Update (July 15, 2013): [Editor’s update] Motion to dismiss this legal malpractice claim against the Twin Cities law firm of Fredrikson & Byron based on the statute of limitations is denied.
Even if the statutes of limitation began to run in October 2004, when Fredrikson first allegedly communicated the possibility of its error, Fredrikson may have tolled the running of the statutes of limitation when it withheld the June 2004 memo.
(When an angry/disappointed client/ex-client demands, “Give me the file,” you’d best give the file, the whole file, and nothing but the file.)
Original Post (12/14/2012): This past week, Plaintiff JJ Holand sued the Minneapolis law firm Fredrikson & Byron for attorney malpractice for a trademark application that went wrong. The case is pending before the Honorable Ann D. Montgomery (D. Minn.).
In 2000, JJ Holand hired Fredrikson to file an intent to use application for the YES! trademark. The application claimed the trademark for use on 21 different goods including cigarettes and related products like lighters and cigars but it was only using the trademark on cigarettes. When JJ Holland was ready to have the mark registered, Fredrikson lawyers allegedly advised that this posed no problem. It was a problem.
In 2001, one of JJ Holand’s competitors, Potomac decided it wanted to register and use the trademark “YES!” on cigarettes as well.
An intent to use application is useful for products or brands still in development. It allows a company to essentially “reserve” a brand for a limited period of time while the product is still in development. When the products are being sold, the owner files a statement of use with the Patent & Trademark Office and usually the application becomes a registration.
JJ Holand and Potomac exchanged letters for a year or two. In 2003, JJ Holand filed a statement of use and got the registration for YES! In response, Potomac filed an action to cancel JJ Holland’s registration on the grounds that it was fraudulently obtained.
Now, the word “fraud” probably sounds a lot worse to attorneys who don’t practice trademark law than those that do. At that time, the standard for “fraud” in obtaining a trademark was essentially simple negligence. Any material error, intentional or not, could result in losing a trademark registration. (The fraud standard has since changed. See In Re Bose 91 USPQ2d 1938 (Fed. Cir. 2009) (overturning the previous fraud standard in Medinol Ltd. v. Neuro Vasx, Inc., 67 USPQ2d 1205 (TTAB 2003)). But in 2004, when Potomac filed their cancellation proceeding, the standard was still a simple negligence standard.)
The problem for JJ Holand is that it was not using the trademark on all 21 of the goods listed on the application when it filed its statement of use. The trademark was only being used on cigarettes. From the Complaint it appears that Fredrikson advised JJ Holand that they did not need to use the mark on all goods before getting a registration. This isn’t accurate and it seems like Fredrikson later admitted as much. Or at least it’s not entirely accurate. Back in 2003, if JJ Holand wanted to get a registration, they had a few options. They could have deleted from the application all the goods not being used. They could have divided the application and paid an additional filing fee. Maybe there were other options too, but certainly they could not just claim all 21 goods and proceed to getting a registration.
Once the cancellation proceeding began, it appears that the relationship between JJ Holand and the Fredrikson firm broke down. The Complaint alleges a variety problems, but ultimately JJ Holand did not challenge Potomac’s cancellation and Potomac won a default. The YES! trademark was cancelled.
Assuming the Complaint and its exhibits are true, Fredrikson gave JJ Holand some bad advice about what they needed to do before obtaining a registration. But it is a little more difficult to determine if there was any hope of saving the YES! trademark or anything else that could have been done to mitigate the damage. JJ Holand defaulted. Even if JJ Holand didn’t have much of a case under then current law, we probably can’t know what could have happened if they had defended the trademark. Once the relationship between JJ Holand and Fredrikson had soured, it seems like any remaining options were spoiled as well.