Ethical Considerations In Trademark Practice
Frank L. Politano
Partner, Newark
September 10, 2013
Copyright © 2013 by K&L Gates LLP. All rights reserved.
What Is Ethics?
ETHICS (from Greek ethos, “character”) is the systematic
study of the nature of value concepts, “good,” “bad,”
“ought,” “right,” “wrong,” etc., and of the general principles
which justify us in applying them to anything; also called
“moral philosophy” (from Latin mores, “customs”).
- Encyclopaedia Britannica
1
What Is Legal Ethics?
“In one sense, the term ‘legal ethics’ refers narrowly
to the system of professional regulations governing the
conduct of lawyers. In a broader sense, however, legal
ethics is simply a special case of ethics in general, as
ethics is understood in the central traditions of philosophy
and religion. From this broader perspective, legal ethics
cuts more deeply than legal regulation:
2
What Is Legal Ethics?
It concerns the fundamentals of our moral lives as lawyers.
As Socrates noted about the subject of ethics, it ‘is not
about just any question, but about the way one should
live.’*”
Legal Ethics (3rd Edition)
Deborah L. Rhode
David Luban
*Plato, The Republic of Plato 31 (Allan Bloom Translation. 1908, 352D).
3
Trademark Rules On Candor
And Disclosure Are Not As Rigorous
As Patent Rules
Trademark Fraud vs. Patent Fraud
1.) Patent prosecution is essentially a “non-adversarial”
process and therefore a higher degree of candor is
required.
a.) Patent prosecutors are held to “the highest
standards of honesty and candor.” Norton v.
Curtiss, 433 F.2d 779, 793 (C.C.P.A. 1970).
4
Trademark Rules On Candor
And Disclosure Are Not As Rigorous
As Patent Rules
Trademark Fraud vs. Patent Fraud
2.)
See 37 C.F.R. §1.56(a) which requires inventors, their
agents and attorneys to “have a duty of candor and
good faith toward the [PTO]” and obliges practitioners
to disclose all information they are aware of “material
to the examination of the application.”
5
Trademark Rules On Candor
And Disclosure Are Not As Rigorous
As Patent Rules
Trademark Fraud vs. Patent Fraud
Note: Patent Fraud has been euphemized to “inequitable
conduct” – but the name change “does not make
the thing itself smell any sweeter.” Burlington
Industries v. Dayco Corp., 849 F.2d 1418, 1422
(Fed. Cir. 1988).
6
Trademark Duty Of Disclosure Is Lower
1.) Patent is a government grant of exclusive rights.
 Without the grant, no rights.
 Candor is thus more important because the PTO
is induced to issue the grant based upon what is
disclosed or not disclosed by the applicant during
the prosecution of the patent application.
7
Trademark Duty Of Disclosure Is Lower
2.) Contrast Trademark Rights:
Trademark registration generally confers no substantive
rights. It only allows procedural advantages based upon
pre-existing common law rights.
8
Trademark Duty Of Disclosure Is Lower
3.)
Note: There are several advantages to having a
federal trademark registration. Most of these are
procedural or evidentiary. See listing attached at end
of this presentation.
But: Recent developments in trademark law have
conferred what may be called substantive registration
rights:
9
Trademark Duty Of Disclosure Is Lower
ITU and Use Applications: Constructive Use:
Section 7(c) of Lanham Act, 15 U.S.C. §1057(c), confers
nationwide right of priority as of filing date:
 For ITU application if the mark is ultimately used and
registered; and
 For use application if the mark is ultimately
registered.
10
Trademark Duty Of Disclosure Is Lower
Incontestability:
Section 33(b) of Lanham Act, 15 U.S.C. § 115(b), confers
“conclusive presumption” of ownership, validity, exclusive
right to use on goods or services stated in the registration.
Eliminates most defenses, except for those listed in
Lanham Act Section 33(b) and Section 15(4)
(genericness).
11
Trademark Duty Of Disclosure Is Lower
Another Reason:
Registration rights are subject, not only to examination by
the PTO, but also to publication, opposition and
cancellation proceedings brought by adversaries.
