In a split panel decision, the US Court of Appeals for the Federal Circuit overturned the Trademark Trial & Appeal Board and ruled that a fraudulent declaration under Section 15 of the Lanham Act is not a basis for cancellation of an otherwise incontestable registered mark. Great Concepts, LLC v. Chutter, Inc., Case No. 22-1212 (Fed. Cir. Oct. 18, 2023) (Dyk, Stark, JJ) (Renya, J., dissenting).

Great Concepts applied to register “DANTANNA’S” as a mark for a “steak and seafood restaurant” in 2003, which resulted in a registration in 2005.

In 2006, Chutter’s predecessor-in-interest, Dan Tana, petitioned the Board to cancel the registration based on an alleged likelihood of confusion with Tana’s common law “DAN TANA” mark for restaurant services. That cancellation proceeding was suspended during a pending civil action in which Tana successfully sued Great Concepts for trademark infringement.

Afterward, the Board dismissed Tana’s cancellation proceeding “based on petitioner’s apparent loss of interest” after he failed to respond to the Board’s order to show cause.

Meanwhile, prior to the finality of the infringement action, Great Concepts’ former attorney, Frederick Taylor, filed a combined declaration of use (pursuant to Section 8 of the Lanham Act) and a declaration of incontestability (pursuant to Section 15). In the Section 15 portion of the declaration, in relation to Great Concepts’ effort to obtain incontestable status for its already registered mark, Taylor falsely declared “there is no proceeding involving said rights pending and not disposed of either in the U.S. Patent and Trademark Office [PTO] or in the courts.”

Chutter then petitioned the PTO for cancellation of the registration based on Taylor’s false Section 15 affidavit. The Board found that Taylor’s Section 15 declaration was fraudulent and cancelled the registration under Section 14 of the Lanham Act. Great Concepts appealed.

The Federal Circuit was confronted with the issue of whether Section 14, which allows a third party to seek cancellation of a registration when the “registration was obtained fraudulently,” permits the Board to cancel a trademark’s registration based on a fraudulent Section 15 declaration, filed for the purpose of acquiring incontestability status for its already registered mark. Reversing the Board’s decision, the Court held that Section 14 does not permit the Board to cancel a registration in these circumstances.

Focusing on the statutory language, the Federal Circuit noted that Section 14 permits a third party to file “[a] petition to cancel a registration of a mark” … “[a]t any time if” the registered mark’s “registration was obtained fraudulently.” Explaining that the word “‘obtaining’ has a plain and ordinary meaning,” i.e., “[t]o get hold of by effort; to gain possession of; to procure…,” the Court then noted that, by contrast, Taylor’s fraudulent Section 15 declaration only sought incontestable status for its already registered trademark—a different right from registration.

Since “fraud committed in connection with obtaining incontestable status is distinctly not fraud committed in connection with obtaining the registration itself” and since fraud committed in connection with an incontestability declaration is not found among the “numerous bases on which a third party may seek Board cancellation of a registered mark” under Section 14, the Federal Circuit held that the Board was not authorized by the statute to cancel the registration.

In dissent, Judge Reyna faulted the majority for instructing the PTO “that there exists a milepost in the trademark administrative continuum, a green light, beyond which inequitable conduct is encouraged by the promise of great gain with little to no meaningful risk to the registrant.” Judge Renya warned that the Federal Circuit “should be wary not to excuse fraud that is undertaken at any stage within an administrative process” and “must recognize that the grant and protection of intellectual property rights involves a pact with the general public.”