FKB’s Spencer A. Richards successfully obtained Pre-Answer dismissal of a Complaint alleging fraud on the court filed in the United States District Court for the Southern District of New York, against FKB’s client, a prominent trademark attorney, arising out of FKB’s client’s representation of a well-known beach accessory store operating across the country.

In the Underlying Action, FKB’s client prosecuted an action for breach of a licensing agreement against   a corporation for the corporation’s unauthorized use of a trademark. The Underlying Action resolved with a stipulation of settlement. However, after the corporation executed the stipulation of settlement, another well-known beach accessory store successfully claimed ownership of the registered trademark. The plaintiff corporation, thereafter, commenced a  fraud on the court action against FKB’s client alleging that FKB’s client misrepresented ownership of the trademark to secure the stipulation of settlement.  

In its Rule 12(b)(6) motion to dismiss the Complaint, FKB successfully argued, among other things, that the plaintiff’s fraud claim is barred by the two-year statute of limitations because the plaintiff corporation should have discovered with reasonable diligence the proper ownership of the trademark based upon public filings.  In dismissing the Complaint, the Court (Hon. Laura Taylor Swain, Chief United States District Judge), agreed with FKB’s argument and held that the plaintiff corporation “did not exercise reasonable due diligence during the Underlying Action, and the Court imputes to the [plaintiff corporation] knowledge of what it should have discovered had it investigated” the alleged ownership rights in the trademark.

If you have any questions about this decision, or the defense of attorneys in general, please contact Spencer A. Richards.