Federal Circuit rules that fraud after registration is not a basis for cancellation
In a split panel decision, the US Court of Appeals for the Federal Circuit has overturned the TTAB and ruled that a fraudulent declaration under Section 15 of the Lanham Act is not a basis for cancellation of an otherwise incontestable registered mark (Great Concepts LLC v Chutter Inc, Case 22/1212, 18 October 2023, Dyk, Stark, JJ, Renya, J, dissenting).
Great Concepts applied to register the mark DANTANNA’S for a steak and seafood restaurant in 2003, which resulted in a successful registration in 2005.
A year later, Chutter’s predecessor-in-interest, Dan Tana, petitioned the board to cancel the registration based on an alleged likelihood of confusion with Tana’s common law mark DAN TANA, used for his restaurant services. This cancellation proceeding was suspended during a civil action in which Tana successfully sued Great Concepts for trademark infringement.
Afterward, the TTAB dismissed Tana’s cancellation proceeding “based on the petitioner’s apparent loss of interest” after he failed to respond to the board’s order to show cause.
Meanwhile, Great Concepts’ former attorney, Frederick Taylor, filed a combined declaration of use under Section 8 of the Lanham Act, and a declaration of incontestability under Section 15. In the latter declaration, relating to Great Concepts’ effort to obtain incontestable status for its already registered mark, Taylor falsely declared that “there is no proceeding involving said rights pending and it is not disposed of either in the USPTO or in the courts”.
Chutter then petitioned the USPTO for cancellation of the registration based on Taylor’s false Section 15 affidavit. The TTAB found that Taylor’s Section 15 declaration was fraudulent and cancelled the registration under Section 14 of the Lanham Act. Great Concepts appealed.
The Federal Circuit was confronted with the issue of whether Section 14 - which allows a third party to seek cancellation of a registration when it was fraudulently obtained - permits the TTAB to cancel a trademark’s registration based on a fraudulent Section 15 declaration, filed for the purpose of acquiring incontestability status for its already registered mark. Reversing the board’s decision, the court held that Section 14 does not permit the TTAB to cancel a registration under these circumstances.
Focusing on the statutory language, the Federal Circuit noted that Section 14 permits a third party to file a “petition to cancel a registration of a mark… [a]t any time if the registered mark was obtained fraudulently”. Explaining that the word ‘obtaining’ has a plain and ordinary meaning in this context, the court noted that Taylor’s fraudulent Section 15 declaration only sought incontestable status for its already registered trademark - a different right from registration.
Since “fraud committed in connection with obtaining incontestable status is distinctly not fraud committed in connection with obtaining the registration itself” and further, since fraud committed in connection with an incontestability declaration is not among the “numerous bases on which a third party may seek Board cancellation of a registered mark” under Section 14, the Federal Circuit held that the TTAB was not authorised by the statute to cancel the registration.
In dissent, Judge Reyna faulted the majority for instructing the USPTO “that there exists a milepost in the trademark administrative continuum, a green light, beyond which inequitable conduct is encouraged by the promise of great gain with little to no meaningful risk to the registrant”. He warned that the Federal Circuit “should be wary not to excuse fraud that is undertaken at any stage within an administrative process” and “must recognise that the grant and protection of intellectual property rights involves a pact with the general public”.
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