MFIB LLC v. IBCA LLC et al — Court Dismisses Fraud-Based Trademark Cancellation Counterclaims but Allows Section 1052(d) Claim to Proceed

Background

Plaintiff MFIB, LLC, doing business as MFRG-ICON Construction and ICON National, sued Defendants IBCA, LLC (doing business as ICON Builders) and Allen W. Sands in July 2025 over the parties' competing uses of the term “ICON” in affordable housing construction. Sands formed the ICON Builders mark more than forty years ago and has used it continuously since. MFIB was formed in 2017 when Sands' Icon Commercial Contractors, Inc. merged with Justin Krueger's Multi-Family Renovation Group; in August 2022, MFRG purchased ICC's ownership interest under a Membership Interest Purchase Agreement that expressly permitted MFIB to continue using “MFRG-ICON,” “ICON National,” and “MFRG-ICON Construction.”

In August 2022, MFIB filed applications for four federal trademark registrations — two for “MFRG-ICON Construction” (U.S. Trademark Reg. Nos. 7,228,247 and 7,228,248) and two for “ICON National” (Nos. 7,228,222 and 7,230,751) — attesting that, to the best of the signatory's knowledge, no other persons had the right to use confusingly similar marks; the marks were registered in 2023. Defendants answered with seven counterclaims, including Count V (fraud on the USPTO for failing to disclose similar marks), Count VI (fraud based on an overbroad registration), and Count VII (cancellation under 15 U.S.C. § 1052(d)). MFIB moved under Rule 12(b)(6) to dismiss Counts V–VII.

The Court’s Holding

The Court granted the motion in part and denied it in part. Count V was dismissed with prejudice and without leave to amend because Defendants did not plead that their rights were “clearly established” by a court decree, settlement agreement, or registration, as Rosso & Mastracco requires. The Purchase Agreement showed MFIB could legitimately have believed it was at minimum a concurrent user, and mere knowledge of another party's use of a similar mark does not constitute fraud under Quiksilver. Because amendment would be futile, dismissal was with prejudice.

Count VI was dismissed with leave to amend. Defendants failed Rule 9(b)'s particularity requirement because they did not identify what was false or misleading about MFIB's statements of intent to use the ICON marks in multiple construction categories, or why those statements were false. Because amendment could render the claim plausible, the Court granted leave to file a Second Amended Counterclaim on Count VI by November 14, 2026, warning that further failure to cure could bring dismissal with prejudice.

Count VII survives. Defendants' allegations that Sands continuously used the ICON Builders mark for over forty years and that there is a likelihood of confusion between the marks are sufficient to state a cancellation claim under 15 U.S.C. §§ 1052(d) and 1064. The Court rejected the argument that the Purchase Agreement barred the claim: the contractual right to “utilize” the marks does not prevent Defendants from challenging the registration. Because the marks were registered in 2023, they have not become incontestable.

Key Takeaways

• Fraud on the USPTO requires pleading that the undisclosed party's rights were “clearly established” by a decree, settlement, or registration; mere knowledge of prior use is insufficient.
• Rule 9(b) requires fraud claims to specify what was false or misleading and why; general allegations of overbreadth fail but may be curable with leave to amend.
• A cancellation claim under 15 U.S.C. § 1052(d) based on prior use and likelihood of confusion survives a motion to dismiss even where a contract permits the registrant to use the mark.
• Dismissal with prejudice is appropriate where amendment would be futile, while curable pleading deficiencies warrant leave to amend with a deadline.
• Marks registered fewer than five years ago remain vulnerable to cancellation on any ground that would have prevented registration initially.

Why It Matters

The order draws a practical line between fraud-based cancellation, which carries a heavy burden and demands particularized pleading of clearly established rights, and statutory § 1052(d) cancellation, which turns on prior use and likelihood of confusion. It confirms that a contractual right to use a mark does not immunize a registration from a cancellation challenge, and it preserves the priority dispute for later stages without deciding who is the senior user.

For practitioners, the decision underscores that trademark applicants need not disclose every potential conflicting user they are aware of, only those with clearly established rights, and that even when fraud counts fail, a straightforward priority-based cancellation claim may proceed past the pleading stage.