TTAB Finds Fraud; Upholds Trademark Opposition to “NATIONSTAR”

Obtaining a federal registration for a trademark is important because it helps to protect a company’s brand.  Due to the importance of receiving a federal registration, the truthfulness of the underlying application for that trademark is paramount.  When filing a trademark application, an applicant must execute a declaration that attests to the truthfulness of the content of the application.  This includes attesting to the fact that the trademark is being used in commerce in connection with the goods or services listed in the application.  If the statements in the declaration are false, any resulting registration can be challenged on the basis of fraud.  If a claim of fraud is brought by a challenger, serious consequences for the registrant can follow.  Such was the case in NationStar Mortgage LLC v. Mujahid Ahmad.

In a precedential opinion, the Trademark Trial and Appeal Board (TTAB) issued a finding of fraud in the opposition matter entitled NationStar Mortgage LLC v. Mujahid Ahmad.  While a finding of fraud is rare, it does happen from time to time.   In the case re Bose Corp., 580 F.3d 1240, 91 USPQ2d 1938 (Fed. Cir 2009), the Federal Circuit articulated the current standard for fraud in procuring a trademark registration.  In the words of the Federal Circuit in Bose, “a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with intent to deceive the USPTO.”

The NationStar Mortgage matter involved the attempted registration of the trademark “NATIONSTAR” for “mortgage brokerage,” “insurance brokerage,” and other real estate and mortgage related services.  In April of 2005, long prior to filing the trademark application, the applicant, Mujahid Ahmad, a Virginia real estate agent, registered multiple domain names using derivations of nationstar, for example, nationstarmortgage.com and nationstar.org.  On April 11 and April 18, 2006, counsel for opposer, NationStar Mortgage, sent letters to Mr. Ahmad offering to purchase two of the domains.  The offer was rejected, and within a few days of the offer, Mr. Ahmad filed a use based trademark application for “NATIONSTAR” for a number of services, including real estate brokerage services and insurance brokerage services.  By filing the application based on use, Mr. Ahmad declared that the mark was in use for all the identified services at the time of filing the application.

Fraud in the procurement of a trademark registration must be proven via clear and convincing evidence, and here, the facts were the applicant’s undoing.  The opposer, NationStar Mortgage, alleged that Mr. Ahmad never used the NATIONSTAR MORTGAGE mark in connection with the identified services, and that he “submitted a fabricated specimen that was not used in commerce at least as early as the application filing date.”  In fact, Mr. Ahmad admitted during testimony that he was not a real estate broker, not an insurance broker, nor did he offer mortgage insurance.  While Mr. Ahmad claimed he was the owner of a company called NationStar Mortgage Inc. and used the name in connection with his services as a real estate agent, he also testified that he was unaware of any profits for the company and did not have a bank account.  Mr. Ahmad also admitted that all of the materials submitted to the USPTO were created on his own computer, and by a third party printer; however, he could not produce records of professional printing for the supposed business cards and postcards that were sent to clients or otherwise used commercially.

The TTAB noted that it was skeptical of applicant’s testimony and claims, particularly because, although the applicant was not a lawyer with expertise in trademark law, he was a real estate agent and was familiar with the laws surrounding mortgage brokers and insurance brokers, and would have certainly been aware that he was not licensed as a broker of mortgages or insurance.  The TTAB stated that just because Mr. Ahmad filed his own application, it did not afford him “a free pass to disregard the straightforward requirements of a use-based application and the solemnity of the application declaration that he signed subject to criminal penalties.”

The TTAB was also clear that the facts in this case were inconsistent with merely a mistake or misinterpretation of the law by a non-attorney applicant.  In the words of the TTAB, “this record does not support a finding that applicant’s misrepresentation was occasioned by mere inadvertence or reasonable mistake or misunderstanding….While fraud will not lie if a statement, though false, was made with a reasonable and honest belief that it was true, there are limits to what may be claimed in good faith.”

In the end, the TTAB sustained NationStar’s opposition.  In addition to the obvious lessons in regard to avoiding fraudulent filings, this case highlights the importance of using an experienced attorney to prepare trademark applications.

If you have questions about filing a trademark application, you need an experienced trademark attorney.  Anna Vradenburgh is a well-respected, business-minded expert in trademark issues with extensive experience prosecuting domestic and foreign trademarks.  In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board.  Anna can also assist your company in licensing matters, including drafting and negotiation of trademark licensing agreements.  For more information, visit her website, or contact Anna at (818) 488-8146.  This article is for educational purposes only and nothing in this article is intended to be, or should be considered to be, legal advice.

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