The Federal Circuit recently released an eye-catching opinion in Great Concepts, LLC v. Chutter, Inc., — F. 4th –, Case No. 2022-1212, 2023 WL 6854647 (Fed. Cir. Oct. 18, 2023). The panel of three judges held, in a two-to-one decision, that the U.S. Patent and Trademark Office’s Trademark Trial and Appeal Board (“TTAB”) did not have the authority to cancel the registration of a mark made incontestable by way of a fraudulent declaration. This holding overturned longstanding Board precedent.
For those who are fans of history, in 1964 actor and former professional footballer Dan Tana opened his eponymous restaurant in West Hollywood, California under the mark DAN TANA’S. The restaurant has enjoyed tremendous popularity, both locally and in popular culture.
Georgia-based Great Concepts, LLC obtained a federal registration for the mark DANTANNA’S for restaurant services in 2005. When Mr. Tana sought to register DAN TANA’S with the USPTO the following year, his application was blocked by Great Concepts’ registration. Mr. Tana petitioned to cancel the registration based on likelihood of confusion with his prior-used mark, and the parties then sparred in a civil suit in Georgia until Great Concepts won on summary judgment in 2009, which Mr. Tana appealed to the Eleventh Circuit. Mr. Tana lost the appeal and his petition to cancel was subsequently dismissed.
In 2010, Great Concepts’ then-attorney filed a combined Section 8 and 15 declaration of use and incontestability to support its registration, declaring that the mark was still in use and that “there is no proceeding involving said rights pending and not disposed of either in the [USPTO] or in the courts.” The latter statement was demonstrably false: both the cancellation proceeding in the USPTO and the Eleventh Circuit appeal were still pending at the time of the filing. But the USPTO accepted the filing and granted Great Concepts’ registration incontestable status, which serves as conclusive evidence of validity of the mark and Great Concepts’ exclusive rights in it.
Five years later, in 2015, Chutter (which had since acquired rights to Mr. Tana’s registration) filed a second petition to cancel Great Concepts’ registration. This time, the petition was based on the fraudulent 2010 filing made to support the registration.
Great Concepts appealed to the Federal Circuit.
The Federal Circuit squarely addressed the question of whether the filing of a false Section 15 declaration provided a valid ground for cancellation. The court answered no.
First, the court clarified that, although Great Concepts’ attorney had filed a combined declaration of use, only the Section 15 portion had been fraudulent. The Section 8 portion was untainted. The court therefore considered the appeal in light of Section 14, which states:
A petition to cancel a registration of a mark, … may … be filed as follows by any person who believes that he is or will be damaged … by the registration of a mark on the principal register …
(3) At any time if … its registration was obtained fraudulently …. 15 U.S.C. § 1064 (emphasis added).
Applying principles of statutory construction, the majority reasoned that, although incontestability status had been obtained fraudulently, there had been no fraud committed in connection with “obtaining” the registration itself. Section 14 lists several bases on which a registered mark may be canceled, but makes no mention of fraud committed in connection with an incontestability declaration which, according the majority, is unrelated to “obtaining” a registration. Thus, the only statutory remedy for fraudulently obtained incontestable status is the loss of that incontestable status. Therefore, Section 14 was not a valid basis for cancelling the DANTANNA’S registration.
Not to be lost are several of the dissent’s arguments that may find more support in future proceedings. First, the dissent notes that the filing was a combined Section 8 and 15 declaration. The combined filing includes a single signature attesting to all of the requirements of both Section 8 and Section 15. As a result, because at least one of the representations was made fraudulently, the declaration as a whole could be considered fraudulent. The dissent also argued, in part, that just because litigants had limited grounds for petitioning to cancel or addressing fraudulent activity, that does not mean the agency (aka the USPTO) was so limited.
Although the dissent was overruled in this case, the court noted that the USPTO is still free to fashion sanctions to address fraudulent conduct. We will wait to see whether the removal of one remedy to address fraud leads the USPTO to find alternative, and perhaps more personal, remedies. In an era where the USPTO is focusing its efforts in addressing misconduct, the Federal Circuit may have inadvertently encouraged new forms of sanctions.