Fraud On The Patent And Trademark Office Isn't What It Used To Be: In re Bose Corp.

By Dave Rein

With the stroke of a quill pen pulled from their cap or with the tap of a keyboard, the Federal Circuit may have relegated an intensely litigated and debated line of fraud cases to the ancient history books.  Likewise, it may yet send the stock price of Novartis, makers of Maalox, downward.  More on stock prices and Maalox later . . . .

Starting with the seminal case, Medinol Ltd. v. Neuro Vasx, the Trademark Trial and Appeal Board has held that the trademark applicant or registrant commits fraud by claiming the use of a mark in connection with identified products or services when it actually did not use the mark on all of the claimed products or services.  The standard that the Board applied was whether the applicant or registrant made a material representation of fact that it knew or should have known to be false.  The penalty for such fraud was typically death to the trademark registration or at least to the registration of the offending class of products or services.  From 2003 until as late as June of this year with the Esprit IP Limited v. Mellbeck Ltd decision (visit Christina Frangiosa's Privacy and IP Law Blog for more on the case), this had been the state of the law with a few tweaks here and there as the Board soften the impact of the Medinol cases. 

This line of cases kept many a trademark attorney up at night wondering what would happen to their clients' valuable portfolios of trademarks registrations if subjected to a Medinol challenge.  Trademark attorneys and their clients implemented a number of creative strategies, but the concern that the registrations might be canceled must have caused many to gulp down untold amounts of Maalox that surely sent the stock price soaring.

Perhaps it was this health concern that caused the Federal Circuit in In re Bose to strongly state that the Board was applying the wrong standard to establish fraud and effectively applying a negligence standard.    The Federal Circuit was perhaps a bit harsh in its criticism given that the Board had lifted the "knew or should have known" standard from a prior Federal Circuit decision, but it is true that the standard that the Board applied was different than anyone else's standard for fraud.

Some have argued that after In re Bose, the only penalty for getting caught listing goods or services that are never used with the mark is to correct the registration because: 1) it is difficult to prove fraud and 2) it will be difficult to justify the cost of pursuing fraud claims given the limited relief that  the Board can award.  If the only realistic penalty is to correct the registration, the argument goes, then it will be much more difficult to keep applicants honest.

Even the "reckless disregard" standard that may have been left open is still a high standard to meet in a Board proceeding and although the PTO's rules prohibit an applicant from making a false statement, until the Board loosens its interpretation of this rule, it provides little comfort to those who are concerned that applicants may cheat if not checked.

John Welch of the TTABlog suggests that one way "to focus an applicant's or a registrant's attention on the issue of use would be to . . . require a specimen of use of every item listed in the application or registration."  He suggests that submitting a catalog or pages printed from the Internet could be deemed sufficient.  I am not sure of the extent legal costs might increase if registration required a specimen showing use of each product or service, but the suggestion is worthy of further discussion.

First, having to submit something -- even if the bar of what the PTO will accept is low -- will ensure that the applicant does some investigation before claiming use on a multitude of goods and services.  Second, the "I didn't know" defense to fraud becomes more suspect if the applicant submits a specimen showing use of the mark on a product when the applicant never sold such products or never used the mark on such products.  

For now, however, given that attorneys and their clients have less fear of their trademark registrations being canceled, fewer will be gulping down bottles of Maalox.  Perhaps Novartis should offer to fund an appeal of the Federal Circuit's decision?

Trademark Trial & Appeal Board Says Internet Is Here To Stay

By Pete Salsich III

No, that's not a headline from The Onion.

In a recent precedential opinion, the TTAB held that evidence from the immensely popular online encyclopedia Wikipedia can be admitted even though -- by its very nature -- such evidence may be unreliable.  See In re IP Carrier Consulting Group, TTAB, Serial No. 78542726 (June 18, 2007).   At issue were applications to register two trademarks: "ipPICS" for online image services and "ipPIPE" for communications services.  The PTO rejected both applications on the grounds that they were merely descriptive of the services provided.  In doing so, it relied in part on numerous online and print sources showing that the abbreviation "ip" was commonly used to refer to "Internet Providers" such as the applicant.  On appeal to the Board, the applicant cited Wikipedia's entry on "Internet Service Provider" to show that the most common abbreviation for Internet Provider was "ISP", not "IP."  The Board accepted and considered the Wikipedia evidence, but still affirmed the examiner's descriptiveness finding and refused the applications.

In the process, the Board spent some time discussing the relative merits of evidence from Wikipedia and other user-edited online sources and concluded that the fact that such sources may sometimes be unreliable does not make them automatically inadmissible, provided the non-moving party has an opportunity to introduce rebuttal evidence.

Does this make sense?  John Welch at the TTABlog doesn't think so.

The TTABlog is one of the very best resources for staying on top of developments at the TTAB, and it's no surprise that Welch has been following this issue for more than a year.  In posts here and here from last July, he points out the myriad problems with admitting evidence from inherently unreliable online sources such as Wikipedia and Acronym Finder

In this case, the Board justified its consideration of the Wikipedia evidence in part by relying on corroborating evidence from other, more reliable sources and stated:

"As a collaborative online encyclopedia, Wikipedia is a secondary source of information or a compilation based on other sources. . . . The better practice with respect to Wikipedia evidence is to corroborate the information with other reliable sources, including Wikipedia's sources."

Opinion at 11.  At the TTABlog, Welch asks the question:

"If corroboration is required, why not discard the Wikipedia evidence entirely and rely on the corroborating evidence? What happens when the corroborating evidence is other Internet evidence? Does such a house of cards provide any real support?" 

I understand and share Welch's concerns about unreliable online evidence--concerns that are shared by INTA as well--but I think there is room in the TTAB's opinion for a reasonable compromise position on this issue. 

Let's face it, online sources such as Wikipedia are here to stay and--warts and all--are increasingly becoming many people's first and only source of information.  We're not going to put that toothpaste back in the tube.  Believe me, I'm not advocating that courts or adminstrative tribunals like the TTAB should lower their evidentiary standards to accomodate this reality, but in certain circumstances, the very nature of the online source is what makes it reliable.

For example, in this case, the primary issue was whether the abbreviation "ip" was merely a descriptive term for "Internet Provider" -- necessarily then, the examiner ought to be able to consider probably the single largest source of information about how people who use internet providers describe them.  I don't think the Board's opinion opens the door for wholesale adoption of Wikipedia entries as learned treatises, but, as the opinion states, such evidence is relevant and can be reliable as evidence "of the way in which a term is being used by the public."  Opinion at 10.

The issue is going to come up again, and as practitioners we need to be prepared to deal with it.  Like it or not, the internet is here to stay.