Fraud on the Patent and Trademark Office in pursuing trademark registration requires a showing of the registrant's awareness of competing, senior marks, the U.S. Court of Appeals for the 11th Circuit ruled Sept. 11 (Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. Florida Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical Order, 11th Cir., No. 11-15101, 9/11/12).
The court reversed a district court's cancellation of marks owned by a charitable organization descended from an 11th century knight order and asserted against another organization claiming the same lineage.
The appeals court also chastised the lower court for performing “extra-record Internet research into similarly named organizations.” However, it rejected the plaintiffs' request that the court ask for reassignment of the trial judge, who had disparaged both parties for “dressing up in costumes, conferring titles on each other and playing in a 'weird world of princes and knights,' ” instead of performing charitable works.
This case involves the history of the Knights Hospitaller, founded in Jerusalem in the 11th century. This Catholic organization was subsequently known as the Knights of Rhodes and the Order of Malta.
At some point around 1800, both a Catholic and non-Catholic order were established. The parties disagree as to whether the non-Catholic order remained “connected to” the original order.
The non-Catholic order became the Ecumenical Order. This order had its first meeting in the United States in 1908 and incorporated under the name The Knights of Malta Inc. in New Jersey in 1911. It obtained a collective membership mark registration (659,477) for “Sovereign Order of Saint John of Jerusalem Knights of Malta” in 1958.
The Ecumenical Order is the parent of the Florida Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta. The Florida Priory began operating in 1977 and used its parent's marks.
Meanwhile, the Catholic order had moved to its current headquarters in Rome and began to operate in the United States in 1926 or 1927 as the Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta (SMOM).
This order filed for and received trademark registrations from 2003-06 on a design (2,799,898), the full organization name (2,783,933), two subsets of the name (2,915,824 and 3,056,803), and “Knights of Malta” (2,783,934).
SMOM filed a lawsuit against the Florida Priory in the U.S. District Court for the Southern District of Florida, alleging trademark infringement and false advertisement under the Lanham Act, as well as unfair competition claims.
The Florida Priory countered with a claim that SMOM committed fraud on the PTO by not disclosing the similar marks used by or registered to the Ecumenical Order.
Judge Kenneth L. Ryskamp agreed with the Florida Priory and canceled the four word marks. He also found that there was no likelihood of confusion as to the two parties' design marks and found the Florida Priory not liable for false advertising and the state law claims. 816 F. Supp. 2d 1290, 2011 BL 261768 (S.D. Fla. 2011).
Judge Charles Reginald Wilson first reversed the fraud judgment.
The court relied on standards that evolved from its own jurisprudence, in Angel Flight of Georgia Inc. v. Angel Flight America Inc., 522 F.3d 1200, 86 USPQ2d 1422 (11th Cir. 2008) (71 PTD, 4/14/08), and from the U.S. Court of Appeals for the Federal Circuit, in In re Bose Corp., 580 F.3d 1240, 91 USPQ2d 1938 (Fed. Cir. 2009) (167 PTD, 9/1/09).
According to Angel Flight, the court said, liability for fraud requires a showing that the individual registrant--in this case an attorney member of SMOM named Dean Francis 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.” Bose confirmed the requirement to show a subjective intent to deceive, the court said.
The district court's opinion said that Pace was not personally aware of the Ecumenical Order. That was sufficient, the appeals court said, to determine that SMOM was not liable for fraud.
However, the district court also found that “SMOM's failure to inform Pace of the existence of the Ecumenical Order is evidence of willful blindness on SMOM's part.” To make its ruling on the knowledge element of fraud, the lower court relied on the recent decision by the U.S. Supreme Court in a patent case that willful blindness could replace actual knowledge as to liability for inducing infringement. Global-Tech Appliances Inc. v. SEB S.A., 131 S. Ct. 2060, 98 USPQ2d 1665 (U.S. 2011)(105 PTD, 6/1/11).
The appeals court rejected the attempt to apply that ruling to a trademark case. “We have been admonished to exercise caution before importing standards from one area of intellectual-property law into another,” the court said, citing Sony Corporation of America v. Universal City Studios Inc., 464 U.S. 417, 439 n.19, 220 USPQ 665 (1984). “To the extent the district court relied on the inapplicable 'willful blindness' standard to find the required intent to deceive the PTO, it erred.”
The court further said that SMOM had reason to believe it had a superior right in the word marks in any case. SMOM's use dated back to the mid-1920s, and evidence in court showed SMOM's awareness of the Ecumenical Order only going back to 1958.
