In In re Bose Corp., the Court of Appeals for the Federal Circuit (“CAFC”) reversed and remanded an appeal from the Trademark Trial and Appeal Board (“TTAB”) (Bose Corp. v. Hexawave, Inc.), which had cancelled Bose’s trademark Serial No. 1,633,789 for the word WAVE after finding Bose had committed fraud on the United States Patent and Trademark Office (“PTO”) under 15 U.S.C. § 1064(3) in renewing the registration.

At issue was the TTAB’s finding that Bose’s general counsel, Mark Sullivan, had an unreasonable belief that his statements were true when he made a material misrepresentation to the PTO on the combined Section 8 affidavit of continued use and Section 9 renewal application for the WAVE mark. The CAFC reversed the finding of fraud because TTAB had included the reasonableness of Sullivan’s belief in the analysis, which was not relevant to the question of fraud.

When applying for a Section 9 renewal, Sullivan believed that the repair and return of audio tape recorders and players constituted a use in commerce, therefore, he included those classes of goods in the renewal. Both the TTAB and the CAFC found that this did not constitute sufficient use in commerce, so, their inclusion in the renewal application was a misrepresentation to the PTO. The TTAB found that this misrepresentation was material, and Bose did not contest this finding on appeal. At this point, the two analyses diverged. The TTAB went on to determine whether Sullivan’s belief that repair and return of goods that Bose no longer sold was reasonable. In contrast, the CAFC explicitly noted that an evaluation of the reasonableness of the belief was improper, and that the court need only find intent to deceive in order to find fraud.

In determining whether Sullivan had an intent to deceive the PTO, the CAFC criticized the TTAB’s reliance on the earlier case Torres v. Cantine Torresella S.r.l., where the CAFC had previously concluded a registrant had knowingly attempted to mislead the PTO when he knew or should have known that he was not using the mark at issue as registered. The CAFC determined that the TTAB misapplied the “should have known” language from Torres, improperly lowering the fraud standard to a negligence standard.

The CAFC held the proper standard for fraud in a trademark context was that only an intent to deceive the PTO would rise to the level of fraud. Here, because Sullivan believed that he was being truthful, he did not knowingly make the material misrepresentation to the PTO. For that reason, the CAFC reversed the cancellation of the WAVE mark in its entirety. The CAFC remanded the case back to the TTAB for cancellation proceedings of the mark with respect to the audio tape recorders and players, because the repair and return of these goods did not constitute “use in commerce.”