In Re Bose Corp.

United States Court of Appeals for the Federal Circuit
2008-1448
(Opposition No. 91/157,315)

IN RE BOSE CORPORATION,

Appellant.

Charles Hieken, Fish & Richardson P.C., of Boston, Massachusetts, argued for
appellant. With him on the brief was Amy L. Brosius.

Raymond T. Chen, Solicitor, Office of the Solicitor, United States Patent and
Trademark Office, of Arlington, Virginia, argued for the Director of the United States
Patent and Trademark Office. With him on the brief were Thomas V. Shaw and
Christina J. Hieber, Associate Solicitors.

Susan J. Hightower, Pirkey Barber LLP, of Austin,Texas, argued for amicus
curiae, American Intellectual Property Law Association. With her on the brief was
William G. Barber. Of counsel on the brief was James H. Pooley, American Intellectual
Property Law Association, of Arlington, Virginia.

Appealed from: United States Patent and Trademark Office
Trademark Trial and Appeal Board
 United States Court of Appeals for the Federal Circuit

2008-1448
(Opposition No. 91/157,315)

IN RE BOSE CORPORATION,

Appellant.

Appeal from the United States Patent and Trademark Office, Trademark Trial and
Appeal Board.

__________________________

DECIDED: August 31, 2009
__________________________

Before MICHEL, Chief Judge, DYK, and MOORE, Circuit Judges.

MICHEL, Chief Judge.

The Trademark Trial and Appeal Board (“Board”) found that Bose Corporation

(“Bose”) committed fraud on the United States Patent and Trademark Office (“PTO”) in

renewing Registration No. 1,633,789 for the trademark WAVE. Bose Corp. v.

Hexawave, Inc., 88 USPQ2d 1332, 1338 (T.T.A.B. 2007). Bose appeals the Board’s

order cancelling the registration in its entirety. Because there is no substantial evidence

that Bose intended to deceive the PTO in the renewal process, we reverse and remand.

I. BACKGROUND

Bose initiated an opposition against the HEXAWAVE trademark application by

Hexawave, Inc. (“Hexawave”), alleging, inter alia, likelihood of confusion with Bose’s

prior registered trademarks, including WAVE. Bose, 88 USPQ2d at 1333. Hexawave
counterclaimed for cancellation of Bose’s WAVE mark, asserting that Bose committed

fraud in its registration renewal application when it claimed use on all goods in the

registration while knowing that it had stopped manufacturing and selling certain goods.

Id.

The fraud alleged by Hexawave involves Bose’s combined Section 8 affidavit of

continued use and Section 9 renewal application (“Section 8/9 renewal”), 1 signed by

Bose’s general counsel, Mark E. Sullivan, and filed on January 8, 2001. Bose, 88

USPQ2d at 1335. In the renewal, Bose stated that the WAVE mark was still in use in

commerce on various goods, including audio tape recorders and players. Id. at 1333.

The Board found that (1) Bose stopped manufacturing and selling audio tape recorders

and players sometime between 1996 and 1997; and (2) Mr. Sullivan knew that Bose

discontinued those products when he signed the Section 8/9 renewal. Id. at 1334-35.

At the time Mr. Sullivan signed the Section 8/9 renewal, Bose continued to repair

previously sold audio tape recorders and players, some of which were still under

warranty. Bose, 88 USPQ2d at 1335. Mr. Sullivan testified that in his belief, the WAVE

mark was used in commerce because “in the process of repairs, the product was being

transported back to customers.” Id. The Board concluded that the repairing and

shipping back did not constitute sufficient use to maintain a trademark registration for

goods. Id. at 1337. It further found Mr. Sullivan’s belief that transporting repaired goods

1
Federal trademark registrations issued on or after November 16, 1989,
remain in force for ten years, and may be renewed for ten-year periods. To renew a
registration, the owner must file an Application for Renewal under Section 9. In
addition, at the end of the sixth year after the date of registration and at the end of each
successive ten-year period after the date of registration, the owner must file a Section 8
Declaration of Continued Use, “an affidavit setting forth those goods or services recited
in the registration on or in connection with which the mark is in use in commerce. . . .”
15 U.S.C. § 1058(b)(1); see also, id. §§ 1058, 1059.

2008-1448 2
constituted use was not reasonable. Id. at 1338. Finally, the Board found that the use

statement in the Section 8/9 renewal was material. Id. As a result, the Board ruled that

Bose committed fraud on the PTO in maintaining the WAVE mark registration and

ordered the cancellation of Bose’s WAVE mark registration in its entirety. Id. Later, the

same panel denied Bose’s Request for Reconsideration. Bose Corp. v. Hexawave, Inc.,

Opposition No. 91157315, 2008 WL 1741913 (T.T.A.B. Apr. 9, 2008).

