False Declaration of Incontestability Not Enough to Cancel US Trademark Registration

BACKGROUND:
Great Concepts has owned Registration No. 2929764 for DANTANNA’S, in association with “steak and seafood restaurant[s]”, since March 2005. In 2006 Chutter Inc’s predecessor-in-interest, Dan Tana, petitioned to cancel the mark based on a likelihood of confusion with his common law DAN TANA mark, used in association with restaurant services. The cancellation action was suspended pending the outcome of a trademark infringement suit filed by Chutter against Great Concepts in the Northern District of Georgia, which was ultimately dismissed in September 2009, and affirmed by the 11th Circuit in July 2010. Chutter’s cancellation action was subsequently dismissed by the USPTO in December 2010 after Chutter failed to respond to an order to show cause.

Meanwhile, in March 2010, Great Concepts’ former attorney filed a declaration in support of their Section 8 (required for renewal) and Section 15 (required for incontestability status) application for renewal and incontestability status, respectively. Part of the declaration was the attorney’s affirmation that “there is no proceeding involving said rights pending and not disposed of either in the [USPTO] or in the courts”.

As Great Concepts was at that time engaged in both an ongoing cancellation action at the USPTO and an ongoing infringement suit in federal court with respect to the mark, Great Concepts knowingly filed a false declaration with the USPTO in furtherance of obtaining incontestability status. Chutter again petitioned the USPTO for cancellation of Great Concepts’ mark in July 2015, citing Great Concepts’ false affirmation as a basis for fraud. The USPTO issued a decision in September 2021, finding Great Concepts’ declaration to be fraudulent, and cancelling the DANTANNA’S mark. This decision was notable, clarifying the USPTO’s ability to cancel marks based on a finding of fraud in an incontestability context – specifically, that a false declaration amounted to an “intent to deceive”. Great Concepts appealed.

CAFC DECISION:
In finding for Great Concepts, the CAFC focused not on the “intent to deceive” question, on which the USPTO’s ruling turned in2021 (and, indeed, the court did not reach the issue of whether Great Concepts’ former attorney acted fraudulently at all), but on the Lanham Act itself, and the authority that Section 14 thereof confers on the USPTO to cancel a mark in a finding of fraud.

The relevant language of Section 14 of the Lanham Act provides that a petitioner may file a cancellation action, and the USPTO has the authority to grant cancellation, in an instance where a “registration was obtained fraudulently”. The CAFC noted as a preliminary matter in its statutory analysis that Great Concepts’ 2010 filing was a combined filing of a Section 8 declaration demonstrating use, and a Section 15 filing claiming incontestability. The Section 8 filing was unchallenged by Chutter, and therefore the CAFC determined that its task was to determine whether a false Section 15 filing provided a proper basis on which to stage a Section 14 cancellation proceeding.

The CAFC reasoned that the key question was to determine what right an applicant in a Section 15 filing obtains, and whether such a right was equivalent to any of those on which a Section 14 cancellation action may be based. The CAFC reasoned that Great Concepts’ alleged fraud was related to obtaining an incontestability right, and not registration, as the mark had already been registered since 2005. Otherwise put: Section 14 affords a third party the right to cancel a mark on a number of bases, and while fraud in connection with obtaining a registration is listed under Section 14, fraud in connection with obtaining an incontestability right is not. Therefore, the USPTO’s cancellation of Great Concepts’ mark was beyond its authority under the statute. Accordingly, the CAFC reversed the USPTO’s ruling, and remanded the case back to the office.

COMMENT:
The CAFC’s decision leaves a number of open questions, chief of which is what tools the USPTO has available, if not cancellation, to punish and deter mark owners who file fraudulent Section 15 filings. While the CAFC’s ruling clearly aligns with a plain reading of the Lanham Act, less clear are the potential consequences of limiting the USPTO’s set of remedies to sanction and deter mark owners seeking greater rights for their registrations by fraud.