- Corrective mechanisms to keep applicants honest.
12
What Is Impact Of
Less Stringent Standard?
The following have been held NOT to constitute fraud:
1.) Failure to disclose merely descriptive or merely
misdescriptive nature of a mark.
Robert B. Vance & Associates, Inc. v. Baronet Corp.,
487 F.Supp. 790 (ND.Ga. 1979)
13
What Is Impact Of
Less Stringent Standard?
2.) Failure to disclose that mark is a surname.
DesDomaines Dourthe Freres v. S.A. Consortium
Vinicole De Bourdeaux,
6 USPQ2d 1205 (TTAB 1988)
3.) Defects in ownership of mark.
Kemin Industries, Inc. v. Watkins Products, Inc.,
192 USPQ 327 (TTAB 1976)
14
What Is Impact Of
Less Stringent Standard?
4.) Failure to state use of mark was by a licensee firm.
Airport Canteen Services, Inc. v. Farmer’s Daughter,
Inc.,
184 USPQ 622 (TTAB 1974)
5.) Reliance on a “borderline” transaction to establish use
in commerce.
Pennwalt Corp. v. Sentry Chemical Co.,
219 USPQ 542 (TTAB 1983)
15
What Is The Current Applicable
Standard In Trademark Matters?
The “Bose” Standard:
Knowing (Actual Knowledge)
+ False
+ Material Representation
+ Intent to Deceive
= Fraud
16
What Was The Applicable Standard In
Trademark Matters Before Bose?
“Medinol” Standard:
Knowing (Knew or Should Have Known)
+ False
+ Material Representation
= Fraud
17
What Is The Applicable Standard
In Trademark Matters?
Standard Applies To:
Applications
- Use
- ITU
Section 8 – Statements of Continued Use
Section 15 – Affidavits of Incontestability
Section 9 - Renewals
18
What Is The Applicable Standard
In Trademark Matters?
Any other papers filed in trademark cases before
USPTO:
- Affidavits to prove secondary meaning;
- Consent Agreements; and
- Assignments.
19
Bose Decision
In an opposition proceeding, Opposer asserts a
registered mark against an applicant. The registered mark
covered many goods still being marketed by the Opposer
at the time a Section 8 declaration was filed in connection
with renewing the registration, and also audiotape
recorders which had not been marketed for years.
20
Bose Decision
Opposer’s General Counsel signed the Section 8
declaration and argued that he believed he acted in good
faith and thus without making a knowingly false statement
because Opposer repaired audiotape recorders and
“transported” them in commerce by shipping them back to
their owners. The General Counsel argued it was
reasonable for him to believe this constituted “use.”
Is this Section 8 statement “fraudulent”?
21
Bose Decision
HELD: T.T.A.B. decision finds Fraud. Used more restrictive
“Medinol” Standard.
Bose Corporation v. Hexawave, Inc.,
88 USPQ2d 1332 (T.T.A.B. 2007)
It was not reasonable for Opposer’s General Counsel
to believe that repair services constituted use of WAVE
mark on tape recorders:
22
Bose Decision
General Counsel knew Bose no longer manufactured
tape recorders and had ceased distributing them for many
years.
Opposer’s General Counsel relied on his interpretation
that “transportation” constituted “use in commerce,” but:
a.) did not seek trademark counsel’s opinion;
b.) had no case law to support his position; and
c.) made no inquiries to confirm if his interpretation
was warranted.
23
Bose Decision
Note: Fraud portion of decision appealed to CAFC
and reversed on August 31, 2009. 580 F.3d 1240
(Fed. Cir. 2009). Bose initially appealed to CAFC,
but Hexawave did not contest the TTAB decision.
The PTO intervened to defend Medinol standard.
24
Bose Decision
CAFC reversed and remanded the T.T.A.B. decision
because it believed there was no substantial evidence that
Bose intended to deceive the USPTO.
CAFC noted that there is a material legal distinction
between a “false” representation and a “fraudulent” one:
• A “fraudulent” misrepresentation involves an intent
to deceive; and
• A “false” representation is occasioned by a
misunderstanding, an inadvertence, or a negligent
omission.
