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.