Motion for summary judgment denied on issue of fraud intent

In DaimlerChrysler Corp v American Motors Corp (Cancellation 92045099, 14th January 2010) the Trademark Trial and Appeal Board followed the recent decision of the US Court of Appeals for the Federal Circuit in In re Bose Corp (580 F3d 1240 (2009)) and denied DaimlerChrysler Corp's motion for summary judgment on the question of whether American Motors Corporation had attained registration of its trademark by way of fraud on the US Patent and Trademark Office (USPTO).

In 1987 DaimlerChrysler purchased the struggling American Motors Corporation, rebranding the company as the Jeep-Eagle division of DaimlerChrysler. In 1999 a new company was formed under the American Motors Corporation name, claiming no relation to any previous embodiment. In 2005 this company was granted a trademark registration for the letters AMC combined with a design element, the latter being identical to the design element used by the company purchased by DaimlerChrysler. The registration claimed use on "automobiles and structural parts thereof". American Motors Corporation admitted that it had never sold an automobile or structural part thereof, but claimed that it believed and continued to believe that its use of the AMC mark on promotional materials and on its website constituted use in commerce.

DaimlerChrysler filed the present action claiming common law rights in the name American Motors Corporation, as well as the AMC marks. It also claimed that American Motors Corporation's registration had been cited against DaimlerChrysler's pending application for the AMC mark and design on "toy vehicle replicas". DaimlerChrysler alleged, among other things, that American Motors Corporation had committed fraud by knowingly misrepresenting to the USPTO that it had used the AMC mark in commerce, on automobiles and structural parts thereof, in order to procure registration.

When DaimlerChrysler filed its motion for summary judgment on the issue of fraud, the Trademark Trial and Appeal Board was operating in accordance with its own holding in Medinol Ltd v Neuro Vasx Inc (http://ttabvue.uspto.gov/ttabvue/ttabvue-92040535-CAN-15.pdf). That decision stood for the proposition that a trademark applicant commits fraud in procuring a registration when it makes material representations of fact in its declaration which it knows or should know to be false or misleading. The inclusion of the term 'should know' had the effect of making gross negligence, or perhaps even mere negligence, equivalent to fraudulent conduct before the USPTO.

However, before DaimlerChrysler's motion for summary judgment was decided, the Federal Circuit overruled the Medinol holding in In re Bose Corp. The Federal Circuit found that the board had erred in finding fraud when a registrant merely should have known that it was making material misrepresentations to the USPTO. Instead, the party alleging fraud must prove a wilful intent to deceive the USPTO through its material misrepresentations. A person's honest belief that his or her misrepresentation was true, no matter how unreasonable, is not fraudulent.

The Bose decision posed two problems for DaimlerChrysler. First, Rule 9(b) of the Federal Rules of Civil Procedure requires that the circumstances alleging fraud must be stated with particularity. However, DaimlerChrysler, in accordance with the Medinol holding, did not specifically allege a wilful intent to deceive. Regardless, the board found that intent may be averred generally and that DaimlerChrysler's pleading was sufficient because it stated numerous "specific representations of fact that [DaimlerChrysler] alleges were false and were known to be false, were material, and were relied upon by the [USPTO]".

DaimlerChrysler's second problem was that it had not presented any direct evidence, or sufficient indirect evidence, to prove American Motors Corporation's intent to deceive the USPTO. While the board acknowledged that American Motors Corporation may not have been using its mark sufficiently to maintain a registration, American Motors Corporation's claim that it honestly believed and continued to believe that a website and promotional material constituted use in commerce, along with the fact that American Motors Corporation was not represented by counsel and the proposition that questions of intent are generally unsuited for summary judgment, were sufficient to render the question of fraud a genuine disputed factual issue. Consequently, the board denied DaimlerChrysler's motion for summary judgment.

This article first appeared in World Trademark Review Daily, published by The IP Media Group (www.worldtrademarkreview.com).