IP Law Daily, TRADEMARK—S.D. Fla.: Allegations on ‘information and belief’ insufficient to state claim for fraud on the USPTO, (May 3, 2023)

By Kevin M. Finson, J.D.

Statements made on information and belief are insufficient under the heightened pleadings standard applicable to fraud claims.

Streetwear seller Worn Out, LLC, in defending trademark infringement claims by Patagonia, Inc., could not rely on “information and belief” to support allegations that Patagonia had obtained its trademark registration of the mark WORN WEAR by committing fraud on the USPTO, the federal district court in Miami has held. Shorn of those allegations, the counter-complaint lacked the specificity required to meet the heightened pleading requirements for stating a counterclaim for fraud (Patagonia, Inc. v. Worn Out LLC, May 1, 2023, Bloom, B.).

Patagonia, Inc. (Patagonia), a seller of outdoor apparel, was the owner of the registered trademark WORN WEAR. Patagonia brought suit against Worn Out, LLC (Worn Out), a luxury street wear company, alleging that Worn Out’s use of and applications for registration of the marks WO WORN OUT and WORN OUT infringed Patagonia’s mark. Worn Out filed a counterclaim alleging that Patagonia had obtained its marks by committing fraud on the USPTO, specifically by making false statements that it had actually used the WORN WEAR mark in commerce. Patagonia moved to dismiss the counterclaim and to strike claims for punitive damages and interest.

Motion to dismiss. Patagonia moved to dismiss Worn Out’s counterclaim for fraud upon the USPTO based on failure to state a claim upon which relief could be granted. Patagonia argued that Worn Out’s complaint relied upon facts alleged “on information and belief” which was insufficient under the heightened pleading standard for fraud. Worn Out argued that the court should not apply the heightened pleading standard because the claim relied on facts solely in the possession of Patagonia.

The court held that the predicate facts, which consisted of statements made by Patagonia to the USPTO, were not solely within Patagonia’s control because they were publicly available on the USPTO website and declined to apply the standard less stringently. Absent the allegations made “on information and belief,” the court found that Patagonia failed to state a claim because it did not specify who made the alleged false statements to the USPTO or explain the contents of the alleged false statements. The court granted the motion to dismiss the counterclaim and allowed Worn Out leave to amend.

Motion to strike. Patagonia moved to strike Worn Out’s claims for punitive damages as well as for pre- and post-judgment interest. The court noted that punitive damages were, by statute, not available under the Lanham Act and struck the punitive damages request. On the other hand, pre- and post-judgment interest were permissible under the statute and while a post-judgment interest claim could not technically exist unless or until Worn Out obtained a judgment, Patagonia suffered no harm from the request being a part of the case. The court denied the motion to strike the interest claims.

The Case is No. 1:22-cv-23858-BB.

Attorneys: David Kenneth Friedland (Friedland Vining, P.A.) for Patagonia, Inc. Ben Natter (Haug Partners, LLP) for Worn Out, LLC.

Companies: Patagonia, Inc.; Worn Out, LLC

Cases: Trademark FloridaNews