Bose appealed. Because the original appellee Hexawave did not appear, the

PTO moved, and the court granted leave to the Director, to participate as the appellee.

We have jurisdiction pursuant to 15 U.S.C. § 1071(a) and 28 U.S.C § 1295(a)(4)(B).

II. DISCUSSION

This court reviews the Board’s legal conclusions de novo. In re Int’l Flavors &

Fragrances Inc., 183 F.3d 1361, 1365 (Fed. Cir. 1999). We review the Board’s factual

findings for substantial evidence. Recot, Inc. v. Becton, 214 F.3d 1322, 1327 (Fed. Cir.

2000).

A third party may petition to cancel a registered trademark on the ground that the

“registration was obtained fraudulently.” 15 U.S.C. § 1064(3). “Fraud in procuring a

trademark registration or renewal occurs when an applicant knowingly makes false,

material representations of fact in connection with his application.” Torres v. Cantine

Torresella S.r.l., 808 F.2d 46, 48 (Fed. Cir. 1986). A party seeking cancellation of a

trademark registration for fraudulent procurement bears a heavy burden of proof. W.D.

Byron & Sons, Inc. v. Stein Bros. Mfg. Co., 377 F.2d 1001, 1004 (CCPA 1967). Indeed,

“the very nature of the charge of fraud requires that it be proven ‘to the hilt’ with clear

and convincing evidence. There is no room for speculation, inference or surmise and,

2008-1448 3
obviously, any doubt must be resolved against the charging party.” Smith Int’l, Inc. v.

Olin Corp., 209 USPQ 1033, 1044 (T.T.A.B. 1981).

The Court of Customs and Patent Appeals (“CCPA”), our predecessor whose

decisions are binding on this court, explained that, before the PTO, “[a]ny ‘duty’ owed by

an applicant for trademark registration must arise out of the statutory requirements of

the Lanham Act,” which prohibit an applicant from making “knowingly inaccurate or

knowingly misleading statements.” Bart Schwartz Int’l Textiles, Ltd. v. Fed. Trade

Comm’n, 289 F.2d 665, 669 (CCPA 1961). Therefore, the court stated that, absent the

requisite intent to mislead the PTO, even a material misrepresentation would not qualify

as fraud under the Lanham Act warranting cancellation. King Auto., Inc. v. Speedy

Muffler King, Inc., 667 F.2d 1008, 1011 n.4 (CCPA 1981).

Mandated by the statute and caselaw, the Board had consistently and correctly

acknowledged that there is “a material legal distinction between a ‘false’ representation

and a ‘fraudulent’ one, the latter involving an intent to deceive, whereas the former may

be occasioned by a misunderstanding, an inadvertence, a mere negligent omission, or

the like.” Kemin Indus., Inc. v. Watkins Prods., Inc., 192 USPQ 327, 329 (T.T.A.B.

1976). In other words, deception must be willful to constitute fraud. Smith Int’l, 209

USPQ at 1043; see also Woodstock’s Enters. Inc. (Cal.) v. Woodstock’s Enters. Inc.

(Or.), 43 USPQ2d 1440, 1443 (T.T.A.B. 1997); First Int’l Servs. Corp. v. Chuckles, Inc.,

5 USPQ2d 1628, 1634 (T.T.A.B. 1988); Giant Food, Inc. v. Standard Terry Mills, Inc.,

229 USPQ 955, 962 (T.T.A.B. 1986).

Several of our sister circuits have also required proof of intent to deceive before

cancelling a trademark registration. See, e.g., Far Out Prods., Inc. v. Oskar, 247 F.3d

2008-1448 4
986, 996 (9th Cir. 2001) (stating that an affidavit was fraudulent only if the affiant acted

with scienter); Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863, 877-78 (8th Cir. 1994)

(per curiam) (“In order to show that an applicant defrauded the PTO the party seeking to

invalidate a mark must show that the applicant intended to mislead the PTO.”); Meineke

Discount Muffler v. Jaynes, 999 F.2d 120, 126 (5th Cir. 1993) (“To succeed on a claim

of fraudulent registration, the challenging party must prove by clear and convincing

evidence that the applicant made false statements with the intent to deceive [the

PTO].”); San Juan Prods., Inc. v. San Juan Pools of Kan., Inc., 849 F.2d 468, 472 (10th

Cir. 1988) (stating that in determining whether a statement is fraudulent, courts must

focus on the “declarant’s subjective, honestly held, good faith belief” (internal quotation

marks and emphasis omitted)); Money Store v. Harriscorp Fin., Inc., 689 F.2d 666, 670

(7th Cir. 1982) (“Fraud will be deemed to exist only when there is a deliberate attempt to

mislead the Patent Office into registering the mark.”).

