Thursday, September 16, 2010

Significant precedential TTAB decision concerning fraudulent intent and "advice of counsel"

I don’t usually report on TTAB decisions, but this one looks significant. It concerns “advice of counsel” and proof of fraudulent intent in the wake of In re Bose Corp., 580 F.3d 1240 (Fed. Cir. 2009).

In M.C.I. Foods, Inc. v. Bunte, Cancellation No. 92046056 (TTAB Sept. 13, 2010), Bunte cross-petitioned to cancel MCI’s registration for fraud. MCI’s registration listed many types of Mexican foods (including tortilla chips), but MCI never used it for tortilla chips. MCI’s president testified that he made a list of goods he wanted to have on the application (including items he knew MCI hadn't used the mark on, like tortilla chips), but testified that the list “was discussed with counsel.” Bunte’s attorney asked no further questions about the discussions with counsel.

Based on the evidence that MCI provided the list to counsel and discussed it with counsel, the TTAB found that MCI did not intend to deceive the PTO. The TTAB qualified its ruling by noting that it was not holding that merely asserting “advice of counsel” creates a per se defense to fraudulent intent. Rather, it faulted Bunte for not following up and obtaining testimony concerning what counsel’s actual advice, if any, was. So, evidence that counsel’s advice was sought can be exonerating if there is no further evidence that counsel’s advice (or lack thereof) undercut this evidence of good faith. In other words, evidence that the accused party sought the “advice of counsel” creates a presumption of good faith, and the presumption stands unless outweighed by contrary evidence.

NB: The TTAB did not discuss the necessarily-implicated issue of whether an accused party waives the attorney-client privilege merely by invoking or referring to the obtaining of counsel’s advice.

Absent fraud, the TTAB denied cancellation, instead restricting MCI’s registration to the items that it actually used the mark on.

No comments: