The USPTO should educate stakeholders on its newly lowered fraud bar and hold non-lawyers to the same standards as attorneys if it wants to maximise the potency of Chutter v Great Management Group and beat back false trademark filers, say in-house and private practice lawyers.
The Trademark Trial and Appeal Board ruled on September 30 that reckless disregard of the truth in a material statement made to the USPTO amounted to fraud and intent to deceive the office. It was previously unclear whether reckless disregard constituted fraud.
In-house counsel at PDC Brands, Novartis, Target and Western Digital and two private practice attorneys, who have all dealt with bad marks on the USPTO register, have different opinions on what – if anything – the USPTO should do to take advantage of this ruling.
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Some argue that the office should educate stakeholders on the outcome because applicants and trademark practitioners might not be aware of it or have registered its importance.
Matthew Wagner, general counsel at PDC Brands in Connecticut, says the decision is important because it places a higher burden on those who sign documents to conduct good-faith investigations.
“If I’m signing a declaration of use, it’s not enough for me to just tick the boxes and sign my name. I actually have to look at the identification of goods and ask my businesspeople for the details behind my declaration,” he says.
He notes that he already followed such a process before Chutter, but points out that others might not have.
Other counsel note that the case involved an attorney who made a false statement – and for that reason, the USPTO should endeavour to clarify whether non-lawyers will be held to the same standard. They say they’re still not sure whether non-attorneys will have to meet the post-Chutter fraud bar – though they hope they will.
Others still say there isn’t much more the USPTO could or should do to ensure Chutter helps cut down fraudulent trademarks. The onus lies on trademark applicants, they add, to take advantage of the lowered fraud bar where appropriate.
During this proceeding, restaurant company Chutter opposed trademarks owned by the defendant on the basis of likelihood of confusion.
The plaintiff also asked the office to cancel one of the marks on the basis that the defendant’s attorney, Procopio partner Frederick Taylor, had signed a document that said there were no pending proceedings involving the trademark rights, even though he knew there were.
Taylor told the TTAB he did not read his client’s statement closely enough to realise it was in the documents.
The case could still be appealed to the Court of Appeals for the Federal Circuit. Managing IP reached out to the defendant’s counsel for comment but has yet to hear back.
Enhancing education
Counsel say there are a few ways the office could make the public aware of the lowered fraud bar.
Wagner at PDC Brands says the USPTO could ramp up its random audits of registrations and use those to inform trademark owners that they need to undertake reasonable investigations into the truth of their statements.
He adds that the office could also highlight Chutter in the forms it sends out when it issues registrations and renewals, warning brand owners in the process that it might cancel their registrations if they don’t conduct reasonable investigations.
Other attorneys say they’re confident the USPTO will do enough to promote the ruling – because it always does.
Brittany Estell, director of trademarks at Western Digital in Washington DC, says the USPTO always strives to educate the public on its new processes and will get the word out so long as it does what it normally does to educate stakeholders – including speaking at conferences.
Ted Davis, partner at Kilpatrick Townsend in Atlanta, says TTAB judges will inevitably highlight this decision at various events, most likely in its presentations on the Trademark Modernization Act (TMA).
The TMA, which will go into full effect in December 2021, introduces ex-parte expungement and ex-parte re-examination proceedings at the USPTO, which are designed to make it easier for third parties to cancel marks that aren’t being used.
Attorneys argue, however, that practitioners and applicants have the ultimate responsibility to ensure their statements are accurate.
Brett Heavner, partner at Finnegan in Washington DC, says a practitioner who represents somebody in front of the USPTO should be up to speed with the latest decisions.
“It just seems indefensible to me that any practitioner would sign something without reading it.”
Ultimate enforcement
Counsel add that stakeholders will likely have to wait and see whether the USPTO follows the same line when it comes to non-attorney applicants who represent themselves and demonstrate reckless disregard.
Heavner says such individuals should be held accountable. “If you’re told you need to read and sign a declaration, a reasonable person should read it and make certain they understand what they’re signing.”
Other sources point out that while it’s not certain whether the USPTO will hold non-lawyers to the same post-Chutter standard, there is some indication that it will.
Davis at Kilpatrick says Nationstar Mortgage v Ahmad, another TTAB decision where the board found fraud, contained similar language and referred to a non-attorney.
Even if the USPTO holds non-attorneys to the same standards as lawyers, though, the decision will not solve the office’s fraudulent trademark problem, say sources.
The ruling still places the onus on registrants to file oppositions and cancellations to attack problematic marks.
Attorneys hope that the USPTO will find more ways to keep these marks off the registry that don’t depend on brands’ diligence.
Stephen Lee, chief IP counsel at Target in Minnesota, says he wants the USPTO to examine applications in a more consistent manner so it can better spot trends that are common among fraudulent applications.
Make use
Still, attorneys do plan to use the Chutter decision to their advantage when weeding out fraud.
Since 2009, the TTAB has only issued two other opinions – Nationstar Mortgage v Ahmad and Fuji Med. Instruments v Am. Crocodile – that found fraud.
This was the case because the Federal Circuit’s decision for In Re Bose in 2009 set out that applicants had to have an intent to deceive the USPTO for the office to find fraud.
Attorneys now hope that the TTAB’s decision in Chutter will make it easier for the office to cancel marks on the basis of fraud.
Wagner at PDC says that if he was in a disputed proceeding, he would now investigate whether his adversary had shown reckless disregard for the truth.
Estell at Western Digital adds: “We’ll just have to see what our strategy is going forward and how we’ll be able to use this tool to protect and maintain the register.”
Some attorneys say the ruling will make them take greater care before they file oppositions to other marks.
Sudipta Rao, head of legal brand protection of global oncology at Novartis in New Jersey, says she would want to ensure all her documents were incontestable before she filed oppositions because she wouldn’t want adversaries to make counterclaims of fraud against her brands.
That being said, the ruling might not get much use once the TMA comes into full effect, because the proceedings created by that law will be easier and less expensive to conduct.
Regardless of how much use attorneys make of this new standard – or what the USPTO does going forward – the decision should serve as a new warning that the office expects trademark applicants to respect the integrity of the register.
Although this ruling alone won’t purge the registry of all improper marks, it is an important step to make the prosecution process better for all.
