In a precedential decision, on September 30, 2014, the Trademark Trial & Appeal Board (TTAB) sustained an opposition to an application to register the mark NATIONSTAR, finding that the applicant had committed fraud on the Patent & Trademark Office in his claim to have been using the mark at the time the application was filed. Nationstar Mortgage LLC v. Ahmad, Opp. No. 91177036. This decision marks the first time the Board has sustained a fraud claim since its seminal 2009 decision in In re Bose Corp. (affirmed by the Federal Circuit at 580 F.3d 1240) drastically raised the burden of proof in fraud claims. What made this case different? A combination of damning documentary evidence and “not at all credible” deposition testimony by the Applicant.
Applicant is a real estate agent based in Northern Virginia. He claimed to have adopted the service mark NATIONSTAR for use in connection with his business in late 2004 or early 2005. He also claimed that he distributed flyers, business cards and letterhead featuring the mark in that time frame and that he rendered services to clients beginning on April 4, 2005. On April 20, 2006, he filed a federal trademark application for NATIONSTAR, claiming use of the mark in commerce since April 4, 2005, in connection with the following services:
Real estate brokerage; rental of real estate; real estate management services, namely, management of commercial and residential properties; real estate investment; residential and commercial property and insurance brokerage; mortgage brokerage; and business finance procurement services, in Class 36.
Nationstar Mortgage LLC, a mortgage company based in Dallas, opposed the application, alleging likelihood of confusion based on its prior use of the identical NATIONSTAR mark, but also fraud on the PTO, in that (a) Applicant’s claim of use of the mark in commerce was false; and (b) Applicant’s specimens of use were fabricated.
The record revealed the following:
Applicant had obtained a Virginia real estate agent’s license in September 2004. (Under Virginia law, there are separate licensure requirements for real estate brokers and agents.)
On April 4, 2005 (the date of first use alleged in the application), applicant registered the domain names <nationstarmortgage.com> and <nationstarmortgage.net>. Applicant did not post any content at those URLs, however, until nearly two years later.
In mid-April 2006, Opposer contacted Applicant and offered to buy the domain names. Applicant declined Opposer’s offer.
Less than a week later, Applicant filed the trademark application at issue.
Applicant’s entity NationStar Mortgage Inc. was not incorporated until May of 2006. Applicant could not testify whether the corporation ever had any revenues or paid any taxes, but did admit that it had never held a bank account or rendered any payment to anyone, or filed any tax returns.
Applicant’s business did not receive a mortgage broker’s license until October 2006. There was no evidence that either Applicant or his corporation ever obtained licenses to act as a real estate broker or insurance broker (each of which requires separate licenses under Virginia law).
Applicant’s specimens were allegedly created and distributed in late 2004 or early 2005, and identify NationStar Mortgage Inc. as a mortgage broker, even though that entity did not yet exist, much less have a mortgage broker’s license. Applicant testified he could not remember any details about when, where, or by whom the specimens were created and printed.
Applicant’s own fact witnesses, who claimed to be early clients of his but were also his “good friends”, testified that Applicant had referred them to other service providers for their insurance and mortgage needs.
Applicant could produce no documents showing use of NATIONSTAR in the rendering of the services; he did not use NATIONSTAR on contracts, forms, or lawn signs. NationStar Mortgage Inc. had no office or telephone directory listing. He testified that the real estate brokerage with which he was affiliated may not have known about his use of the mark. Apart from the disputed specimens, none of the documents produced by Applicant corroborated any of his testimony.
Based on this record, the TTAB found that, as of the filing date of the application, the Applicant was not using the mark on any of the claimed services. At best, Applicant may have used the mark in connection with real estate agency services (the only service he was licensed to provide at the time), but that particular service was not included in the application. Thus, the Applicant’s claim of use of the mark was false. The Board further noted that it is well established that claims of use are by their very nature material in a use-based trademark application.
It remained for the Board to determine whether the false statements were made with the subjective intent to deceive the PTO – an element which must be proved by clear and convincing evidence. The Board noted that the Applicant was participating in a strictly regulated industry, and was well aware of which licenses were need to perform the services in question–and that he did not hold those licenses. He was also aware of the importance of reading and understanding documents before signing them, and thus his signature on the application cannot be dismissed as mere inadvertence or inability to understand a finer point of trademark law. But the Board based its finding on intent primarily on “the manifest lack of credibility of applicant’s testimony”. The Board included several pages of excerpts of Applicant’s deposition testimony, to illustrate the Applicant’s “evasiveness, and his failure to respond”, his attempts to “dodge” simple yes or no questions, and his “inability or unwillingness” to identify corroborating evidence. Citing pre-Bose precedents, the Board stated that culpable intent can be found in cases where the accused’s testimony lacks credibility. Non-credible testimony in the proceeding supports the inference that the party’s statements to the PTO in prosecution were also not credible.
The Applicant’s evasive testimony was ultimately his own undoing. If the Board had not been so deeply convinced of its utter “lacking in conviction or credibility”, this case might have fallen in the category of “knew or should have known”–which the Board post-Bose has found does not rise to fraud.
It remains to be seen how much of an effect this case will have on the Board’s fraud jurisprudence: although the decision has been designated as precedentialthe specific facts here may limit its broad applicability. But the case certainly highlights the potential importance of oral deposition testimony in Board proceedings, and may spawn an uptick in deposition practice in cases that might otherwise have relied primarily on documentary evidence.
Robert O’Connell is Of Counsel in the Boston office of Fish & Richardson. His practice focuses on trademark and copyright strategic advice, prosecution and enforcement, including all aspects of domestic and international trademark law; registration and...