts attempted to draw parallels with the Bose case. Judge Reyna, on dissent, noted in Bose, an honest misunderstanding was presented, whereas here, the counsel knowingly signed a false statement and failed to take remedial action upon becoming aware of the false submission. Great Concepts contends that the maximum sentence for fraud committed to obtain incontestability rights should be limited to the revocation of incontestability status, despite a Board ruling stating otherwise.
In its opinion, the majority focused their decision on the premise that this applies to applicants seeking registration, not those maintaining it. Judge Reyna addresses the majority’s remedy, asserting that the USPTO has the authority to cancel a trademark in this case, derived from the statute that mandates refraining from knowingly making false, material statements. Reyna’s dissent emphasizes the belief that the wrongdoer should be held accountable or the public’s reliance on the system is jeopardized. Reyna would affirm the TTAB’s conclusion that Great Concepts, LLC intentionally defrauded the TTAB in an attempt to obtain incontestability rights and its action to cancel the registration.