“Fraud in procuring a trademark registration or renewal occurs when an applicant knowingly makes false, material representations of fact in connection with his application.” In re Bose Corp., 580 F.3d 1240, 1243 (Fed. Cir. 2009) (quoting Torres v. Cantine Torressella S.r.l., 808 F.2d 46, 48 (Fed. Cir. 1986)). “A party seeking cancellation of a trademark registration for fraudulent procurement bears a heavy burden of proof.” Id. (citation omitted). “Indeed, ‘the very nature of the charge of fraud requires that it be proven ‘to the hilt' with clear and convincing evidence. There is no room for speculation, inference or surmise and, obviously, any doubt must be resolved against the charging party.'” Id. (internal quotation omitted).

In Bose, the Federal Circuit held that “there is ‘a material legal distinction between a ‘false' representation and a ‘fraudulent' one, the latter involving an intent to deceive, whereas the former may be occasioned by a misunderstanding, an inadvertence, a mere negligent omission, or the like.'” Id. (quoting Kemin Indus., Inc. v. Watkins Prods., Inc., 1976 WL 21132, at *3 (TTAB 1976) (internal citation omitted)). “In other words, deception must be willful to constitute fraud.” Id.

Thus, a registration “is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO,” and “[s]ubjective intent to deceive, however difficult it may be to prove, is an indispensable element in the analysis.” Id. at 1245. “Of course, ‘because direct evidence of deceptive intent is rarely available, such intent can be inferred from indirect and circumstantial evidence. But such evidence must still be clear and convincing, and inferences drawn from lesser evidence cannot satisfy the deceptive intent requirement.'” Id. (quoting Star Sci., Inc. v. R.J. Reynolds Tobacco Co., 537 F.2d 1357, 1366 (Fed. Cir. 2008)). “When drawing an inference of intent, ‘the involved conduct, viewed in light of all the evidence . . . must indicate sufficient culpability to require a finding of intent to deceive.'” Id. (quoting Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988)).

A third party may seek cancellation of a registration based on fraud committed in connection with its issuance or its maintenance. Great Concepts, LLC v. Chutter, Inc., 90 F.4th 1333, 1339 (Fed. Cir. 2024) (citing 15 U.S.C. § 1064(3)).  In Great Concepts, the Federal Circuit reversed the Board's decision in Chutter, Inc. v. Great Mgmt. Grp., LLC, 2021 WL 4494251 (TTAB 2021) (“Chutter”), finding fraud in the Section 15 portion of a combined declaration under Sections 8 and 15 of the Trademark Act. The reversal was based on the narrow ground that the Trademark Act “does not authorize cancellation of a registration when the incontestability status of that mark is ‘obtained fraudulently.'” Great Concepts, 90 F.4th at 1337. As the court explained, “[o]ur ruling that a Section 14 cancellation of registration is not an available remedy for a fraudulent Section 15 declaration – a conclusion we reach because Congress chose not to empower the Board with the ability to impose that specific consequence – is a ruling only that this one remedy is unavailable, leaving the Board, we expect, with sufficient mechanisms to adequately deter fraud.” Id. at 1344. 

The Board recently affirmed that reckless disregard satisfies the requisite intent for fraud on the USPTO in trademark matters, citing Chutter. Ruifei (Shenzhen) Smart Technology Co., Ltd. v. Shenzhen Chengyan Science and Technology Co., Ltd., Cancellation No. 92077931 (TTAB July 2, 2024).

“Reckless disregard” is the “‘conscious indifference to the consequences of an act.'” Chutter, 2021 WL 4494251, at *9 (quoting BLACK'S LAW DICTIONARY (11th ed. 2019)). When submitting a declaration to the USPTO, a “declarant is charged with knowing what is in the declaration being signed, and by failing to make an appropriate inquiry into the accuracy of the statements the declarant acts with a reckless disregard for the truth.” Id. (citing Standard Knitting, Ltd. v. Toyota Jidosha K.K., 2006 WL 173463, at *12 (TTAB 2006)); cf. Bose, 580 F.3d at 1246 n.2 (leaving open the question of whether “a submission to the [US]PTO with reckless disregard of its truth or falsity satisfies the intent to deceive requirement”). 

The Board found that the Statement of Use and the subsequent Section 8 Declaration contained false statements that the DISO mark (Registration No. 5060173) was in use on all the goods listed in its application and in its registration as issued. After a USPTO audit of the registration, all the identified goods were deleted except for "earphones and headphones; portable media players, namely, MP3 players."  

The record, however, contained no testimony of the persons who signed the Statement of Use and the subsequent Section 8 Declaration. In the absence of deposition or cross-examination testimony, the Board refused to infer subjective intent to deceive the USPTO or reckless disregard of the truth, citing Chutter (relying on discovery deposition testimony for proof of reckless disregard) and Nationstar Mortg. LLC v. Ahmad, 2014 WL 6480655, at *4 (TTAB 2014) (relying on the “manifest lack of credibility of applicant's [deposition] testimony.”). 

Without this “indispensable element in the analysis” of its fraud claim, the Board dismissed the fraud claim and denied the petition for cancellation. 

UPDATE: Professor McCarthy noted in a comment on the TTABlog that several district courts have rejected the Chutter standard for intent to deceive for fraud as including “reckless disregard”—citing Weems Industries, Inc. v. Teknor Apex Co., 2023 WL 2333901, *8, n.10 (N.D. Iowa 2023) (rejecting TTAB's “reckless disregard” theory where “both the Federal Circuit and the Eighth Circuit have held that an intent to deceive must be willful”); Florida Virtual School, v. K12, Inc., 2023 WL 8357735,*5 (M.D. Fla. 2023) (finding TTAB's “reckless disregard” standard contrary to the Eleventh Circuit); and La Terra Fina USA, LLC, v. Reser's Fine Foods, Inc., 2024 WL 1973468, *3 (N.D. Cal. 2024) (“The Trademark Trial and Appeal Board cannot set a new legal standard.”).

The attorneys at Thomas P. Howard, LLC are experienced in trademarks nationwide including in Colorado.