After the PTO published Falls Media's application for opposition in 1999, Zobmondo filed an opposition, which was dismissed with prejudice for failure to prosecute. Following the PTO's issuance of a Notice of Allowance, Falls Media filed five requests for extensions of time to file a Statement of Use. After selling a game under the mark in October 2004, Falls Media filed a Statement of Use with the PTO on November 24, 2004. The PTO issued Registration No. 2,970,830 to Falls Media on July 19, 2005, for the mark WOULD YOU RATHER…? for "printed matter, namely, books and comic strips" in Class 16, and "games, namely, board and card games" in Class 28.
Plaintiffs Zobmondo Entertainment, LLC and Randall Horn (collectively "Zobmondo") and Defendants Falls Media, LLC, Justin Heimberg, and David Gomberg (collectively "Falls Media") both set out to create a board game based on the conversation-starter "WOULD YOU RATHER…?" Falls Media conceived the idea for the board game as early as 1995, and in 1997 filed an intent-to-use application with the PTO for the mark WOULD YOU RATHER…? for "printed matter, namely, books and magazines in the field of humor, calendars, greeting cards, comic strips," and "games, namely, board and card games."
Following issuance of the registration, the parties sued each other in New York and California, alleging trademark infringement and other claims. Among multiple claims and counterclaims, Zobmondo alleged that it was entitled to damages because Falls Media had defrauded the PTO under Section 38 of the Lanham Act, 15 U.S.C. § 1120. Section 38 provides that "[a]ny person who shall procure registration in the [PTO] of a mark by a false or fraudulent declaration or representation, oral or in writing, or by any false means, shall be liable in a civil action by any person injured thereby for any damages sustained in consequence thereof." The court resolved most of the other claims by granting cross-motions for summary judgment. Falls Media subsequently moved for summary judgment on the remaining fraud claim.
In support of its claim, Zobmondo argued that the TTAB substantially lowered the standard for scienter in a fraud-based cancellation proceeding in Medinol Ltd. v. Neuro Vasx, Inc., 67 USPQ2d 1205 (TTAB 2003). Zobmondo relied on Medinol to argue that Falls Media defrauded the PTO because it did not intend to create a game when it filed its original intent-to-use application or at the time it filed its requests for extensions of time to file a Statement of Use. It also argued that Falls Media's entire registration was tainted because it claimed use of the mark on "comic strips" before it made such use. Invoking Medinol, Zobmondo sought damages under Section 38 for the entire fraudulent registration.