Turning the Tide on Claims of Fraud on the USPTO: The Bose WAVE Decision

Ever since the Medinol case in 2003, the Trademark Trial and Appeal Board has applied a very exacting standard to statements of use filed with the U.S. Patent and Trademark Office, requiring the signatory owners to investigate whether each and every item on a list of goods and services was actually in use. If the statement was wrong, the registration could be canceled, even in case of negligent error, if the TTAB found that the signatory knew or should have known the statement to be false or misleading. The TTAB’s expanded application of fraud on the USPTO has been especially troublesome for foreign owners of U.S. trademark registrations, since most countries do not require the same level of detail in listing goods and services in a trademark registration and do not require affirmative statements of use. In In re Bose Corporation, 2008-1448, Opposition No. 91/157,315 (C.A.F.C., August 31, 2009), the Federal Circuit has now addressed the TTAB’s practice, finding that it goes a bit overboard.

In this case, Bose opposed an application for the mark HEXAWAVE by Hexawave, Inc., citing its prior registration of the mark WAVE. Hexawave countered by claiming that the statement of continuing use signed by Bose’s general counsel in conjunction with Bose’s renewal of its WAVE mark was false and that the WAVE mark should be canceled, since the statement included audio tape recorders and players, which were then no longer manufactured by Bose. Bose claimed that its general counsel believed that the statement of use was true since it continued to repair and transport audio tape recorders and players to its customers. The TTAB found that the repair and transport activities did not constitute use in commerce and ordered the cancellation of the WAVE mark in its entirety.

In reversing the TTAB’s ruling, the Federal Circuit held that the standard applied by the TTAB – making a statement that the signatory knows or should know to be false or misleading – erroneously lowered the standard of fraud to that of simple negligence. The decision makes it clear that subjective intent to deceive is an indispensible element in the analysis of fraud, even if it is difficult to prove. While even after this decision it will be important for owners of U.S. trademark registrations to pay attention to the statements they submit to the USPTO, at least the more draconian effects of a mistake can now be averted.