Articles
Client Alert Standard of Fraud in the U.S. Trademark Office--Relaxed?
By Baila H. Celedonia; Sujata Chaudhri
Jul. 20, 2009
In its ruling in Medinol Ltd. v. Neuro Vasx, Inc., 67 U.S.P.Q. 2d 1205 (T.T.A.B. 2003), and numerous cases that
followed, the Trademark Trial and Appeal Board (the “Board”) of the U.S. Patent and Trademark Office (“USPTO”) has
consistently held that it is fraud on the USPTO to claim that a mark is in use in commerce on each and every good or
service listed in a required statement of use made under penalty of perjury when such is not the case. The Board
rejected Neuro Vasx’s motion to amend its application to delete the goods incorrectly included and held that the
fraud invalidated the entire registration.
The Medinol line of cases left counsel in a quandary as to whether it was possible to correct an inadvertent error
once made in a Statement of Use.
We have now received some comforting guidance from the Board in Zanella Ltd. v. Nordstrom, Inc. 90 U.S.P.Q. 2d 1758
(T.T.A.B. 2008).
Background. When the Board initially decided Zanella, the decision was designated as non-precedential. However,
nearly six months later, in an unusual move, the Board redesignated its formerly non-precedential decision as
precedential. Clearly, the Board was of the opinion that the Zanella decision (discussed in detail below) was
important.
The Decision. Nordstrom, Inc. (“Nordstrom”) filed an intent-to-use application to register the mark ZELLA for
various items of women’s and girl’s athletic sportswear and active apparel. Zanella Ltd. (“Zanella”) filed an
opposition against Nordstrom’s application on the basis of likelihood of confusion with Zanella’s registered mark
ZANELLA. In the Notice of Opposition, Zanella pleaded five incontestable registrations for the mark ZANELLA for a
variety of men’s and women’s clothing.
Nordstrom timely filed an answer to the Notice of Opposition. After filing its answer, Nordstrom, through
discovery, learned that Zanella had not used the ZANELLA mark on several goods covered by the pleaded registrations.
Consequently, Nordstrom filed motions (i) to amend its answer to include a counterclaim to cancel all five pleaded
registrations on the ground of fraud, and (ii) for summary judgment based on its fraud counterclaim.
The Board granted Nordstrom’s motion to amend its answer, and also granted Nordstrom’s summary judgment motion with
respect to one of the pleaded registrations, ordering its cancellation. With respect to this registration, the
Board found that there was no dispute that Zanella had not used its ZANELLA mark in connection all of the goods
covered by that registration either at the time of filing of its application or when it filed its fifth-year
Declaration of Use and Incontestability under Sections 8 and 15 of the Trademark Law. Citing Medinol, the Board
ordered cancellation of the entire registration because “the registration would not have issued nor the combined
Sections 8 and 15 affidavit accepted and acknowledged but for the material representation.”
With respect to the remaining four pleaded registrations, the Board denied Nordstrom’s summary judgment motion,
holding that there was a genuine issue of material fact as to whether Zanella had the intent to commit fraud on the
USPTO. The factual difference between the cancelled registration and these remaining four registrations was that
Zanella had affirmatively deleted those goods on which it was not using the ZANELLA mark. For three of them,
Zanella made the deletion at the time of filing Sections 8 and 15 declarations. With respect to the last remaining
registration, it had voluntarily requested the USPTO delete the goods on which it had not used the mark much after
it filed a Sections 8 and 15 declaration. These deletions all occurred prior to Zanella’s attempt to enforce these
registrations against Nordstrom’s application.
The Board found that Zanella’s “timely proactive . . . action . . . in correcting any false statements prior to any
actual or threatened challenge to the registrations creates a rebuttable presumption” that Zanella “did not intend
to deceive” the USPTO. The Board held that the evidence submitted by Nordstrom in support of its summary judgment
motion, namely, Zanella’s discovery responses, admitting non-use and the file histories of the registrations alone,
“failed to rebut the presumption of no intent to commit fraud” on the USPTO.
Significance of the Decision. A successful fraud challenge can effectively limit a registrant’s ability to enforce
its rights in a registration. This decision is significant because it allows registrants to take proactive and
timely steps to correct a registration by deleting those goods and services inadvertently included in any statement
of use. As a result of this decision, if such proactive steps are timely taken, challenges to registrations on
fraud grounds are now likely to be significantly harder to establish.
A word of caution! Such corrections will not preclude a successful fraud allegation. Rather, such corrections will
only create a rebuttable presumption that there was no intention to commit fraud. However, we believe that by
redesignating its non-precedential decision to precedential, the Board intended to signal that it has softened the
fraud standard set forth in Medinol and its progeny, and to encourage registrants to correct errors which might
exist.
Practice Tips. Now may be a good time to contact your trademark counsel to discuss a portfolio audit. Such audit
can determine whether amendments need to be made to the descriptions of goods and/or services covered by your
registrations. If maintenance deadlines on any of these registrations are coming due, appropriate amendments must
be made to the descriptions of goods and services by affirmatively deleting all goods or services not in use at the
time of filing. However, even if there are no close maintenance deadlines, you should consider amending any
registrations in which goods or services are incorrectly included or have been left in the description. These
amendments can be made fairly easily and cheaply. These proactive steps should be considered sooner rather than
later. Otherwise, when you seek to enforce a registration with an inadvertent error, it will be too late to make
that correction.
For more information about the review of a trademark portfolio, please feel free to contact us. Our contact
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