25
Bose Decision
For CAFC, mere negligence is not enough to infer fraud or
dishonesty. Finding intent to deceive is a stricter standard
than finding negligence or even gross negligence:
“Thus, we hold that a trademark is obtained fraudulently
under the Lanham Act only if the applicant or registrant
knowingly makes a false, material representation with the
intent to deceive the PTO.”
26
Bose Decision
Note 1: This standard applies to patent inequitable
conduct, but CAFC now says it also applies to
trademark cases.
Note 2: See discussion of Therasense, Inc. v. Becton,
Dickinson and Company, (CAFC May 25, 2011)
infra.
27
CAFC Views On Inequitable Conduct
The CAFC, en banc, has in a patent case, recently
recognized that the expansion and overuse of the
inequitable conduct defense has created problems, and has
limited the applicability of the doctrine. See Therasense, Inc.
v. Becton, Dickinson & Co., (CAFC May 25, 2011).
28
CAFC Views On Inequitable Conduct
CAFC recognizes that inequitable conduct standard
has become the “atomic bomb” of patent law:
 inequitable conduct regarding a single claim renders
the entire patent unenforceable (validity defenses are
claim specific);
 inequitable conduct has lead to a flood of litigation
and has become a litigation strategy of choice
increasing costs and complexity; and
 inequitable conduct cannot be cured by re-issue
(other deficiencies can be cured).
29
CAFC Theories On Inequitable Conduct
 Taint of inequitable conduct can spread from one patent
to an entire portfolio in the same product family.
 Inequitable conduct expands and lengthens the
discovery process and disqualifies the prosecuting patent
attorney from the litigation team.
 Inequitable conduct may engender antitrust claims, may
lead to awards of attorney’s fees, and could vitiate the
attorney/client privilege.
 Compels patent prosecutors to bury the PTO with prior
art references and thus clogs the patent prosecution
system.
30
New Therasense Standard:
To succeed with an inequitable conduct defense:
 Accused infringer must prove by clear and convincing
evidence that the applicant:
knew of the reference;
 knew the reference was material; and
 made a deliberate decision to withhold it.

31
Therasense Standard
Note: Intent and Materiality are separate requirements:
 Each must be proved by clear and convincing
evidence.
 No more “sliding scale” analysis (i.e. where a weak
showing of intent combined with a strong showing
of materiality (vice versa) are used to find
inequitable conduct.
 Materiality requirement is generally “but for”
materiality (i.e. undisclosed prior art is “but for”
material if the PTO would not have allowed the
claim if it had been aware of it).
32
Examples
By equating the “should have known” of the falsity with
a subjective intent, the TTAB erroneously lowered the
fraud standard to a simple negligence standard.
A trademark registration is obtained or maintained
fraudulently only if the applicant or registrant “knowingly
makes a false, material representation with intent to
deceive the PTO.”
Note: New subjective standard. Harder to show subjective
intent. “Should know” standard is eliminated.
33
Implications Of “Bose” Decision:
• Negligence is permissible.
• Gross negligence does not of itself justify an inference
of intent to deceive.
• Reckless disregard of truth or falsity is not an issue in
this case so CAFC leaves that conduct open for another
decision.
34
Implications Of “Bose” Decision
The general counsel’s belief that shipping refurbished
goods met the “use in commerce” requirement, though
incorrect, is not fraud. The general counsel believed this
was true at the time of the renewal.
Challenger must be able to point to evidence to support
an inference of deceptive intent. Here, it failed to satisfy
the clear and convincing evidence standard required to
establish a fraud claim.
Note: Board did require the registration to be restricted to
delete audio tape recorders and players. Case was
remanded to TTAB.
35
Implications Of “Bose” Decision
After “Bose:” it will be difficult for challengers to
expunge registrations. They must meet the subjective
standard of knowing intent to deceive with clear and
convincing evidence.
Burden on applicants and registrants is eased, but
knowing misstatements still expose registrations to risk.
