Trademark Trial Appeal Board Sustains Fraud Claim

On September 30, 2014, the Trademark Trial and Appeal Board (TTAB) at the U.S. Patent and Trademark Office (PTO) issued a precedential opinion in favor of a Buchanan Ingersoll & Rooney client, Nationstar Mortgage, LLC. The decision in Nationstar Mortgage LLC v. Ahmad, Opposition No. 91177036, is the first comprehensive statement by the TTAB on the standard of proof in a fraud claim at the PTO since In re Bose Corp., 580 F.3d 1240 (Fed. Cir. 2009).

In finding that the applicant’s misrepresentations as to his use of the disputed mark were fraudulent, the TTAB acknowledged that allegations of fraud should not be taken lightly and that "[s]ubjective intent to deceive, however difficult it may be to prove, is an indispensable element in the analysis." Slip Op. at 33 (citing Bose). "While fraud will not lie if a statement, though false, was made with a reasonable and honest belief that it was true," the TTAB stated, "there are limits to what may be claimed in good faith." Id. The TTAB concluded:

[T]he law does not require "smoking gun" evidence of deceptive intent, but instead has long recognized that direct evidence of deceptive intent is rarely available and deceptive intent may be inferred from the surrounding facts and circumstances. * * * We may infer deceptive intent where, "the involved conduct, viewed in light of all the evidence...indicate[s] sufficient culpability to require a finding of intent to deceive." * * * We find that this standard is met here. The surrounding facts and circumstances provide clear and convincing evidence that applicant did not have a good faith reasonable basis for believing that he was using the NATIONSTAR mark in commerce for all the services identified in the application. Id. at 33-34.

The TTAB refused registration of the applicant’s mark based on its finding of fraud.