A Limit to Cancel Culture? Federal Circuit Finds Fraud in Connection with Section 15 Declaration of Incontestability Not a Cancellable Offense

In 2021, the Trademark Trial and Appeal Board cancelled Great Concepts, LLC’s trademark registration for the mark DANTANNA’S for restaurant services under Section 14, after finding that counsel for the Registrant committed fraud by signing a false Combined Declaration of Use and Incontestability under Sections 8 & 15. The Section 15 Declaration of Incontestability, specifically, was found to be false because counsel for the Registrant made a representation as part of that filing that no proceeding involving rights in the mark was pending and not disposed of in either the U.S. Patent and Trademark Office or the courts existed at the time of the filing, when in fact, both a Board proceeding and civil action involving the Registrant’s right to register and use the mark DANTANNA’S were pending. Our October 2021 MarkIt to Market® article about the Board case can be found here: Ignorance is NOT Bliss: Reckless Disregard for the Truth Supports a Finding of Fraud.

Two years later, Great Concepts’ appeal has made its way through the Federal Circuit, and the Court has issued a precedential opinion in Great Concepts Management Group v. Chutter, Inc., No. 2022-1212, 2023 WL 6854647 (Fed. Cir. Oct. 18, 2023). Great Concepts is appealing the cancellation of its registration, on the basis that the fraud committed by its counsel in connection with submitting a Section 15 Declaration of Incontestability with a false statement is not a situation contemplated by Section 14 of the Lanham Act, which permits a third party to file a petition to cancel a registration of a mark at any time if the registered mark’s “registration was obtained fraudulently.” 15 U.S.C. § 1064 (emphasis added). Upon consideration, the Court found that the registration was not obtained fraudulently by filing the false Declaration, only the incontestable status was, so the Board had no authority under Section 14 to cancel Great Concepts’ registration.

In an interesting portion of the opinion, the Court discusses the possibility that this decision might encourage mark owners to engage in fraud, now that cancellation is not a potential penalty. In an encouraging statement, the Court said, “nothing in this opinion should be read to mean that the Board is powerless to address fraud, including fraud committed solely in conjunction with the filing of a Section 15 declaration.” Great Concepts at 20. This case has been remanded back to the Board to consider potential alternative consequences for the fraudulent conduct, suggesting that perhaps the incontestable status be revoked, or sanctions be imposed on Great Concepts and its counsel. While cancellation may not be a consequence of filing a fraudulent Declaration, the Court does urge the Board to consider alternatives.  

In any case, practitioners and mark owners should take note of this decision as further indication that the USPTO, the Board, and the Federal Circuit are taking a close look at Declarations of Use and Incontestability. As always, we caution that Declarations need to be closely read and carefully considered before they are submitted to the USPTO—while cancellation may not always be on the table, there are sure to be other consequences for committing fraud.

This article appeared in the October 2023 issue of MarkIt to Market®. To view our past issues, as well as other firm newsletters, please click here.