Precedential TTAB Decision Finding Applicant Committed Fraud On The USPTO

On April 20, 2006 the Applicant filed a trademark application for NATIONSTAR pro se with the United States Patent & Trademark Office (“USPTO”). The Applicant filed a use-based application for real estate brokerage; rental of real estate; real estate management services (residential and commercial properties); real estate investment; insurance and mortgage brokerage; and business finance procurement services. Eight days after the Applicant’s filing, Nationstar Mortgage LLC, (“Opposer”) filed two applications with the USPTO for NATIONSTAR MORTGAGE (a word mark and a stylized mark) both for mortgage lending services. Opposer disclaimed the exclusive right to use the word “mortgage”.

The Applicant’s application was cited against the Opposer’s two applications based on the possibility of a likelihood of confusion as to the source of the marks. The Opposer filed a Notice of Opposition with the Trademark Trial and Appeal Board (“Board”) alleging that the Applicant did not use the NATIONSTAR mark for any of the services identified in its application prior to the date of filing with the USPTO. Further the Opposer alleged that Applicant fabricated a specimen and knowingly deceived the USPTO. See Nationstar Mortgage LLC v. Ahmad, Opposition No. 91177036 (Sept. 30, 2014).

Applicant decided to hire counsel after the filing of the Notice of Opposition. Upon advice of counsel, he amended his use-based application to an intent-to-use application. However, this amendment will not assist the Applicant in defending against a fraud claim. The reasoning is that fraud occurs if an applicant knowingly makes false representations of fact with respect to its trademark application with an intent to deceive the USPTO. See In re Bose Corp., 580 F.3d 1240, 1245, 91 USPQ2d 1938, 1941 (Fed. Cir. 2009). In re Bose was a seminal case where the Board raised the burden of proof substantially in fraud claims. Nationstar Mortgage LLC is the first case where the Board has found that an Applicant has committed fraud since 2009. There is a heavy burden attached to proving a fraud claim. One must prove fraud with clear and convincing evidence. This means that if a false statement is made, but there was a reasonable belief that it was true then fraud cannot be found. There has to be a requisite intent to deceive the USPTO.

The evidence in this case showed that the Applicant is a real estate agent who acquired a license in Virginia. The Applicant testified that he was not a “real estate broker”. Applicant had no documentary evidence showing that his proposed mark NATIONSTAR was used in any transactions. The documents the Applicant produced showed that Applicant used his personal name (Mujahid Ahmad) when conducting real estate transactions. He testified that Nationstar Inc. did not have a bank account, it didn’t file tax returns, nor did it do any business. Moreover, Nationstar did not have an office, a business listing, nor did it ever issue an invoice. However, Applicant testified that he began advertising his real estate business under NATIONSTAR through business cards, postcards, and flyers. But the Applicant couldn’t remember the details of who he engaged to print the materials. The Applicant was evasive during deposition testimony. The Board perceived the Applicant to be lacking in conviction and credibility.

The Board held that based on the evidence in the record, Applicant was not using the trademark NATIONSTAR for any of the services identified in his trademark application. Therefore, it was found that the Applicant falsely represented to the USPTO that he was using the mark in conjunction with the services identified in the application. Further, the record demonstrated that Applicant couldn’t hold himself out as a mortgage broker, insurance broker, or real estate broker because he was not licensed through the state of Virginia.

The evidence did not support the possibility that this was a reasonable mistake made by the Applicant. The record clearly shows that the Applicant knew that he was not rendering all the services listed in the application and yet swore that he was using the mark NATIONSTAR for the services listed in his trademark application. Ignorance of the law has never provided a strong defense. In the end, the Board sustained the opposition on the ground of fraud and refused registration. Before filing a trademark application, the applicant should clearly understand the legal definitions of “commerce”, “use in commerce”, and “bona fide intention” to use the mark in commerce. See our webpage entitled, How To Avoid Fraud On The USPTO for these legal definitions. If you have any further questions, please feel free to contact our office for a courtesy consultation.