Federal Circuit Reins in TTAB’s Authority in Trademark Cancellation Proceedings

Background

In 2005, Great Concepts, LLC obtained registration for its “DANTANNA’S” trademark used in connection with its restaurant. In 2006, Chutter Inc.’s predecessor‑in‑interest, Dan Tana, petitioned the Board to cancel Great Concepts’ mark based on an alleged likelihood of confusion with Mr. Tana’s common law “DAN TANA” mark for restaurant services. The cancellation proceeding was suspended during the pendency of a civil action in the Northern District of Georgia, in which Mr. Tana sued Great Concepts for trademark infringement. On September 15, 2009, the district court granted summary judgment in favor of Great Concepts, which was affirmed by the Eleventh Circuit on July 15, 2010. On December 14, 2010, the Board dismissed Mr. Tana’s cancellation proceeding based on his failure to respond to the Board’s order to show cause.

Meanwhile, on March 8, 2010, four months before the Eleventh Circuit’s decision, and nine months before the Board’s dismissal of the cancellation proceeding, Great Concepts’ former attorney filed with the U.S. Patent and Trademark Office (“PTO”) a combined declaration of use, pursuant to Section 8 of the Lanham Act, and declaration of incontestability, pursuant to Section 15 of the same act. In the Section 15 portion of the declaration, Great Concepts’ attorney falsely declared, “there is no proceeding involving said rights pending and not disposed of either in the U.S. Patent and Trademark Office or in the courts.”²

In July 2015, Chutter petitioned the PTO for cancellation of Great Concepts’ mark based on the false Section 15 declaration. On September 30, 2021, the Board issued a decision finding that the declaration was fraudulent and cancelling Great Concepts’ registration of its mark under Section 14 of the Lanham Act.

Sections 8, 14, and 15 of the Lanham Act

Section 8 of the Lanham Act requires trademark owners, “at the end of the sixth year after the date of registration and at the end of each successive ten-year period after the date of registration,” to “file a Section 8 Declaration of Continued Use, ‘an affidavit setting forth those goods or services recited in the registration on or in connection with which the mark is in use in commerce.’”³

To make it more difficult for a mark to be invalidated (e.g., on grounds of confusion, descriptiveness, genericness, etc.), the owner of a registered mark may also seek to obtain “incontestable” status under Section 15 of the Lanham Act. Section 15 provides that a registered trademark may acquire incontestable status after “such registered mark has been in continuous use for five consecutive years subsequent to the date of such registration and is still in use in commerce.”⁴ An incontestable mark is conclusive evidence of the validity of the registered mark, whereas a registered mark that has not achieved incontestable status is only prima facie evidence of the validity of the registered mark.⁵

Section 14 of the Lanham Act sets out the circumstances under which the registration of a mark may be challenged, including if the registration was obtained fraudulently.⁶

The Opinion

The Federal Circuit was tasked, for the first time, with determining whether Section 14 of the Lanham Act permits the Board to cancel a trademark’s registration due to the owner’s filing of a fraudulent Section 15 declaration for the purpose of acquiring incontestable status for its already-registered mark. Although “[t]he Board has long believed it has such power,” illustrated most recently by its decision to cancel Great Concepts’ registration, the Court held that it does not.⁷

The basis for the Court’s opinion is its interpretation of Section 14. 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.”⁸ As the Ninth Circuit has explained, “obtain” has a plain and ordinary meaning: “‘[t]o get hold of by effort; to gain possession of; to procure; to acquire in any ways.’”⁹ Because the parties did not dispute that Great Concepts obtained something through its Section 15 declaration, the Court moved to the question of what Great Concepts obtained. The Court found that question “not difficult to answer” : Great Concepts obtained incontestable status for its already‑registered trademark.¹⁰ But “[u]nder the Lanham Act, registration and incontestability are different rights. . . . [F]raud committed in connection with obtaining incontestable status is distinctly not fraud committed in connection with obtaining the registration itself.”¹¹

The Court further noted that in Section 14, Congress set out a lengthy list of bases on which a third party may seek cancellation of a registered mark. Notably absent from the list is fraud committed in connection with an incontestability declaration. The Court therefore refused to “lightly” add to the list in fear of “contradict[ing] what may have well been an intentional omission.”¹² The Court also noted that under Section 33(b) of the Lanham Act, an accused infringer may attempt to prove in an infringement action that the mark’s incontestable status was obtained fraudulently by the mark owner. But the remedy Section 33(b) provides for fraud in connection with obtaining incontestable status is loss of incontestable status, not also loss of registration. The Court was therefore “unpersuaded” that Congress, in Section 14, “silently authorized the PTO to impose a different, more severe remedy, cancellation of registration, for th[e] same offense.”¹³

Chutter’s main argument was that the Court should adhere to its predecessor court’s precedent, holding that a fraudulent declaration filed in support of incontestable status can be the basis for Board cancellation of a registered mark.¹⁴ Chutter relied on a Court of Customs and Patent Appeals’ opinion that involved a mark owner, whose predecessor‑in‑interest had acquired an incontestable mark by filing a combined Section 8 and Section 15 declaration, in which the Section 15 portion contained a false statement, and the Section 8 portion did not¹⁵ — precisely the situation before the Federal Circuit. That mark owner then opposed an applicant’s attempt to register its own similar mark.

But the Federal Circuit noted that the applicant in that case did not ask the Board to cancel the mark owner’s registered mark, believing the Board had no authority to do so. The court in that case had also expressly declined to reach the question of whether Section 14 permitted cancellation based on fraudulent statements in a Section 15 declaration. Further, the sanction the applicant obtained was to preclude the mark owner from relying on its incontestable, registered mark as a basis to oppose applicant’s application for its own mark. The mark owner still possessed its registered mark — which could be asserted against infringers in subsequent actions — just as Great Concepts sought to do.

Unpersuaded by the rest of Chutter’s arguments,¹⁶ the Federal Circuit reversed the Board’s cancellation of Great Concepts’ registration, and remanded the case so that the Board can consider whether to declare that Great Concepts’ mark does not enjoy incontestable status and to evaluate whether to impose other sanctions on Great Concepts or its attorney.

What This Means for You

The Federal Circuit’s opinion in Great Concepts confirms the Federal Circuit’s power to rein in its agencies when they exceed their authority, regardless of how long their actions have been ultra vires. The opinion also joins the recent trend of Federal Circuit opinions granting challenges to PTO administrative decisions, suggesting that these types of challenges are becoming more effective tools for obtaining relief in intellectual property disputes.

¹ No. 22-1212 (Fed. Cir. Oct. 18, 2023) (“Op.”).

² Id. at 3.

³ In re Bose Corp., 580 F.3d 1240, 1242 n.1 (Fed. Cir. 2009).

⁴ 15 U.S.C. § 1065.

⁵ See 15 U.S.C. § 1115(b).

⁶ See 15 U.S.C. § 1064.

⁷ Op. at 7.

⁸ 15 U.S.C. § 1064 (emphasis added).

⁹ W. Union Tel. Co. v. Hansen & Rowland Corp., 166 F.2d 258, 260–61 (9th Cir. 1948) (quoting Webster’s New International Dictionary, 2d ed. at 1682).

¹⁰ Op. at 12.

¹¹ Id.

¹² Id. at 13.

¹³ Id. at 14.

¹⁴ See id. at 14–17.

¹⁵ See Duffy-Mott Co. v. Cumberland Packing Co., 424 F.2d 1095 (C.C.P.A. 1970).

¹⁶ Op. at 17–21.