E.D. Va. Gives Preclusive Effect to TTAB Finding of Fraud in NATIONSTAR Case

Last month we had a federal district court apply issue preclusion to a TTAB finding on priority in the SPENDOLOGY case (here). Now the U.S. District Court for the Eastern District of Virginia has given preclusive effect to the Board's finding of fraud in the NATIONSTAR case (TTABlogged here). Nationstar Mortgage, LLC. v. Mujahid Ahmad and Nationstar Mortgage, Inc., Civil Action No. 1:14-cv-1751 (E.D. Va. December 17, 2015).

Plaintiff moved for summary judgment on four counts against Defendants: trademark infringement under Section 14 of the Lanham Act; unfair competition under Section 43(c); Virginia common law unfair competition; and fraud.

In 2014, the TTAB sustained an opposition to Defendant Ahmad's application to register the mark NATIONSTAR for various real estate services, finding that Ahman had committed fraud on the USPTO when he filed his use-based application to register. The Board concluded that Ahmad "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."

Plaintiff here alleged that Defendant continues to offer mortgage lending services under the name NATIONSTAR MORTGAGE. The court had little difficulty in finding likelihood of confusion and violation of Section 43(a). It concluded that "Defendants' conduct in attempting to establish rights in the NATIONSTAR mark superior to those of the Plaintiff were made in bad faith." Under Virginia law, a claim for unfair competition is essentially the same as for Lanham Act Section 43(a), and so the court granted the motion for summary judgment on that claim as well.

As to the fraud claim, the court relied on B&B Hardware v. Hargis Industries, Inc., 135 S. Ct. 1293 (2015), which held that "a court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met."

The district court found that all of the elements for claim preclusion were met: the issue was identical and was decided against Defendant Ahmad, and the decision was critical and necessary to the Board's decision. The TTAB decision is final (Ahmad did not appeal) and Ahmad was represented by counsel and had a full and fair opportunity to litigate the issue. Therefore, the court entered summary judgment on the fraud claim as well.

Read comments and post your comment here.

TTABlog comment: Common law fraud requires that the party claiming fraud show it relied upon the false statement. If Ahmad's false statement was made to the USPTO, how did plaintiff rely on it?

Text Copyright John L. Welch 2015.