Incontestable - September 2010 - M.C.I. Foods, Inc. v. Bunte

Finnegan's monthly review of essential decisions, key developments, evolving trends in trademark law, and more.

September 2010 Issue

TTAB Cases

M.C.I. Foods, Inc. v. Bunte,
Canc. No. 92046056 (TTAB Sept. 13, 2010)

ABSTRACT
Petitioner cross-petitioned to cancel Registrant’s registration for the mark CABO PRIMO & Design for various Mexican-style food products, including tortilla chips, on the ground of fraud based on Registrant’s alleged nonuse of the mark in connection with tortilla chips. Registrant had relied on the advice of counsel in filing its application for the CABO PRIMO mark, and there was no evidence presented at trial that counsel had advised against filing for goods that were not in use, such as tortilla chips. The TTAB found that Registrant had made a false representation when it filed its application to register the CABO PRIMO mark by claiming use on tortilla chips, but that Registrant did not intend to deceive the PTO when it filed that application. Specifically, because Registrant filed its application to register the CABO PRIMO mark with the advice of counsel, the overly expansive description of goods, while a false statement, fell short of constituting a fraudulent statement (which carries with it an actual or implied intent to deceive the PTO).

CASE SUMMARY

FACTS
M.C.I. Foods, Inc. (“M.C.I.”) filed a petition to cancel Brady Bunte’s registration for the mark CABO CHIPS for “processed snack foods formed from corn, namely, chips” on the grounds of priority of use and likelihood of confusion. M.C.I. pleaded ownership of three federally registered marks: CABO PRIMO & Design for various Mexican-style food products, including tortilla chips; LOS CABOS & Design for similar goods (but not chips); and CABO CLASSICS for similar goods (but not chips). Bunte denied the salient allegations of the petition to cancel and filed a separate petition to cancel M.C.I.’s CABO PRIMO & Design registration on the ground of fraud. Specifically, Bunte alleged that M.C.I. had never used the mark CABO PRIMO in connection with tortilla chips and that representatives of M.C.I. signed the application with the knowledge of this false representation. M.C.I. denied the salient allegations in Bunte’s petition for cancellation.

ANALYSIS
With respect to Bunte’s fraud claim, the TTAB reiterated the Bose fraud standard as follows: “Fraud in procuring a trademark registration or renewal occurs when an applicant knowingly makes false, material representations of fact in connection with his application.” In re Bose Corp., 91 U.S.P.Q.2d 1938, 1939 (Fed. Cir. 2009) (citation omitted). The TTAB further explained that there is “a material legal distinction between a ‘false’ representation and a ‘fraudulent’ one, the latter involving an intent to deceive, whereas the former may be occasioned by a misunderstanding, an inadvertence, a mere negligent omission, or the like.” A trademark registration is obtained fraudulently only if the applicant knowingly makes a false, material representation with the intent to deceive the PTO.

In this case, M.C.I.’s president testified that M.C.I. had used the CABO PRIMO mark only on burritos. However, he also testified that although M.C.I. had not sold any tortilla chips in connection with its CABO PRIMO mark, it had used the mark in connection with tortilla chips in sales presentations. Moreover, M.C.I. had applied to register the CABO PRIMO mark for an expansive list of Mexican foods to obtain a broad scope of protection for the future and had discussed this registration strategy with its counsel.

Based on this testimony, the TTAB found that M.C.I. made a false representation when it filed its application to register the CABO PRIMO mark by claiming use on goods other than burritos. But, the TTAB further found that M.C.I. did not intend to deceive the PTO when it filed that application. Specifically, because M.C.I. filed its application to register the CABO PRIMO mark with the advice of counsel, the overly expansive description of goods, while a false statement, fell short of constituting a fraudulent statement, which carries with it an actual or implied intent to deceive the PTO. There was no evidence or testimony indicating that M.C.I. was advised that it could not or should not apply for Mexican-food products not in use for its CABO PRIMO mark. Thus, the TTAB explained that it would not draw an inference that M.C.I. acted with the intent to deceive the PTO without some factual basis for drawing such an inference. It was incumbent on Bunte to establish such a factual basis by, for example, eliciting further testimony as to the actual advice M.C.I. received from counsel and whether and to what extent M.C.I. relied on such advice. Because Bunte had not done so, the TTAB found that M.C.I. had not committed fraud. The TTAB did, however, restrict the description of goods in M.C.I.’s CABO PRIMO registration to its burrito products.

The TTAB emphasized that its finding does not mean that the mere assertion that one acted on “advice of counsel” will make out a good defense to a charge of fraud. Rather, it explained that its finding should be taken as an indication that the charging party must be able to show at trial that the defense is inapplicable or inappropriate under the particular circumstances of the case.

CONCLUSION
Where a party has relied on the advice of counsel in filing an allegedly fraudulent trademark application, this decision indicates that the party alleging fraud will have to be able to show at trial that the defense of “advice of counsel” is inapplicable or inappropriate under the particular circumstances of the case (e.g., by establishing that counsel advised against the allegedly fraudulent activity and applicant proceeded anyway).