United States: Scope of Res Judicata Examined in Trademark Registration Opposition

The U.S. Court of Appeals for the Federal Circuit affirmed the Trademark Trial and Appeal Board’s (TTAB) finding that a default judgment entered against an applicant for failure to defend against an opposition to registration of its word-and-design mark did not preclude an opposition filed against the applicant’s similar, pending word-mark application. Sharp Kabushiki Kaisha v. ThinkSharp, Inc., Case No. 05-1220 (Fed. Cir. May 30, 2006) (Newman, J.).

The applicant, ThinkSharp, filed two trademark applications within four months of each other: one for THINKSHARP and the other for THINKSHARP & DESIGN. Sharp opposed both applications, asserting that the marks were confusingly similar to and diluted the family of SHARP marks. ThinkSharp chose to defend only the THINKSHARP word-mark registration. The TTAB entered a default judgment against ThinkSharp as to its word-and-design mark. During the opposition proceedings on the word mark, Sharp argued the default judgment entered in its favor on the word-and-design mark operated as res judicata against ThinkSharp, thereby precluding ThinkSharp from contesting the opposition directed to its word mark.

The TTAB rejected Sharp’s res judicata argument, holding that an "applicant was entitled to choose to pursue one registration and abandon the other, even after oppositions had been filed." It further explained that an "applicant is not required to defend against multiple oppositions in order to preserve its right to defend against one of them." The TTAB also found that there was no likelihood of confusion between the THINKSHARP and SHARP marks. Sharp appealed on the issue of res judicata.

In affirming the TTAB’s decision, the Federal Circuit reiterated the Supreme Court’s concerns against the offensive use of res judicata and held that "[p]recedent and sound administrative policy support the Board’s reasoning that a trademark owner is entitled to choose which opposition to defend, when the proceedings are not an attempt to evade the effect of a previous adverse judgment on the merits."

The Federal Circuit particularly noted the TTAB’s finding that ThinkSharp filed the two trademark applications at the same time. Thus, this was not a situation where ThinkSharp adopted a second mark after judgment had been entered against it in another matter in an attempt to insignificantly modify its mark after an adverse ruling.

The fact that the default judgment on the word-and-design mark was entered on procedural grounds, and without consideration of the merits, was also "highly relevant" to the Federal Circuit’s conclusion: "when a party did not have an opportunity to litigate disputed issues, a decision to permit such litigation is favored."

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