After the Federal Circuit’s In re Bose decision, submission of false declarations to the U.S. Patent and Trademark Office (USPTO) increased as parties believed that adverse consequences were unlikely. Specifically, plaintiffs before the Trademark Trial and Appeal Board (TTAB) could establish fraud only if the declarant was shown to have intended to deceive the USPTO. In response, declarants asserted that any false statement was unintentional, and because fraudulent intent is difficult to prove without “smoking gun” evidence, such allegations have often failed before the TTAB. In fact, over the past 11 years, the TTAB has found fraud to exist in only two cases – Nationstar Mortgage v Ahmad and Fuji Med. Instruments v Am. Crocodile. Now, the TTAB has appeared to be ready to consider “reckless disregard” for the truth in a declarant’s statement sufficient to cancel a registration. This approach is consistent with the Federal Circuit’s dicta In re Bose that fraud might also exist if the declarant exhibited a “reckless disregard” for the truth when submitting a false declaration.

In Chutter, Inc. v. Great Management Group, LLC, the TTAB appears to have significantly eased the burden on plaintiffs by finding that a declarant’s failure to read an inaccurate declaration before submitting it to the USPTO constituted reckless disregard for the truth and warranted canceling the registration on fraud grounds. In this case, Chutter attacked Great Management’s registration of the mark DANTANNA’S for restaurant services and spices based on Chutter’s prior rights to the mark DAN TANA’s for restaurant services and marinara sauce. After Chutter filed a cancellation action and a civil action involving the DANTANNA trademark registration, Great Management’s counsel filed a Section 15 declaration with the USPTO with the intent of achieving incontestability status for the registration. The Section 15 declaration falsely stated that there were no civil actions or USPTO proceedings pending against the DANTANNA registration. Great Management’s counsel admitted that he knew of the pending civil action and USPTO cancellation action at the time he filed the Section 15 declaration. However, counsel claimed that there was no fraud because he had failed to review the document carefully enough to see that the statements in it were incorrect. 

Chutter argued that Great Management’s counsel had been “willfully blind” in submitting the Section 15 declaration, not knowing what he was signing and failing to inquire about its accuracy. Seizing upon the Federal Circuit’s dicta in In re Bose, Chutter asserted that the false Section 15 declaration amounted to fraudulent “reckless disregard” for the truth which justified the cancellation of Great Management’s DANTANNA trademark registration. 

The TTAB agreed. It noted that “reckless disregard” is defined as the “conscious indifference to the consequences of an act.” Under U.S. law, “[a] declarant is charged with knowing what is in the declaration being signed, and by failing to make an appropriate inquiry into the accuracy of the statements the declarant acts with reckless disregard for the truth.” In this case, Great Management’s counsel did not fulfill his duties as counsel and did not take any action to remedy the error once it was brought to his attention. Further, the TTAB expressed concern that if counsel’s reckless disregard were not held to be fraud, it would “encourage declarants to conclude that such disregard carries no consequences, and that they can fail to read documents that they are signing without penalty.” The TTAB also noted that, while the Federal Circuit required willful conduct for there to be fraud, many U.S. appellate courts have held willfullness to encompass “recklessness.” So, there is no reason that, in the context of trademark prosecution, fraud could not also encompass reckless disregard for the truth. Indeed, the USPTO relies on declarants to submit complete, accurate, and truthful statements in their filings. Given that applicants and registrants know of the USPTO’s reliance on their honesty, reckless disregard for the truth is equivalent to intent to deceive. Consequently, in view of the knowing and reckless false statement in the Section 15 declaration, the TTAB determined that counsel had committed fraud on the USPTO and granted Chutter’s petition to cancel the DANTANNA trademark registration.

The case is Chutter, Inc. v. Great Management Group, LLC, 2021 U.S.P.Q.2d 1001 (T.T.A.B. 2021)