On February 25, 2010, the United States Trademark Trial and Appeal Board vacated its ruling in Herbaceuticals, Inc. v Xel Herbaceuticals, Inc., where a partial summary judgment had been entered on the ground of fraud. Though the finding of fraud was vacated due to procedural reasons, the Board did, sua sponte, review the original fraud pleadings in light of the 2009 Bose Corp. v Hexwave decision that revised the test for fraud on the USPTO. Based on its review, the Board found Petitioner Herbaceuticals, Inc.'s fraud claim legally insufficient.
In the original March 7, 2008 order, the Board granted summary judgment to Petitioner Herbaceuticals, Inc. (HCI) on its pleaded fraud claim, ordering cancellation of four registrations in the name of Respondent, Xel Herbaceuticals, Inc. (Xel). The Board concluded that Xel filed knowingly false Statements of Use, signed by the representing attorney. The XEL HERBACEUTICALS marks were not being used on all goods in the identifications as claimed.
On January 7, 2010, Xel filed a motion to vacate the Board's partial summary judgment on HCI's fraud claim, relying on the Bose decision which set forth, "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." Bose, 91 USPQ2d at 1941.
The Board granted Xel's motion to vacate, as conceded, because HCI failed to respond, in any manner, to Xel's motion. However, the Board also sua sponte reviewed HCI's pleaded fraud claim in the original petition to cancel, finding it legally insufficient under the Bose decision.
HCI's pleaded fraud claim alleged that Xel "knew or should have known that it was not using" the marks on all goods identified in each application when the relevant Statements of Use were filed. However, HCI's claim did not allege that Xel possessed the requisite "intent to deceive" the United States Patent and Trademark Office through its actions. Under Bose, the Board noted that each petitioner must specifically plead "intent to deceive" in raising a claim of fraud. See Bose, 91 USPQ2d at 1941. An allegation of "knew or should have known" will not rise to the level of fraud under the Bose standard. In addition, HCI based its fraud claim on "information and belief" but failed to specify facts to support its belief, which also rendered the claim insufficient.
Thus, while the Board has vacated its partial summary judgment based on fraud, the Board has also allowed HCI thirty days from the mailing date of this decision (February 25, 2010) by which to replead its fraud claim under the Bose standard. As of March 10, 2010, HCI has not yet filed an amended petition to cancel.
In addition to articulating the Bose standard in the present order, the Board also discussed the standard for "intent to deceive" in a footnote, stating, "[t]he standard for finding intent to deceive is stricter than the standard for negligence or gross negligence. Still open is the question whether a submission to the PTO with reckless disregard of its truth or falsity would satisfy the intent to deceive requirement. Bose, 91 USPQ2d at 1942, fn. 2."
Vol. 53, June 2010