In Chutter, Inc. v. Great Management Group, LLC, a precedential decision, the Trademark Trial and Appeal Board (TTAB) held that recklessly false representations made during the course of the trademark application process satisfy the level of intent required to support a finding of fraud before the United States Patent and Trademark Office (USPTO).[1] The TTAB’s holding lowers the bar to demonstrate fraud on the USPTO.

Previously, the Court of Appeals for the Federal Circuit’s (Federal Circuit) held in In re Bose that a trademark is only obtained fraudulently if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the USPTO.[2] The Court acknowledged that subjective intent to deceive may be hard to prove, but explained that it is an indispensable element in the analysis of determining whether an applicant secured a trademark registration as a result of fraud. To satisfy the burden of proof, the Court established a heavy burden of proof: clear and convincing evidence of fraud which left no room for speculation. Practically, the heightened intent requirement made it difficult to prove fraud in connection with the prosecution of trademark applications.

In Chutter, Inc. v. Great Management Group, LLC, the TTAB considered whether reckless disregard for the truth or falsity of a statement made in a USPTO filing, rather than a knowingly false statement, met the intent to deceive requirement to establish fraud. There, the Defendant had filed a Combined Declaration of Use and Incontestability under Sections 8 and 25 of the Trademark Act representing that there were no pending or closed proceedings before the USPTO or US Courts regarding the registration. Plaintiff subsequently filed a petition to cancel the registration on the grounds that in fact there was a pending cancellation proceeding against the registration and a pending civil action involving the registration in question. Defendant’s counsel admitted that he did not read the contents of the filed declaration closely enough to be aware that the declaration contained a false statement.

The Chutter Court noted that In re Bose left open the question of whether reckless disregard of the truth or falsity of a material statement made in a USPTO filing satisfies the intent to deceive requirement. Accordingly, the Chutter Court held that, as a matter of law, reckless disregard satisfies the requisite intent for fraud on the USPTO in trademark matters. It noted that “reckless disregard” is defined as “conscious indifference to the consequences of an act” and “conscious disregard of a substantial harm.” The Court held that by paying little to no attention to the document he was signing under oath, defendant’s counsel acted in reckless disregard for the truth and noted that he did not take any action to remedy the error once it had been brought to his attention. The TTAB granted the petition to cancel the mark on fraud grounds.

Examining Galperti, Inc. v. Galperti S.r.L. in light of Chutter

The TTAB’s ruling in Chutter may also impact its decision on remand for Galperti, Inc. v. Galperti S.r.L., which was remanded to the TTAB by the Federal Circuit for the second time in November 2021.[3]

Defendant registered the mark at issue on the Principal Register under Section 2(f) of the Trademark Act, claiming that while the mark is a surname, it had become distinctive of the applicant’s goods in commerce. To prove such acquired distinctiveness, the application must prove substantially exclusive and continuous use of the mark in commerce for the five years before the date distinctiveness is claimed. The defendant made such a claim regarding the mark at issue.

Nearly five years later, plaintiff petitioned to cancel the registration, arguing, among other things, that defendant obtained the registration by fraud by making a false assertion of substantially exclusive use from 2002-2007. Plaintiff claimed that it already owned a trademark for the mark at issue and had been using the mark in the US since 1978. Therefore, plaintiff argued that defendant was aware of plaintiff’s use of the mark in the US and fraudulently made the statement that defendant had substantially exclusive use of the mark during the requisite timeframe.

The TTAB originally dismissed the cancellation petition, but plaintiff appealed to the Federal Circuit. The Federal Circuit vacated the TTAB’s rejection of the fraud charge and remanded for further consideration. On remand, the TTAB again dismissed the fraud claim finding that plaintiff had not proven falsity of defendant’s substantially exclusive use statement. The TTAB required plaintiff to establish its own propriety rights to the mark and disregarded third parties’ use of the mark. Nonetheless, plaintiff appealed again.

The Federal Circuit again disagreed with the TTAB and held that plaintiff need not establish its own priority rights to the mark and that use by anyone, regardless of the relation to the challenger, may undercut a claim of substantially exclusive use. The court vacated the TTAB decision and remanded the matter for further consideration.

With the recent TTAB decision in Chutter combined with the Federal Circuit’s holding in Galperti, it is possible that on remand, the plaintiff in Galperti may be able to successfully argue that defendant acted in reckless disregard when making its substantially exclusive use of the mark statement. Plaintiff would need to show that defendant was aware of uses made by others or had failed to investigate whether others were also using the mark in a non-inconsequential way prior to making the representations to support its acquired distinctiveness claim. Based on plaintiff’s claims that it has been using the mark at issue in the US for more than 40 years in the same industry as the defendant, it would seem likely that defendant would have been aware of plaintiff’s use of the mark by performing a reasonable investigation. If that standard is applied, defendant’s registration could be cancelled on fraud grounds.

Key Takeaways

  • “Reckless disregard” satisfies the requisite intent for fraud on the USPTO in trademark matters, an evidentiary standard well below clear and convincing evidence demonstrating that the applicant or registrant knowingly made the false statement.
  • Anytime you sign and submit materials to the USPTO, check to make sure that all assertions in each submitted document are true. If you are not sure whether an assertion is true, investigate and ask someone who might know more information to confirm the accuracy of the representation to be made. Otherwise, there is a risk that the TTAB may claim you acted with reckless disregard in making the submission if challenge is later made to your registration.
  • If a trademark applicant claims “substantially exclusive use” of a mark when it is relatively easy to find non-inconsequential use of the same mark exists in the applicant’s market, the TTAB could later determine in a subsequent proceeding challenging the enforceability of the registration that the applicant acted with reckless disregard for the truth or falsity of such statement and cancel the registration of the mark.

[1] Chutter, Inc. v. Great Management Group, LLC, 2021 U.S.P.Q.2d 1001 (T.T.A.B. 2021).

[2] In re Bose Corp., 580 F.3d 1240, 1245 (Fed. Cir. 2009).

[3] Galperti, Inc. v. Galperti S.r.L., No. 2021-1011, 2021 U.S. App. LEXIS 33616 (Fed. Cir. Nov. 12, 2021).