Canadian court rejects U.S. doctrine of fraud on the trade-mark office

Canada’s Federal Court recently rejected the U.S. doctrine of fraud on the trade-mark office in the recent decision Parfums de Coeur, Ltd. v. Christopher Asta.

Background

In Parfums de Coeur, Parfums de Coeur (PDC) brought expungement proceedings against Asta’s Canadian trade-mark registration for BOD, alleging that the Declaration of Use for the BOD trade-mark registration contained either a fraudulent misrepresentation or a materially false statement that was fundamental to the registration.

Asta’s trade-mark application was filed on a proposed use basis, necessitating the filing of a Declaration of Use to obtain the registration. A Declaration must accurately state what wares and/or services the trade-mark has been used within Canada; supporting specimens of use are not required. If the trade-mark has not been used in Canada with all of the wares and/or services claimed in the application, those wares and/or services are deleted from the Declaration before it is signed by the applicant and filed with the Canadian Trade-marks Office (TMO).  Alternatively, extensions of time to file a Declaration be obtained so the applicant additional time to use the trade-mark with all of the wares and/or services claimed in the application.

Asta thought he could file the Declaration claiming use for all of the wares claimed in his application when in fact his BOD trade-mark had been used in Canada with only some of the wares.  The BOD trade-mark application registered. Subsequently, PDC filed a trade-mark application for BOD MAN; Asta’s BOD trade-mark was cited against PDC’s application. To eliminate the citation, PDC brought expungement proceedings against the BOD trade-mark in order to secure registration of its BOD MAN trade-mark application. Before initiating the proceedings, PDC advised Asta of its intention. Asta subsequently amended the wares in his BOD trade-mark registration to reflect only those wares with which the BOD trade-mark was used. Asta admitted that the Declaration was inaccurate due to “his lack of understanding of the trademark system.”

PDC’s arguments and the U.S. doctrine of fraud

PDC did not pursue its allegation of fraud but did pursue the material misstatement allegation. Since Asta had amended the statement of wares in his BOD registration before the expungement application was filed, to be successful, PDC would have to show that the amended registration was obtained by a material misstatement in order to win the proceeding.

It is Canadian law that either (1) intentional fraudulent or (2) innocent misstatements which allow a trade-mark application to overcome barriers to registration found in section 12 of Canada’s Trade-mark Act (e.g. confusion) can invalidate a trade-mark registration.  PDC relied upon the U.S. doctrine of fraud on the trade-marks office, which the Canadian Federal Court found does not require “real fraud”, but “any material misstatement in the processing of a registration” which “renders the entire resulting registration void”.  The Canadian court observed that if the U.S. doctrine was applied, the error in the Declaration would render the BOD registration void, despite Asta’s innocent error and subsequent amendment to the statement of wares.

According to Paul Jorgensen of The Jorgensen Firm LLC:

In the U.S., applicants and their counsel need to ensure that descriptions of goods and services are accurate.  Before the mark registers, applicants who know the use has changed should correct the description of goods or services with the U.S. Patent and Trademark Office (PTO).

As a precautionary measure, we often recommend that our clients avoid densely-packed descriptions of goods and services, and that we file separate applications covering discrete categories of goods and services.   This approach has good results: our clients tend to focus more carefully on the accuracy of the description, and to take a less “shotgun” approach to their descriptions.  This approach also increases the chances that our clients will obtain some protection in the unlikely event of one of its applications being attacked on fraud grounds.

This approach is advised by the many fraud cases emerging from the PTO’s Trademark Trial and Appeal Board (TTAB) in recent years.  Distilling these cases, several bright lines emerge for applicants and registrants:

  • Fraud can be shown by evidence that you knew or should have known that your statement to the PTO was false when it was made and, but for that statement, the registration would not have issued.
  • Your specific intent to defraud the PTO does not need to be shown to find fraud.
  • You cannot cure fraud by trying to amend your application after a fraud proceeding begins.
  • The TTAB will not accept your defence to fraud if you say:
    • I did not understand the law.
    • I was not represented by counsel.
    • I do not speak English.
    • I did not know what “use in commerce” meant.
  • The TTAB may accept your defence to fraud if you show that:
    • You believed that what you stated was true;
    • Your belief came from an honest misunderstanding, inadvertence or negligent omission; and
    • Your statement was not material to the issuance or maintenance of the registration.

The Federal Court rejected PDC’s arguments based on the U.S. doctrine, as such a doctrine is not Canadian law. While Asta’s Declaration did not accurately reflect what the wares the BOD trade-mark had been used with, the Declaration contained an innocent or potentially negligent misstatement which did not result in the BOD trade-mark application overcoming barriers to registration.

The Federal Court also found it significant that Asta amended his registration before PDC initiated expungement proceedings. The Court also noted that innocent misstatements such as Asta’s can be amended under Canada’s Trade-mark Act.

Significance

The Federal Court’s decision in Parfums de Coeur makes it clear that, at least for now, the U.S. doctrine of fraud on the trade-marks office does not apply in Canada when it comes to innocent mistakes in Declarations of Use. Regardless, trade-mark applicants should ensure that their Declarations of Use are accurate to ensure that they do not end up with a trade-mark registration that is merely a piece of paper instead of an accurate depiction of their trade-mark rights.

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