Prev # 24: The TTAB Rules That Reckless Disregard Of The Truth Is Enough To Prove Fraud – Intellectual Property

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In the seminal fraud case of About Bose, the CAFC has left open the question of whether a “reckless disregard” of the truth is sufficient to find a USPTO fraud. The board has now answered this question in the affirmative, granting a request for cancellation of a trademark registration. BY DANTANNA for “steak and seafood restaurant” for fraud. By no longer requiring proof of intent to deceive the USPTO, the Board has significantly lowered the bar for proof of fraud. In a much less consequential decision, the Commission also supported the opposition of the applicant Chutter to the registration of the marks DANTANNA’S for “spices and spice rubs” and DANTANNA’S TAVERN for “restaurant and bar services” in view of the trade mark previously used by Chutter DAN TANA for catering services and marinara sauce.
Chutter, Inc. v Great Management Group, LLC and Chutter, Inc. v Great Concepts, LLC, 21 USPQ2d 1001 (TTAB 2021)
[precedential] (Opinion of judge Marc A. Bergsman).

Fraud: Plaintiff Chutter’s fraud complaint was based on defendant Great Concepts’ filing of a Section 15 declaration of incontestability in which his attorney, Mr. Taylor, said there was no Civil action or USPTO proceeding pending against the DANTANNA trademark and registration. Chutter alleged that this statement was knowingly false (because an annulment and civil action were pending regarding the DANTANNA’S trademark) and that it was made with the intent to deceive the USPTO into “Accepts” the statement.

The Commission noted that it is “well established that the inclusion of false statements in an affidavit / statement under section 15 is important and, if done with the relevant degree of intent, constitutes fraud. justifying the cancellation of the relevant registration under Article 14 (3) of the Trademark Law. “

A false affidavit / declaration under section 15, when invoked by the USPTO, allows a registrant to obtain a new right that he or she would not otherwise have, in particular, the right to have accepted. its registration, in litigation, as conclusive evidence, rather than simply prima facie evidence of the proprietor’s exclusive right to use the registered mark in commerce. See Section 33 of the Trademark Act, 15 USC § 1115 (b).

The Board noted that the USPTO does not “accept” a Section 15 affidavit or declaration, but simply reviews the documents for compliance with the law and rules (signature, timeliness, and proper terminology). , then acknowledge receipt.

It was not disputed that at the time the statement was filed, Mr. Taylor was aware of the pending legal proceedings relating to the trademark and registration of DANTANNA, that he was unaware of the legal obligation to file a Section 15 declaration, and that the USPTO has acknowledged receipt of its declaration. Mr. Taylor testified that he did not examine the document “carefully enough to see that the statement is in [t]here incorrectly. Neither he nor Great Concepts ever informed the USPTO of the false statement, although they have been aware of the same since 2015. Great Concepts admitted that the statement was false.

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Chutter accused the false statement of having been made with “willful blindness” as to the content of the statement or, failing that, with “reckless indifference” to the veracity of the statement because Mr. Taylor did not know. what he was signing and failed to inquire about its accuracy. The Council agreed with the latter allegation.

“Reckless contempt” is defined as “conscious indifference to the consequences of an act”. See BLACK LAW DICTIONARY (11th ed. 2019) under “Negligence”. The Council observed that “[a] the declarant is accused of knowing what is in the statement being signed, and by failing to make a proper inquiry into the accuracy of the statements, the declarant is acting with reckless disregard for the truth. “

Mr. Taylor paid little or no attention to the document he was signing under oath and thus ignored the importance of the benefits he was obtaining for his client. By failing to determine and understand the scope of the document he was signing, far from conscientiously fulfilling his duty of counsel, Mr. Taylor acted with a reckless disregard for the truth; nor did he take any action to remedy the error once it was brought to his attention.

If the Commission were to find that Mr. Taylor’s conduct did not constitute fraud, it could “encourage reporters to conclude that such disregard is of no consequence and that they may fail to read the documents they sign. without penalty. “Statements made with such a degree of solemnity are clearly or should be fully investigated before being submitted and signed to the USPTO.”

The Council stressed that Bose the CAFC ruled that the intent to deceive must be intentional. The Supreme Court and various circuit appeal courts have ruled that “willful” includes reckless behavior. Thus, the Council retained:

When it comes to registering and maintaining trademarks, when the USPTO relies on complete, accurate and truthful statements … reckless contempt equates to intent to deceive and satisfies the requirement of intent to deceive. ” [Emphasis supplied].

And so. the Council granted the request for cancellation of the registration of DANTANNA for fraud.

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Risk of confusion: The board’s likelihood of confusion analysis was straightforward: the marks are very similar; the goods are related and travel in the same commercial channels to the same categories of consumers; and the services are partly identical and are offered in the same commercial channels to the same categories of consumers.

Consequently, the Commission allowed the opposition to both requests.

Read comments and post your comment here.

TTABlogger comment: So will we see more fraud allegations? It seems that, to prove reckless disregard, one would have to take the declarant’s testimony, just as in the pure “intent to deceive” case. Have we actually gone back to the old “knew or should have known” standard of Medinol?

Does this decision make the failure to remove service goods from an Article 8 declaration more serious? Can signing a Section 8 declaration that includes “unused” goods and services be “fraud”?

TTABlog

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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