Trademark Trial and Appeal Board Sustains Opposition on the Basis of Fraud
Nationstar Mortgage LLC v. Mujahid Ahmad
The United States Patent and Trademark Office (USPTO) Trademark Trial and Appeal Board (TTAB or Board) sustained an opposition on the basis of fraud, finding that Ahmad’s assertions to the USPTO regarding his use of the trademark NATIONSTAR in interstate commerce were false and knowingly made with the requisite intent to deceive the USPTO. Nationstar Mortgage LLC v. Mujahid Ahmad, Opposition No. 91177036 (TTAB, Sept. 30, 2014) (precedential) (Bergsman, ATJ).
In the opposition proceeding, the registrant, Ahmad, testified that he had considered using the trademark NATIONSTAR in connection with his real estate services in 2004 or 2005, and, in April 2005, Ahmad registered several domain names containing the text “nationstar.” Because Ahmad was not using the domain names in 2006, Nationstar Mortgage contacted Ahmad, offering to purchase two of the domain names from him. Ahmad denied Nationstar Mortgage’s offer, and days later proceeded to file his own trademark application for NATIONSTAR. The application included a declaration under penalty of perjury signed by Ahmad claiming that he had used the trademark in commerce in connection with all of the real estate and mortgage brokerage services listed in the application since at least as early as April 4, 2005. In order to demonstrate the requisite proof of use of the trademark in commerce, Ahmad later filed with the USPTO a copy of a business card and an advertising flyer showing use of the NATIONSTAR mark.
Eight days after Ahmad filed his U.S. trademark application for NATIONSTAR, Nationstar Mortgage filed two new U.S. trademark applications for the marks NATIONSTAR MORTGAGE and NATIONSTAR MORTGAGE & DESIGN in connection with mortgage lending services. When Ahmad’s pending trademark application for NATIONSTAR was cited by the USPTO as a potential bar to registration of Nationstar Mortgage’s applications, Nationstar filed an opposition against Ahmad’s application claiming fraud, likelihood of confusion and a lack of bona fide intent to use the mark in commerce. During the proceeding, Ahmad filed a motion to amend the filing basis of his NATIONSTAR application from a “use in commerce” basis under Section 1(a) of the Lanham Act, to an “intent-to-use” basis under Section 1(b). Despite this amendment, however, the Board noted that “amending the filing basis of the opposed application to Section 1(b) does not protect the application from the fraud claim.” The Board cited In re Bose Corp. (IP Update, Vol. 10, No. 2) for the proposition that fraud in procuring a trademark registration occurs when an applicant knowingly makes false, material representations of fact in connection with its application with intent to deceive the USPTO. The party alleging fraud must prove same with clear and convincing evidence, and the Board will not find fraud if the evidence shows that a false statement was made with a reasonable and honest belief that it was true, rather than with intent to mislead the USPTO.
The Board found that Ahmad’s statements regarding his use of the NATIONSTAR mark were material to the USPTO’s approval of the application, and the Board then examined the evidence of record to determine whether the material representations were indeed knowingly made to deceive. The Board stated that “the law does not require ‘smoking gun’ evidence of deceptive intent,” and it determined that the surrounding facts and circumstances were sufficient to find that Ahmad did not have a good-faith basis to state that he was using the NATIONSTAR trademark in commerce for all of the services listed in the application. The Board noted that Ahmad was not licensed by the state to be a real estate or mortgage broker (and he testified that he was not a real estate broker), but he stated in the application that he had used the mark for “real estate brokerage” and “mortgage brokerage” services; Ahmad could not identify when or who created or printed his business cards, flyers and postcards (some of which were submitted as specimens of use); Ahmad testified that he did not know whether his business earned any income or revenue; and, Ahmad did not use or post any content on his “nationstar” domain names until 2007 even though he owned them in 2005, and claimed to be doing business under the mark in 2005.
Citing its “grave concerns about the credibility of applicant’s testimony regarding his use of NATIONSTAR for the identified services at the time he filed the use-based application,” the Board found that the totality of the evidence met the standard of proof and denied registration of Ahmad’s application on the ground of fraud.