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

2008-1448 5
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. . . .”); see

also Davis v. Monroe County Bd. of Educ., 526 U.S. 629, 642 (1999) (explaining that in

Gebser v. Lago Vista Independent School District, 524 U.S. 274 (1998), the Court

“declined the invitation to impose liability under what amounted to a negligence

standard—holding the district liable for its failure to react to teacher-student harassment

of which it knew or should have known. Rather, [the Court] concluded that the district

could be liable for damages only where the district itself intentionally acted in clear

violation of Title IX by remaining deliberately indifferent to acts of teacher-student

harassment of which it had actual knowledge.”).

We have previously stated that “[m]ere negligence is not sufficient to infer fraud

or dishonesty.” Symbol Techs., Inc. v. Opticon, Inc., 935 F.2d 1569, 1582 (Fed. Cir.

1991). We even held that “a finding that particular conduct amounts to ‘gross

negligence’ does not of itself justify an inference of intent to deceive.” Kingsdown Med.

Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc). The

principle that the standard for finding intent to deceive is stricter than the standard for

negligence or gross negligence, even though announced in patent inequitable conduct

2008-1448 6
cases, applies with equal force to trademark fraud cases. After all, an allegation of

fraud in a trademark case, as in any other case, should not be taken lightly. San Juan

Prods., 849 F.2d at 474 (quoting Anheuser-Busch, Inc. v. Bavarian Brewing Co., 264

F.2d 88, 92 (6th Cir. 1959)). Thus, we hold that a trademark is obtained fraudulently

under the Lanham Act only if the applicant or registrant knowingly makes a false,

material representation with the intent to deceive the PTO.

Subjective intent to deceive, however difficult it may be to prove, is an

indispensable element in the analysis. Of course, “because direct evidence of

deceptive intent is rarely available, such intent can be inferred from indirect and

circumstantial evidence. But such evidence must still be clear and convincing, and

inferences drawn from lesser evidence cannot satisfy the deceptive intent requirement.”

Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir.

2008). When drawing an inference of intent, “the involved conduct, viewed in light of all

the evidence . . . must indicate sufficient culpability to require a finding of intent to

deceive.” Kingsdown, 863 F.2d at 876.

The Board in Medinol purportedly relied on this court’s holding in Torres to justify

a “should have known” standard. The Board read Torres too broadly. In that case,

Torres obtained the trademark registration for “Las Torres” below a tower design.

Torres, 808 F.2d at 47. The trademark was registered for use on wine, vermouth, and

champagne. Id. In the renewal application, Torres submitted an affidavit stating that

the mark as registered was still in use in commerce for each of the goods specified in

the registration. Id. He even attached a specimen label with the registered mark

displayed. Id. In fact, Torres was not using the mark as registered. Id. Instead, five

2008-1448 7
years prior to the renewal application, Torres had admittedly altered the mark to

“Torres” in conjunction with a different tower design. Id. In addition, Torres knew that

even the altered mark was in use only on wine. Id. In other words, the registrant

knowingly made false statements about the trademark and its usage when he filed his

renewal application. Id.

True, the court concluded that

If a registrant files a verified renewal application stating that his registered
mark is currently in use in interstate commerce and that the label attached
to the application shows the mark as currently used when, in fact, he
knows or should know that he is not using the mark as registered and that
the label attached to the registration is not currently in use, he has
knowingly attempted to mislead the PTO.

Id. at 49. However, one should not unduly focus on the phrase “should know” and

ignore the facts of the case, i.e., the registrant “knows.” Doing so would undermine the

legal framework the court set out in Torres. Indeed, in Torres, the court cited various

precedents—some persuasive, others binding on the court—and reemphasized several

times that (1) fraud in trademark cases “occurs when an applicant knowingly makes

false, material representations,” (2) the Lanham Act imposes on an applicant the

obligation not to “make knowingly inaccurate or knowingly misleading statements,” and

(3) a registrant must also “refrain from knowingly making false, material statements.” Id.

at 48. The “should know” language, if it signifies a simple negligence or a gross

negligence standard, is not only inconsistent with the framework set out elsewhere in

Torres, but would also have no precedential force as it would have conflicted with the

precedents from CCPA. See Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed.

