The TTABlog®‘s John Welch shares his thoughts from on “fraud on the PTO in the post-Bose era. Excerpt:
So how does one plead a fraud claim post-Bose? It appears that one must expressly allege that the adversary knew that the statement was false and intended to deceive the USPTO. What specific facts may be alleged to support that allegation? One might set forth the facts surrounding the pleader’s investigation into the use or non-use of the mark in question, but that would not seem to fit the bill.
Indeed, a party may have to refrain from pleading a fraud claim until after discovery has revealed sufficient facts to satisfy the pleading requirement. . . .
It seems clear that proving a fraud claim on summary judgment may have become an historical relic. In Medinol, the TTAB entered summary judgment sua sponte on the ground of fraud. But in the post-Bose era, one will need to find the proverbial “smoking gun” before the TTAB will enter summary judgment for fraud.
This sounds a lot like the standard the rest of the world has to meet before proceeding with a claim of civil fraud. Under Federal Rule of Civil Procedure 9(b), “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” I imagine John’s response would be that we are not talking here about common-law fraud where a defendant is, as a matter of policy, entitled to know what particular actions or omissions, in the course of potentially complex transaction or series of transactions, was the one constituting the knowingly untruthful statement or omission. Here there is merely an application listing goods and services for a trademark, one or more of which, it turns out, is not really being used with the trademark. That is objectively ascertainable, as it was pre-Bose.
Now, however, the way John reads Bose, a smoking evidentiary gun of intent must be found if there is to be summary judgment and, he seems to say, even an allegation of fraud. He cites Enbridge Inc v Excelerate Energy Limited Partnership, where the TTAB denied a summary judgment motion because there were genuine issues of material fact regarding whether Excelerate “knowingly made this representation of use with the intent to deceive the USPTO.”
Actually, yes: This sounds a lot like the standard the rest of the world has to meet before proceeding with a claim of fraud. But I do not agree that it is necessary to meet this standard in order to plead fraud. That would be contrary to the concept of notice pleading. There is certainly nothing in Enbridge to suggest that. In fact, the only thing needed to allege a Rule 9(b)-compliant fraud claim is to allege with reasonable particularity the statements alleged to be fraudulent, the identity of the speaker, where and when the statements were made, and why they were fraudulent (i.e., false, reasonably relied upon, and intended to be relied upon). See, Acito v. IMCERA Group, Inc., 47 F.3d 47, 51 (2d Cir. 1995). It is not necessary to plead a state of mind, merely a state of mind that gives rise to a reasonable inference of fraud — such as a motive or other circumstantial facts.
All these facts are at hand, and convenient, in a PTO fraud claim. In fact, they are so readily available that it is very much, at the pleading stage, unlike the standard the rest of the world has to meet before proceeding with a claim of fraud. It is hard to imagine a situation where anything akin to a 9(b)-based motion to dismiss a fraud claim could succeed in an inter partes action.
As to summary judgment, John is surely right. Short of that holy grail of a smoking gun where the registrant admits, pre-discovery, to having made a false statement to the PTO (or presumably one it reasonably should have known was false), both sides will have to slug it out. And, as he points out in his article, procedural and particular aspects of the trademark practice quite unlike what happens in civil litigation could make it far harder for lawyers to operate or, for that matter — where the PTO is, unlike in most civil cases, both the tribunal and an interested party — make settlement far more difficult. Perhaps that prospect will result in some new PTO rule-making or “judicial creativity”; for now, however, there will be no easy fraud judgments — a prospect whose desirability John and I have not agreed in the past. But, as John says, that’s history.