36
Remediation
It may be possible to correct certificates of registration
and avoid fraud claims. See Zanella, Ltd. v. Nordstrom,
Inc., 90 U.S.P.Q. 2d 1758 (TTAB 2009), a decision
rendered before the CAFC Bose decision, where
corrective action taken before the applicant’s use of its
mark and prior to the institution of the opposition
proceeding was sufficient to defeat summary judgment.
37
Remediation
In Zanella, the Opposer owned three registrations covering a
wide variety of clothing items. The marks involved were not
used on some of the items. The Opposer, when it filed its
Section 8 and 15 affidavits, deleted clothing items not in use.
Opposer also rectified one registration by filing a Section 7
request to amend the certificate of registration to delete the
goods on which it had never used the mark.
Note: All of these actions were undertaken before Applicant
had used its mark and before the Opposition was
lodged.
38
Remediation
T.T.A.B.:
“We find that Opposer’s timely proactive corrective
action with respect to these registrations raises a genuine
issue of material fact regarding whether Opposer had the
intent to commit fraud. In particular, Opposer’s action in
correcting any false statements prior to any actual or
threatened challenge to the registrations creates a
rebuttable presumption that Opposer did not intend to
deceive the Office.”
39
Remediation
Zanella is particularly significant because in October
2008 the decision was designated “non-precedential,”
but this was changed in May 2009 so the decision is now
a precedent of the T.T.A.B.
40
Practice Tips
Practice Tips:
1.) Be extremely careful in obtaining evidence that mark is
in use on all goods and services.
a.) have the client complete a form or averment; and
b.) get evidence of use (specimens, internet evidence)
and place in file; and
41
Practice Tips
c.) have the client execute all filings, requests for
extension of time, maintenance papers. (This is
relatively easy to do today by using electronic
signatures).
Note: This may take more time but it helps prevent the
argument that attorney is a fact witness in litigation
or that attorney committed the fraud.
42
Practice Tips
2.) Be extremely careful with foreign applications filed in
the U.S. Foreign practice tends to have inclusive
specifications because use need not be shown in most
countries to obtain registration rights.
Note: Foreign applicant under Section 44(e) must have
bona-fide intention to use even though registration
may issue without showing use.
43
Ethical Issue
Your client owns a well-known registered mark that has
been heavily advertised over the course of several
decades. It is time for renewal and you must prove use.
Unfortunately, the mark is not in use, and has not been
used for over five years. The client is eager to maintain the
registration.
What do you do?
44
Ethical Issue
Section 45, Lanham Act
“A mark shall be deemed to be ‘abandoned’ when …
1.) … its use has been discontinued with intent not to
resume such use. Intent not to resume may be inferred
from circumstances. Non-use for three consecutive years
shall be prima facie evidence of abandonment. ‘Use’ of a
mark means bona fide use of that mark made in the
ordinary course of trade, and not made merely to reserve a
right in a mark.”
45
Effect Use
 Convince the client to resume bona fide use.
 Use the mark in a dual-branding situation with a product
that is currently in the marketplace.
 Effect use through different marketing channels (e.g.
mail order, internet sales)
46
Effect Use
Note: Use is effective even if first occurs during 6 month
“grace” period provided by Section 8(c)(1). See 37
CFR §§2.160 and 2.161(b) (Registrant must attest
to continued use … within the periods set forth in
Section 8 of the Act), which provides grace period.
See also TMEP Section 1604.10(3) “if the §8
affidavit or declaration was filed during the grace
period, the substitute affidavit or declaration must
state that the mark was in use in commerce on or in
connection with the goods/services before the
expiration of the grace period, if accurate.”
47
Effect Use
Note: Filing after expiration or grace period is not a
deficiency that can be cured, even with a deficiency
surcharge. 37 CFR §§2.164(b), 2.182 and 2.185(b).
48
License The Mark
Use by licensee inures to benefit of licensor.
Section 5, Lanham Act.
See also, Section 45, Lanham Act, definition of “Related
Company” – any person whose use of a mark is controlled
by the owner of the mark with respect to the nature and
quality of the goods.
49
Non-Use Due To Special Circumstances
Section 8(b)(2), Lanham Act.