Cir. 1988). Certainly, the prior CCPA decisions cited in the Torres opinion were

precedents binding on the Torres court. See S. Corp. v. United States, 690 F.2d 1368,

2008-1448 8
1369 (Fed. Cir. 1982). In fact, they still bind us because they have never been

overturned en banc. 2

Metro Traffic Control, Inc. v. Shadow Network Inc., 104 F.3d 336 (Fed. Cir. 1997)

further supports our reading that the Torres holding does not deviate from the

established rule that intent to deceive is required to find fraud. In Metro Traffic Control,

the court cited Torres and reaffirmed that fraud can only be found if there is “a willful

intent to deceive.” 104 F.3d at 340. As a result, the court agreed with the Board that

the applicant’s statements, “though false, were not uttered with the intent to mislead the

PTO.” Id. at 340-41. Because the applicant’s “misstatements did not represent a

‘conscious effort to obtain for his business a registration to which he knew it was not

entitled,’” the court affirmed the Board’s ruling of no fraud. Id. at 341; see also L.D.

Kichler Co. v. Davoil, Inc., 192 F.3d 1349, 1352 (Fed. Cir. 1999) (remanding the case so

the district court may determine whether the trademark applicant “knowingly submitted a

false declaration with an intent to deceive”).

Applying the law to the present case, Mr. Sullivan, who signed the application,

knew that Bose had stopped manufacturing and selling audio tape recorders and

players at the time the Section 8/9 renewal was filed. Therefore, the statement in the

renewal application that the WAVE mark was in use in commerce on all the goods,

including audio tape recorders and players, was false. Because Bose does not

2
The PTO argues that under Torres, making a submission to the PTO with
reckless disregard of its truth or falsity satisfies the intent to deceive requirement. We
need not resolve this issue here. Before Sullivan submitted his declaration in 2001,
neither the PTO nor any court had interpreted “use in commerce” to exclude the
repairing and shipping repaired goods. Thus, even if we were to assume that reckless
disregard qualifies, there is no basis for finding Sullivan’s conduct reckless.

2008-1448 9
challenge the Board’s conclusion that such a statement was material, we conclude that

Bose made a material misrepresentation to the PTO.

However, Mr. Sullivan explained that in his belief, Bose’s repairing of the

damaged, previously-sold WAVE audio tape recorders and players and returning the

repaired goods to the customers met the “use in commerce” requirement for the

renewal of the trademark. The Board decided that Bose’s activities did not constitute

sufficient use to maintain a trademark registration. See Bose, 88 USPQ2d at 1335-37.

It also found Sullivan’s belief not reasonable. Id. at 1338. We do not need to resolve

the issue of the reasonableness as it is not part of the analysis. There is no fraud if a

false misrepresentation is occasioned by an honest misunderstanding or inadvertence

without a willful intent to deceive. Smith Int’l, 209 USPQ at 1043. Sullivan testified

under oath that he believed the statement was true at the time he signed the renewal

application. Unless the challenger can point to evidence to support an inference of

deceptive intent, it has failed to satisfy the clear and convincing evidence standard

required to establish a fraud claim.

We hold that Bose did not commit fraud in renewing its WAVE mark and the

Board erred in canceling the mark in its entirety. Indeed, the purpose of the Section 8/9

renewal is “‘to remove from the register automatically marks which are no longer in

use.’” Torres, 808 F.2d at 48 (quoting Morehouse Mfg. Corp. v. J. Strickland & Co., 407

F.2d 881, 887 (CCPA 1969)). When a trademark registrant fulfills the obligation to

refrain from knowingly making material misrepresentations, “[i]t is in the public interest

to maintain registrations of technically good trademarks on the register so long as they

are still in use.” Morehouse, 407 F.2d at 888. Because “practically all of the user’s

2008-1448 10
substantive trademark rights derive” from continuing use, when a trademark is still in

use, “nothing is to be gained from and no public purpose is served by cancelling the

registration of” the trademark. 3 Id.

We agree with the Board, however, that because the WAVE mark is no longer in

use on audio tape recorders and players, the registration needs to be restricted to

reflect commercial reality. See Bose, 88 USPQ2d at 1338. We thus remand the case

to the Board for appropriate proceedings.

III. CONCLUSION

For these reasons, the Board’s decision is reversed and remanded.

IV. COSTS

Each party shall bear its own costs.

REVERSED and REMANDED

3
Indeed, even though the Board cancelled the registration of the WAVE
trademark, it continued to analyze Bose’s common law right in the mark. Eventually,
the Board found likelihood of confusion and rejected Hexawave’s application to register
trademark HEXAWAVE. Bose, 88 USPQ2d at 1342-43.

2008-1448 11