United States: When A District Court Must Confront A Trademark Trial And Appeal Board Opinion

Last Updated: August 5 2014
Article by Leo Kittay

B & B Hardware, Inc. v. Hargis Industries, Inc., 716 F.3d 1020 (8th Cir. 2013), petition for cert. filed, 2013 WL 5276022 (U.S. Sept. 18, 2013) (No. 13-352) and Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150 (4th Cir. 2014)

Two recent cases in the news highlight the two different ways that an opinion by the Trademark Trial and Appeal Board ("TTAB") can wind up before a federal district court. And, in both contexts, the chief question is how much preclusive effect or deference is owed to the TTAB's holdings.

In the first case, B & B Hardware, Inc. v. Hargis Industries, Inc., 716 F.3d 1020 (8th Cir. 2013), petition for cert. filed, 2013 WL 5276022 (U.S. Sept. 18, 2013) (No. 13- 352), the Supreme Court currently is considering whether to grant certiorari in a civil infringement action brought by B&B Hardware. B&B Hardware owns a registration for SEALTIGHT for self-sealing nuts and bolts based on first use in 1990. It opposed an application filed by Hargis for the mark SEALTITE for another type of sealing fasteners made up of screws and washers based on a later first use date. After conducting a likelihood-of-confusion analysis using the so-called DuPont factors and finding, inter alia, that the marks were "substantially identical," the products were "closely related" and actual confusion had resulted, the TTAB sustained the opposition. B & B Hardware, Inc. v. Sealtite Building Fasteners, Opp. No. 91155687, 2004 WL 1776636 (T.T.A.B. Aug. 6, 2004); see also Application of E. I. DuPont DeNemours & Co., 476 F.2d 1357 (C.C.P.A. 1973). Hargis did not appeal.

B&B then turned to the district court, in which it had already initiated an infringement action. However, there, the jury found for defendant Hargis, including on the infringement claim. B&B failed to convince either the district court or the Court of Appeals for the Eighth Circuit that the TTAB decision should be given preclusive effect or, even, admitted into evidence. The district court refused to hold the TTAB decision had preclusive effect on the ground that the TTAB was not an Article III court. The district court would not admit into evidence the TTAB decision because the thirteen DuPont factors differed from the six factors that must be considered under Eighth Circuit law in determining likelihood of confusion. The Court of Appeals for the Eighth Circuit affirmed, pointing to the different (albeit overlapping) factors. 716 F.3d 1020, 1025 (8th Cir. 2013). One judge dissented.

The questions presented to the Supreme Court are, first, "[w]hether the TTAB's finding of likelihood of confusion precludes Hargis from relitigating that issue in infringement litigation . . . ," and, second, if Hargis is not estopped from relitigating likelihood of confusion, what, if any, deference is due to the TTAB's finding. B&B argues that there is a four-way split on these issues among the U.S. circuit courts, which would indicate the need for the Supreme Court to step in and resolve the split. But, Hargis takes issue with this characterization, calling the split illusory. Hargis insists instead that circuit courts across the country are uniform in that they determine what, if any, preclusive effect is owed to TTAB decisions on the facts of each case, not based on a black-and-white rule.

Notably, on January 13, 2014, the Supreme Court invited the Solicitor General to file a brief in the case expressing its position. This invitation strongly suggests that the Court will grant certiorari. Any decision by the Supreme Court on the questions presented would undoubtedly affect strategic decisions concerning whether to pursue inter partes proceedings before pursuing an infringement action in federal court.

The second case, Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150 (4th Cir. 2014), concerns appeals to the district court of TTAB final decisions brought pursuant to Section 21 of the Trademark (Lanham) Act, 15 U.S.C. § 1071(b). Under Section 21, a litigant in an inter partes or ex parte proceeding, who is "dissatisfied with the decision of the . . . Trademark Trial and Appeal Board" may seek "remedy by civil action." 15 U.S.C. § 1071(b). More often litigants challenge a TTAB decision by appealing to the Federal Circuit under 15 U.S.C. § 1071(a), which permits an appeal based solely on the record below. In stark contrast, appeals to the district court permit the parties to submit new evidence.

Before the Fourth Circuit's decision in Swatch, it was said that the district court would "sit in a dual capacity" for Section 1071 appeals. Skippy, Inc. v. Lipton Invs., Inc., 345 F. Supp. 2d 585, 586 (E.D. Va. 2002) aff'd, 74 F. App'x 291 (4th Cir. 2003). "On the one hand, the court [sat as] an appellate reviewer of facts found by the TTAB. On the other hand, the court [sat as] a fact-finder based on new evidence introduced to the court. Review of new evidence [was] de novo. The district court, . . . however, [was to] afford deference to the fact-findings of the TTAB." Id.

In Swatch, however, the Fourth Circuit overruled this precedent holding that "where new evidence is submitted, de novo review of the entire record is required because the district court 'cannot meaningfully defer to the PTO's factual findings if the PTO considered a different set of facts.'" Swatch AG, 739 F.3d at 156 (quoting Kappos v. Hyatt, 132 S. Ct. 1690, 1700 (2012)) (emphasis added).

The Fourth Circuit's holding enhances the allure of bringing an appeal to district courts in the Fourth Circuit, as opposed to the Federal Circuit, since the appellant can guarantee itself a "fresh look" at its case simply by supplementing the record with new evidence. It remains to be seen whether other circuit courts will follow the Fourth Circuit's lead or whether a split will emerge, potentially setting the stage for another trip to the Supreme Court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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