The U.S. Court of Appeals for the Fifth Circuit has held that a trademark owner must be able to point to significant intervening factual change (other than the mere passage of time) before it will be permitted to relitigate secondary meaning. Test Masters Educational Services Inc. v. Singh, Case Nos. 03-20787, 04-20861 and 05-20049 (5th Cir. Oct. 18, 2005) (Stewart, J.).
In a long series of contentious cases the district court dubbed "the second coming of the Hatfields versus the McCoys," test preparation companies operating under the name "Testmasters" and "Test Masters" each sought to exclude the other from using its respective name. Singh began doing business as "Testmasters" in Beverly Hills in 1991; Israni began operating Test Masters Education Services, Inc. (TES) in Houston in 1992. In 1999, Singh received a trademark registration for the "TESTMASTERS" trademark. When Singh tried to set up a website, he learned that TES had acquired the domain name "testmasters.com" in 1995. Multiple suits ensued.
In one previous trial, the jury found "TESTMASTERS" was a descriptive mark that had acquired secondary meaning. On appeal, the Fifth Circuit reversed the jury’s decision on secondary meaning, finding Singh had failed to provide sufficient factual evidence to support secondary meaning of the mark.
Several years later, Singh filed a second lawsuit against TES for California trademark infringement based on his claim that TES altered its website to suggest it was Singh’s California-based company. TES filed a motion to dismiss based on res judicata. The district court granted TES’s motion and concluded res judicata applied to bar the second litigation because it was based on the same nucleus of operative facts as the first. The fact scenarios were parallel and involved Singh’s attack on TES for use of the website to infringe the "TESTMASTERS" mark. Not persuaded that the expansion of Singh’s company, U.S.-wide exposure and acquisition of state trademark rights in 29 other states materially changed the analysis, the court also dismissed Singh’s attempt to relitigate secondary meaning.
On appeal, the Fifth Circuit held Singh’s action was not estopped by res judicata (or claim preclusion) because the operative facts between the two lawsuits were different. Nonetheless, the court concluded Singh was barred by collateral estoppel (or issue preclusion) because the issue of law in both cases was identical (i.e., whether "TESTMASTERS" had acquired secondary meaning) and because Singh had failed to allege any significant intervening factual changes to justify relitigating the issue of secondary meaning of the mark. The court held that whether a mark has secondary meaning depends on dynamic factual scenarios, not the mere passing of time.
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