Excusable Non-Use = Due to special circumstances which
excuse such non-use (not due to
any intention to abandon mark).
What Works?
 TMEP 1604.11
 Retooling
 Trade embargoes
 War
 War
 Illness
 Sale of business with temporary non-use
 Fire
 Retooling
 Awaiting regulatory
approval
50
Non-Use Due To Special Circumstances
What Does Not Work:
 Business decision;
 Decreased demand for product; or
 Use of Mark on other products or in another format.
51
Consider Filing A New
Intent To Use Application
52
Addendum A
Advantages of
Federal Trademark Registration
on the
Principal Register*
* Items marked with an asterisk also apply to Supplemental Register registrations.
53
Advantages of Federal Trademark
Registration on the Principal Register
1.
Comprehensive Protection
A principal register trademark registration offers the
registrant nationwide protection against infringement from
the date on which the application was filed. For an intent to
use application, as well as for a use based application, a
registration confers a nationwide, constructive, first use
date as of the filing date.
54
Advantages of Federal Trademark
Registration on the Principal Register
2.
Incontestability
A trademark registered on the principal register that is
used continuously for five years may become incontestable if
certain other conditions are met. An incontestable registration
may only be challenged on limited grounds, such as it has
become generic, was abandoned, was obtained through fraud,
is deceptive, scandalous, or disparages a person, institution,
belief or national symbol, or brings a person into disrepute.
Incontestability eliminates certain defenses in trademark
litigation, including the defense that a mark is merely
descriptive. See also Item 6 below.
55
Advantages of Federal Trademark
Registration on the Principal Register
3.
Fair Warning
A principal register trademark registration serves
as constructive notice to potential infringers of
registrant’s claim of ownership in a trademark. It should
be revealed in any competent search and acts as a
deterrent to potential subsequent users. Furthermore, if a
trademark is registered, the United States Patent and
Trademark Office will refuse to register what it believes
to be any confusingly similar trademarks.*
56
Advantages of Federal Trademark
Registration on the Principal Register
4.
Infringing Imports
A principal register trademark registration gives the registrant
the right to file the registration with the United States Customs Service
to prevent importation of infringing foreign goods.
5.
Counterfeiting
A principal register trademark registration gives federal courts
jurisdiction over infringement and related unfair competition claims.
Federal law provides unique remedies against counterfeiters, such as
the possibility of obtaining punitive damages and attorney fees against
willful infringers.
57
Advantages of Federal Trademark
Registration on the Principal Register
6.
Evidence
A principal register trademark registration initially
acts as prima facie evidence of: (1) the validity of the
trademark and its registration; (2) the registrant's
ownership of the trademark; and (3) the registrant's
exclusive right to use the trademark in commerce for the
goods or services included in the registration. Once a
registration becomes incontestable, it acts as conclusive
evidence of each of the above rights.
58
Advantages of Federal Trademark
Registration on the Principal Register
7. Use of the ® Symbol, “Registered in U.S. Patent
Office” or “U.S. Pat. Off.” to Denote Federal
Registration
A principal register trademark registration gives the
registrant the ability to inform the public that proprietary
rights are recognized in the trademark by using the ®
Symbol, “Registered in U.S. Patent and Trademark Office”
or “U.S. Pat. and Tmk. Off.” in connection with the
trademark.*
59
Advantages of Federal Trademark
Registration on the Principal Register
8.
Confirms Ownership and Validity
A principal register trademark registration may simplify the
process of auditing and clearing title in connection with the sale of a
product line or a company.
9.
Preemption of State Regulation
A principal register trademark registration protects trademarks
against certain types of state regulation. For example, state truth-inlabeling laws are preempted when they require alteration of a federally
registered trademark or service mark.
60
Advantages of Federal Trademark
Registration on the Principal Register
10. Defense to State Law Anti-Dilution Claims
The registrant of a principal register trademark
registration may use it as a complete bar to any claim brought
against the registrant under state common or statutory laws that
seek to prevent dilution.
11. Basis For Foreign Filing
A federal registration may serve as the sole basis for
filing abroad under the Madrid Protocol, other filing conventions
and local law.
61