Knights of Malta Did Not Commit Fraud In Filing USPTO Trademark Application

The 11th Circuit Court of Appeals overruled a district court’s decision that one ancient branch of the Knights of Malta committed fraud when it filed its federal trademark application in 1958.  Another ancient branch of the Knights of Malta sued for trademark infringement and asserted claims of false advertising under the Lanham Act, 15 U.S.C. § 1051, and state law claims for Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Fla. Stat.§ 501.201.  Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. The Florida Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical Order, Case No. 11-15101 (11th Cir. Sept. 11, 2012)(available here).

Plaintiff Order sued The Florida Priory.  Before the District Court in a bench trial, The Florida Priory obtained a ruling that the Plaintiff Order’s federally registered mark was obtained by fraud based upon an argument that Plaintiff Order’s predecessor  knew of Florida Priory’s earlier use of the mark.

Historically, Plaintiff Order was founded in Jerusalem in the eleventh century.  The group spent 200 years on the island of Rhodes, then the group located in Malta (becoming the Order of Malta). The Knights then migrated to Russia.  The Russian order was composed of two priories: the Catholic-affiliated Polish Grand Priory and the non-Catholic Russian Grand Priory.  The Catholic priory marked the origin of the organization that is now Plaintiff Order.  The non-Catholic Russian Grand Priory became known as The Ecumenical Order, and it had its first meeting in the United States on January 10, 1908.  The Florida Priory used the trademarks of its parent, The Ecumenical Order and in 1958, The Ecumenical Order obtained Federal Trademark Registration No. 659,477.

Letters and complaints were exchanged in 1983, and later in 2000, which finally precipitated the present law suit. Florida Priory claimed that Plaintiff Order’s parent, The Ecumenical Order, committed fraud on the USPTO when it filed the federal trademark application.

“At any time, a party may petition to cancel a registered mark on the ground that the registration was procured by fraud, even if that mark has become incontestable. 15 U.S.C. §§ 1064(3), 1119. An applicant commits fraud when he ”knowingly makes false, material representations of fact in connection with an application for a registered mark.” Angel Flight of Ga., Inc. v. Angel Flight Am., Inc., 522 F.3d 1200, 1209 (11th Cir. 2008). Fraud further requires a purpose or intent to deceive the PTO in the application for the mark. In re Bose Corp., 580 F.3d 1240, 1243, 1245 {Fed. Cir. 2009); see also Angel Flight, 522 F.3d at 1210– 11 (affirming cancellation on the basis of the applicant’s purposeful failure to disclose a superior user of the mark). The party seeking cancellation on the basis of fraud must prove its claim by clear and convincing evidence. Angel Flight, 522 F.3d at 1209. This is necessarily a heavy burden, and ‘any doubt must be resolved against the charging party.’ Bose, 580 F.3d at 1243.”

To prove the fraud claim based on misrepresentations in the declaration oath, The Florida Priory was required to establish that Pace “’was aware other organizations were using the … mark (either in an identical form or a near resemblance) and ‘knew or believed’ those other organizations had a right to use the mark.” Angel Flight, 522 F.3d at 1211 (analyzing a similar declaration). The declarant-focused text of the application oath requires the signatory’s good-faith, subjective belief in the truth of its contents. See, e.g., Bose, 580 F.3d at 1245 (“Subjective intent to deceive … is an indispensable element in the [fraud] analysis.”); Marshakv. Treadwell, 240 F.3d 184, 196 (3d Cir. 2001).

The Appellate Court overruled the trial court’s finding of fraud based upon the facts in this case.  The facts indicated that the person who signed the trademark application did not know about Florida Priory’s use of a similar mark in the U.S.  The Appellate Court also disagreed with the district court’s reliance on  the Supreme Court’s decision in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S._, 131 S. Ct. 2060 (2011). “Global-Tech considered whether knowledge of infringement was required to sustain a claim that a party actively induced infringement of a patent under 35 U.S.C. § 271(b). Id. at 2063. The Supreme Court held that knowledge, rather than deliberate indifference, was required to sustain a claim under§ 271 and that ‘willful blindness’ was sufficient to satisfy that knowledge element. Id. at 2068. Utilizing this concept, the district court explained that ‘[t]o the extent that a willful blindness standard applies here, the Court concludes that [Plaintiff Order]’ s failure to inform Pace [the person who signed the trademark application] of the existence of [T]he Ecumenical Order is evidence of willful blindness on [Plaintiff Order]’ s part.’ 816 F. Supp. 2d at 1300.”  The District court erred by applying Global-Tech to this claim for fraud on the PTO.  The Court stated that if the declarant subjectively believes the applicant has a superior right to use the mark, there is no fraud, even if the declarant was mistaken. See Bose, 580 F.3d at 1246 (”There is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive.”).

This case seems to turn of the absence of clear and convincing evidence that the person in Plaintiff Order who signed the federal trademark application had facts about Florida Priory.   Without clear and convincing evidence, the 11th Circuit overruled the District Court’s decision.  As to the application of Global-Tech, the Supreme Court and other Circuit Courts of Appeal have applied willful blindness concepts across the I.P. field.  See MGM Studios, Inc. v. Grokster Ltd., 125 S. Ct. 2764 (2005); Viacom Int’l, Inc. V. YouTube, Inc., Case no. 10-3270 (2nd Cir. Apr. 5, 2012).  In this Knights of Malta case, it seems that there was a lack of clear and convincing evidence regarding
willful blindness sufficient to satisfy that knowledge element of the fraud.