Medinol v. Neuro Vasx is Dead

In Medinol Ltd. v. Neuro Vasx Inc., 67 U.S.P.Q. 2d 1205 (TTAB 2003), the Trademark Trial and Appeal Board held that a trademark registration that contains erroneous information, such as goods and services that were never sold under the mark, would render a trademark registration as fraudulent and subject to cancellation. The TTAB imposed a constructive knowledge standard for errors in the trademark application. Calling a mere error “fraud” seemed like harsh medicine.

Under Medinol, if an applicant for a trademark says that he sells Widgets, Donkeys, and Thingamajigs under the trademark RANDUZZI, he had better actually sell Widgets, Donkey, and Thingamajigs under that mark. If the applicant only sells Widgets and Donkeys, Medinol said that he committed “fraud” — therefore the application is void. To the best of my knowledge, nobody has been prosecuted for fraud, nor perjury under this standard — it has just cost them their trademark registration.

There has been a lot of consternation over this case. Calling an honest mistake “fraud,” rubs some people the wrong way. Well, it sure rubbed the Court of Appeals for the Federal Circuit the wrong way. The CAFC just ruled that Medinol is no longer good law. See In Re Bose Corporation, Opposition No. 91/157,315.

The Board stated in Medinol v. Neuro Vasx, Inc. that to determine whether a trademark registration was obtained fraudulently, “[t]he appropriate inquiry is . . . not into the registrant’s subjective intent, but rather into the objective manifestations of that intent.” 67 USPQ2d 1205, 1209 (T.T.A.B. 2003). We understand the Board’s emphasis on the “objective manifestations” to mean that “intent must often be inferred from the circumstances and related statement made.” Id. (internal quotation marks omitted) (quoting First Int’l Serv., 5 USPQ2d at 1636). We agree. However, despite the long line of precedents from the Board itself, from this court, and from other circuit courts, the Board went on to hold that “[a] trademark applicant commits fraud in procuring a registration when it makes material representations of fact in its declaration which it knows or should know to be false or misleading.” Id. (emphasis added). The Board has since followed this standard in several cancellation proceedings on the basis of fraud, including the one presently on appeal. See Bose, 88 USPQ2d at 1334.

By equating “should have known” of the falsity with a subjective intent, the Board erroneously lowered the fraud standard to a simple negligence standard. See Ileto v. Glock, Inc., 565 F.3d 1126, 1155 (9th Cir. 2009) (“Knowing conduct thus stands in contrast to negligent conduct, which typically requires only that the defendant knew or should have known each of the facts that made his act or omission unlawful. . . .”). (Op. at 5-6)

This result seems fair. Should a company lose its trademark simply because of what could have been an honest error in its original application? On the other hand, this case might prove to be all that is necessary for sleazy companies and sleazier lawyers to make “mistakes,” under a standard that will essentially free them from any responsibility at all. Nevertheless, for better or worse, Medinol v. Neuro Vasx is dead.

3 Responses to Medinol v. Neuro Vasx is Dead

  1. Jay says:

    OK. In order to secure a trademark registration in the U.S., an applicant [the proprietor] must submit a Declaration of Use (DOU), within 3 years of publication, indicating the goods, wares and services for which the trademark is in “actual use” in the U.S. (Note: That’s not entirely accurate — you can also base your TM application off a foreign registration, for instance a UK reg, to get a trademark registered without proving use in the U.S.) Somewhere on that DOU there’s a statement indicating that any applicant who submits false information can be fined or put in jail (I don’t recall how much the fine or jail time is — sorry). From my experience, the U.S. is the only country that actually threatens jail time for fraudulently submitted declarations. Maybe Canada does. I do not know of any instance where someone has gone to jail for false declarations. Usually, as you said, the application is deemed invalid. But really? Imprisonment? The USPTO must be joking.

    Besides, there are workarounds. If a trademark is in use for only one or two of the goods indicated on the application, the applicant can delete the unused goods and, after republication of the mark, the app will proceed to registration; or the application may split the application and allow part of it to register for the goods in actual use while the other unused goods portion remains in the application stage with its original filing date (potentially useful if the proprietor truly does intend to use the mark for all goods listed on the app).

    In matters where none of the goods are in actual use, one tactic is to refile the application again and again to prevent other people from registering the trademark for themselves. This is very common. I do this for 85% of the applications I file in the U.S., primarily to keep our competitors from using our trademarks, which we use all over the world but not in the States.

    The use requirement in the U.S. (and Canada) is a huge pain; it is in part intended to keep businesses from filing bad faith apps of their competitors’ marks, and in part to give other interested parties a shot at having the mark(s) for themselves. Most countries don’t bother with use requirements to secure registration, instead relying on interested third parties to file cancellation actions at the end of the non-use period (typically three to five years after registration). Savvy proprietors can extend their rights to unused trademarks indefinitely by refiling new applications at the end of the non-use period.

    Anyway, back to the topic at hand, I suppose submitting a falsified DOU could be considered fraud according to U.S. IP law, regardless if it was an error or intentional. But the idea of this is just silly and practically unenforceable. And should we really care? It comes up so rarely because most applicants do not wish to draw any attention to their own dodgy filings.

    That said, it would be fantastic if the USPTO would simplify its IP laws so that it is more in line with the rest of the western world. I have yet to meet any patents or trademarks professional outside of the States that likes how the USPTO does business. Don’t even get me started on the Madrid (Int’l) apps and the USPTO. It’s almost not worth designating the U.S.

    • Jay, try going through some of my posts on Section 2(a) of our trademark act. That will really infuriate you, if you live in the “free world,” which the United States left a number of years ago.

      • Jay says:

        I quite like this one re OAs:

        “Facts are shocking, immoral, and scandalous, and thus prohibited by Section 2(a).”

        Tell me about it. Try filing class 34 apps and let me know how you get on. It’s a brave new world an ye best not be a sinner, nor believe in free speech, nor believe in anything that is contrary to the oh-so-fashionable mores of this new age.

        Anyway, I’ve read most of the Section 2(a) posts here — at least for the last year or so. I am well past fury, however, and prefer to believe that the last decade or so is simply a glitch in the Matrix. It’s easier to cope with this way.

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