United States: Trademark Trends: Back-To-Back Arguments In Trademark Cases At SCOTUS

The Supreme Court heard oral argument in trademark cases on consecutive days this month. On December 2, 2014, the issue of whether a finding by the Trademark Trial and Appeal Board (TTAB) of likelihood of confusion precludes the issue from being re-litigated in a trademark infringement action was presented in B&B Hardware, Inc. v. Hargis Industries, Inc. The following day, the Justices turned to the issue of whether trademark tacking is a question of law or fact in Hana Financial, Inc. v. Hana Bank.

B&B Hardware is the culmination of a sixteen-year dispute between B&B's SEALTIGHT mark for leak-proof screws and bolts, and Hargis's SEALTITE mark for construction screws. The TTAB found a likelihood of confusion between Hargis's SEALTITE and B&B's senior SEALTIGHT mark, and denied Hargis's application to register SEALTITE on that basis. In a later trademark infringement litigation, Hargis won a jury verdict of noninfringement, and B&B appealed on the basis that the TTAB's finding of likelihood of confusion should have been issue-preclusive. The Eighth Circuit affirmed that the district court did not err in declining to defer to the TTAB determination and excluding the TTAB opinion from trial.

At oral argument, Justice Ginsburg suggested to B&B's counsel that issue preclusion should not apply, because the stakes are so different in a TTAB opposition proceeding as compared to a full district court litigation. B&B's counsel demurred, but both Justice Ginsburg and Justice Kagan took issue with his representation that a TTAB opposition proceeding is "just like a civil proceeding." The difference in the stakes of the proceeding, both in terms of cost and scope of discovery, were emphasized by Hargis's counsel, as was the contention that in Board proceedings, likelihood of confusion is determined independent of actual usage – unlike evidence presented at the district court. Chief Justice Roberts, however, observed that "the issues are not always different," and in such cases, B&B "could prevail on . . . the basic preclusion rule."

It is difficult to predict what the outcome of this case will be from the argument alone; however, it will be interesting to see whether the Justices upend the current rule that TTAB proceedings are not preclusive as to the likelihood of confusion question, insofar as doing so would likely have implications for other TTAB determinations as well.

Hana Financial involves the "tacking" doctrine, which allows a mark holder to make small changes to its mark over time (such as to modernize the mark) while maintaining the right to claim the original first date of use in commerce for priority purposes. Tacking is permitted so long as the revised mark creates the same "commercial impression" to consumers as the original mark. The issue presented in Hana Financial is whether this determination should be made by a judge or a jury. The question was put to a jury in the district court, which found that Hana Bank's original mark, HANA OVERSEAS KOREAN CLUB, had the same commercial impression as the revised mark, HANA BANK, which resulted in a priority date earlier than Hana Financial's mark, HANA FINANCIAL.

The Ninth Circuit affirmed the jury's verdict, but noted the existence of a circuit split, with the Sixth and Federal Circuits having held that tacking is a question of law for a judge to decide. The TTAB also considers tacking a question of law. INTA observed in its amicus brief in support of Hana Bank that the circuits holding tacking to be a question of law "have done so principally because the circuit in which the given court is situated holds the ultimate determination of likelihood of confusion in trademark infringement cases to be a matter of law."

At oral argument, according to one commentator, "the justices seemed inclined to find that tacking should be considered a question of fact." It thus seems likely that this case will create a bright-line rule that the question of whether two versions of a mark create the same "commercial impression" should be posed to a jury—consumers—instead of a judge. However, given the infrequency with which tacking is a dispositive issue in a jury trial, this rule is not likely to have far-reaching consequences. And presumably, the question could still be presented to a judge on summary judgment, by arguing that no reasonable jury could conclude that the purportedly tacked marks either do or do not create the same commercial impression.

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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