Great Concepts, LLC v. Chutter, Inc.
90 F. 4th 1333 (2023)
Rule of Law:
Section 14 of the Lanham Act does not grant the Trademark Trial and Appeal Board the authority to cancel a trademark registration based on a fraudulent Section 15 declaration filed to obtain incontestable status, as such fraud is not committed in obtaining the registration itself.
Facts:
- Great Concepts, LLC applied to register the trademark 'DANTANNA’S' for a steak and seafood restaurant in 2003, receiving registration in 2005.
- In 2006, a competitor (Dan Tana) petitioned to cancel the registration and sued Great Concepts in federal district court for trademark infringement.
- While both the cancellation proceeding and the civil lawsuit were still pending in 2010, Great Concepts' attorney, Frederick Taylor, filed a declaration with the USPTO.
- This declaration was filed pursuant to Section 15 of the Lanham Act to secure 'incontestable' status for the trademark.
- In the declaration, Taylor swore under penalty of perjury that there were no proceedings involving the trademark rights pending in the USPTO or the courts.
- This statement was false because both the USPTO cancellation proceeding and the federal appeal regarding the infringement suit were active at the time of signing.
- Based on this false declaration, the USPTO granted incontestable status to Great Concepts' trademark.
Procedural Posture:
- Chutter, Inc. filed a petition with the USPTO's Trademark Trial and Appeal Board (TTAB) to cancel Great Concepts' trademark registration.
- The TTAB found that Great Concepts' attorney filed a fraudulent declaration to obtain incontestability.
- The TTAB issued a decision cancelling Great Concepts' trademark registration under Section 14 of the Lanham Act.
- Great Concepts appealed the TTAB's cancellation decision to the U.S. Court of Appeals for the Federal Circuit.
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Issue:
Does Section 14 of the Lanham Act authorize the Trademark Trial and Appeal Board to cancel a trademark registration because the trademark owner filed a fraudulent Section 15 declaration to obtain incontestable status?
Opinions:
Majority - Circuit Judge Stark
No, the Board lacks the statutory authority to cancel a registration under these specific circumstances. The Court's reasoning centers on the plain text of Section 14 of the Lanham Act, which permits cancellation if a mark's 'registration was obtained fraudulently.' The Court distinguished between obtaining a registration and obtaining incontestable status (a Section 15 declaration). Because Great Concepts had already obtained its registration years prior to the fraudulent filing, the fraud was committed to acquire the separate, distinct right of incontestability, not the registration itself. Furthermore, the Court noted that Section 33(b) of the Lanham Act already provides a specific remedy for fraud in obtaining incontestability: the loss of incontestable status, not the total loss of the trademark registration. The Court declined to expand the statutory list of grounds for cancellation to include Section 15 fraud.
Dissenting - Circuit Judge Reyna
Yes, the Board should have the authority to cancel the registration to maintain the integrity of the federal trademark system. The dissent argued that the majority's decision ignores fifty years of precedent established in Crown Wallcovering, which allowed cancellation for fraudulent Section 15 affidavits. Judge Reyna contended that filing a Section 15 declaration is an act of 'maintaining' a registration, which falls under the purview of Section 14. The dissent expressed concern that the majority's ruling effectively 'green-lights' fraud by removing significant consequences; if the only penalty for lying to get incontestability is losing incontestability, a registrant risks nothing by lying.
Analysis:
This decision significantly limits the USPTO's power to police fraud within the trademark system. By strictly construing the phrase 'registration was obtained fraudulently,' the Federal Circuit overturned long-standing administrative precedent that allowed the TTAB to cancel trademarks when owners lied to get incontestable status. The ruling establishes a hierarchy of trademark rights where 'registration' and 'incontestability' are treated as legally distinct assets with different predicates for cancellation. Practically, this means that while attorneys may face individual sanctions for lying to the USPTO, the underlying trademark registration remains valid even if 'incontestable' status was secured through perjury, provided the original registration itself was not fraudulent.
