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In re Bose: Federal Circuit Raises the Bar for Fraud in Trademark Cases

September 30, 2009

On August 31, the Federal Circuit brought the standards for fraud in the Trademark Office in line with those for patent cases with its decision in In re Bose. Bose Corporation had challenged the HEXAWAVE trademark registration of communications technology company Hexawave Inc. based on Bose’s prior registration for WAVE. Hexawave counterclaimed that Bose committed fraud because an affidavit stated it was still manufacturing and selling all of the products listed on the WAVE registration, though that was not the case. Fraud was found and Bose’s WAVE registration was cancelled.

On appeal, the Federal Circuit found that Bose did not commit fraud and vacated the order cancelling its registration. The court dictated that in order to succeed on a fraud claim, a litigant must show that the filed affidavit contained false statements of material fact that were submitted not merely out of negligence, but with the intent to deceive.

Six years ago, in Medinol v. Neuro Vasx, Inc., the Trademark Trial and Appeal Board held that a trademark applicant commits fraud when it “makes material representations of fact ... which it knows or should know to be false or misleading.” Now, with Bose, the Federal Circuit has ruled that Medinol “erroneously lowered the fraud standard to a simple negligence standard,” and “there is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive.”

“The Bose decision answers the question of the applicable legal theory, but leaves open the practical issue of how to prove willful intent,” says WilmerHale Litigation Counsel Dyan Finguerra-DuCharme. “The prior ‘should have known’ standard under Medinol was much easier to establish than demonstrating a willful ‘intent to deceive the Patent and Trademark Office,’ and Bose offers little practical guidance on how to do so. While Medinol led to the use of a ‘fraud on the PTO claim’ as leverage in trademark disputes, we will likely see a decrease in these claims in the wake of Bose.”

To read the full text of a recent WilmerHale Email Alert on this subject, click here.

Lawyers in WilmerHale’s Intellectual Property Litigation Practice have considerable experience trying intellectual property cases in the Federal Circuit, federal district courts from coast to coast, and the US International Trade Commission, as well as courts in the UK and Germany. We have tried jury and non-jury cases involving technologies ranging from complex mathematical algorithms and devices for manufacturing semiconductor chips to recombinant genetics and the construction of golf balls. We also regularly handle patent appeals before the US Court of Appeals for the Federal Circuit and appeals of other IP cases before the regional courts of appeals. For more information on this practice, click here.