The lack of evidence showing “that (or Plaintiff Order [for that matter]) believed that The Ecumenical Order had a right to use the objected-to marks in commerce … is fatal to the claim of fraud,” the court concluded. It therefore reversed the cancellation of the four word marks.
The court further vacated the district court's judgment of no infringement of the design mark.
Eleventh Circuit precedent requires the fact finder to consider seven likelihood-of-confusion factors, the appeals court said, citing Frehling Enterprises Inc. v. International Select Group Inc., 192 F.3d 1330, 1335, 52 USPQ2d 1447 (11th Cir. 1999): “(1) the type of mark, (2) the similarity of the marks at issue, (3) the similarity of the services the marks represent, (4) the similarity of the parties' service outlets and customers, (5) the nature and similarity of the parties' advertising media, (6) the defendant's intent, and (7) any actual confusion.”
However, the lower court improperly limited its analysis to the second factor only, a comparison of the visual appearance of the mark and the Florida Priory's unregistered symbol, according to the appeals court.
“As a result, we remand the infringement claim so the district court may conduct the proper, multi-factor infringement analysis for the design marks,” the court decided.
The appellate court also vacated rulings as to unfair competition inasmuch as the multi-factor analysis was required to assess those claims as well.
The false advertising claim at issue in the case involved the Florida Priory's advertising of a connection to the historic Order of Malta. SMOM claimed that this misrepresentation deceived customers into contributing money to the Florida Priory.
The issue ultimately rested on two versions of what happened around 1800, and the district court adopted the version put forward by Florida Priory's expert to establish the connection. The appeals court affirmed the lower court's denial of the claim for false advertising.
“The district court, as is its prerogative when conducting a bench trial, weighed the testimony and came to a conclusion,” the court said. “After carefully considering the trial transcript, we are not left with the 'definite and firm conviction that a mistake has been committed,' ” the court explained, referring to the 11th Circuit's standard for overturning a lower court's findings of fact.
The court closed with issues related to the district court judge's handling of the case.
First, the appeals court said, “we caution the district court to limit its analysis to facts in the record and to refrain from consulting outside sources on the Internet that have not been cited, submitted, or recognized by the parties.”
The court referred to citations in footnote 14 of the district court's opinion as “extra-record Internet research into similarly named organizations.”
“The websites that the district court identified were proffered by neither party, and Plaintiff Order had no opportunity to contest the validity of the information contained therein, rendering it an improper consideration in the [likelihood-of-]confusion analysis,” the court concluded.
SMOM also asked to have the judge removed for “findings of fact that disparage the parties, witnesses, or their work.”
The circuit court agreed that “[Ryskamp's] remarks are wholly inappropriate in the context of a judicial proceeding and a published judicial opinion,” but it denied the request. In part, the court's denial was based on the fact that Ryskamp's comments were offensive to both parties, and did not show “actual bias in favor of, or against, one party over the other.”
It expressed confidence that the district court, on remand, will treat both parties “with the respect that they deserve.”
Judge Beverly B. Martin joined the opinion.
In dissent, Judge William H. Pryor Jr. contested the majority's false advertising ruling. “The district court clearly erred when it found that the Sovereign Military Order and the Florida Priory share a history prior to 1798 because no competent evidence supports that finding,” he said.
The question was whether the testimony of the expert--Nicholas Papanicolaou, the current Prince Grand Master of The Ecumenical Order--proffered by Florida Priory should have been admitted under Fed. R. Evid. 702. “Special dangers attend the introduction of testimony about history in judicial proceedings,” Pryor said, citing a law review article on a historian's “ability to paint a picture of the past as he or she so desires.”
Rule 702 requires that an expert testifying “based on scientific, technical, or other specialized knowledge,” must be qualified, he said, and “this district court considered Papanicolaou's testimony without qualifying him as an expert.”
Pryor and the majority disagreed as to whether SMOM had preserved its argument that Papanicolaou was not qualified as an expert to testify about the history of the Knights of Malta, but his remarks ultimately pertained to a historian's testimony generally.
“The real issue is whether the district court based its findings about history on the testimony of a serious scholar,” he said. “The district court cannot rely on the testimony of a lay witness about ancient history. The district court must instead rely on the testimony of an expert to make findings about history, which is the province of serious scholars.”
Paul D. Clement of the Bancroft law firm, Washington, D.C., represented SMOM. Thomas W. Brooke of Holland & Knight, Washington, D.C., represented the Florida Priory.
By Tony Dutra
Opinion at http://pub.bna.com/ptcj/111510112Sep11.pdf