Eighth Circuit: a step towards the inequitable conduct doctrine?

United States of America

Ownership of a trademark or service mark registration on the US Patent and Trademark Office’s (USPTO) Principal Register provides the registrant with both substantive and procedural benefits in litigation to protect the registered mark. Nevertheless, as the US Court of Appeals for the Eighth Circuit confirmed in Fair Isaac Corp v Experian Information Solutions Inc (Case 10-2281, August 17 2011), those benefits are of limited value if the registration is vulnerable to attack under the grounds for cancellation set forth in Section 14 of the Lanham Act (15 USC § 1064), one of which is that the registration was procured fraudulently.

The appeal before the court arose from a suit brought by two affiliated credit score developers against three credit bureaus challenging, among other things, the bureaus’ use of the lead plaintiff’s registered 300-850 mark. The defendants responded to the plaintiff’s trademark causes of action by seeking the invalidation of the lead plaintiff’s mark and the cancellation of the registration covering it. Prior to submitting the case to a jury, the trial court determined that the lead plaintiff’s mark was merely descriptive of the associated services. The jury then found that:

  • the mark was invalid because it lacked acquired distinctiveness; and
  • the lead plaintiff had fraudulently procured its registration through false representations made to the examining attorney assigned to its application.

Based on the second of these findings, the trial court ordered the USPTO to cancel the lead plaintiff’s registration.

In declining to set aside this outcome on appeal, the Eighth Circuit began its analysis by noting that the defendants were required to rebut the presumption of mark validity attaching to the lead plaintiff’s registration under 15 USC § 1115(a). It then held that the defendants had done so successfully by showing that the mark was descriptive and that “consumers in the market immediately understand ‘300-850’ to describe the qualities and characteristics of [the lead plaintiff’s] credit score [system] - that the credit score will be within the range of 300-850.”

Of greater interest, however, was the court’s affirmance of the finding of fraudulent procurement. While prosecuting its application, the lead plaintiff twice represented to the USPTO that it was unaware of any other parties that used the applied-for mark “as a unique identifier for credit bureau risk scores”. Whether in reliance on these statements or for other reasons, the examining attorney assigned to the application withdrew an initial rejection of the application, and the application subsequently matured into the registration at issue in the litigation.

In affirming the jury’s finding of fraud, the Eighth Circuit adopted a methodology at odds with the one usually applied in evaluations of allegedly false statements made to the USPTO. Specifically, the court relied in part on the defendants’ use of “a PTO expert, who testified that a reasonable examiner would consider it important in deciding whether to allow the registration to know whether others were using 300 to 850 as a score range for credit scoring services”, and in part on the registration’s issuance after the lead plaintiff had made the statements in question. According to the court, “there was sufficient evidence for a reasonable jury to determine that the PTO relied on a false representation in deciding whether to issue the registration”.

To be found fraudulent, however, a misstatement in the application process must be “material”, and courts and the US Trademark Trial and Appeal Board alike have long held that materiality in the trademark prosecution context requires a showing that the registration in question would not have issued had the statement in question not been made. The test for materiality used by the Eighth Circuit - whether an examiner would have considered an applicant’s statement “important” - is a departure from this 'but-for' test and, indeed, is largely indistinguishable from the one for materiality historically used in patent infringement cases in which claims of inequitable conduct have been raised. And, of equal importance, that standard had been rejected even in the patent context by the US Court of Appeals for the Federal Circuit’s holding nearly three months earlier in Therasense Inc v Becton Dickinson & Co (Case 2008-1511, May 25 2011) that “as a general matter, the materiality required to establish inequitable conduct is but-for materiality”. The Eighth Circuit’s holding on this issue therefore arguably stands on shaky doctrinal ground; whether future courts occupy that same ground in the future remains to be seen.

Theodore H Davis Jr, Kilpatrick Townsend & Stockton LLP, Atlanta

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