A recent U.S. Supreme Court decision, B&B Hardware, Inc.
v. Hargis Industries, Inc., heightens the importance of
often-neglected trademark conflict administrative proceedings in
the Trademark Trial and Appeal Board.
B&B Hardware presented a case of two trademarks:
SEALTITE and SEALTIGHT. There were two different proceedings to
determine if consumers were likely to confuse them. The Supreme
Court was asked, could there be two different results? The answer:
Not if the two proceedings are deciding the same issue.
Trademark owners can litigate possible conflicts between marks in
either the TTAB (regarding whether a mark should be registered), or
a U.S. District Court (where the proceeding focuses primarily on
whether a mark can be used). The question in B&B
Hardware was whether a decision in a TTAB case was binding in
a later district court case, and the Supreme Court ruled that it
was binding, absent special circumstances.
As a practical matter, the ruling means that trademark owners will
need to take TTAB proceedings more seriously than in the past,
because the results of those administrative cases may affect not
only what marks get registered, but also what marks can actually be
used. TTAB cases have often been treated with less attention and
resources than district court litigation. But now that TTAB rulings
may be decisive for all purposes, trademark owners are likely to
pay more attention to them, possibly using expert witnesses,
broader discovery, more motions, and more appeals of adverse
rulings.
The specific issue in the SEALTIGHT versus SEALTITE case was
whether, when B&B Hardware (owner of SEALTIGHT) sued Hargis
(owner of SEALTITE) in district court, that court was required to
honor the TTAB's ruling that the two marks were confusingly
similar.
Trademark practitioners and brand owners have typically viewed the
TTAB likelihood of confusion analysis differently than the
likelihood of confusion analysis for federal court proceedings. The
TTAB typically conducts its analysis in a vacuum, focusing on the
marks as shown and the goods/services as specified in the relevant
application/registration—even if the actual usage of the
marks by either party differs. In contrast, courts routinely
consider real world marketplace conditions, including the way that
a mark is displayed (e.g., font, stylization) and more specific
information regarding the manner in which goods/services are
offered, the customers to whom they are offered, channels of trade,
etc.
The Supreme Court concluded that a TTAB finding as to
"likelihood of confusion" should preclude re-litigation
of that issue in a court proceeding, so long as the ordinary
elements of issue preclusion are met and "the usages
adjudicated by the TTAB are materially the same as those
before the district court" (emphasis added). The
"ordinary" elements of issue preclusion require that (1)
an issue is litigated and determined by a final judgment, and (2)
the determination is essential to the judgment. Issue preclusion is
applied in those situations where the same issue is before two
courts, and often in those cases where the same issue is before a
court and an administrative agency.
In its analysis, the Supreme Court said that the "real
question" before the court is whether likelihood of confusion
for purposes of registration is the same standard as likelihood of
confusion for purposes of infringement. Its answer to that question
is "yes"—the standard is the same, even if the TTAB
and federal courts use different factors to assess likelihood of
confusion. This is because (1) the factors are not fundamentally
different, and (2) if federal law provides a single standard (i.e.,
likelihood of confusion), parties cannot escape an unfavorable
decision simply by litigating in other courts that apply the
standard differently.
The Supreme Court did recognize that "for a great many
registration decisions issue preclusion obviously will not apply
because the ordinary elements will not be met." If the TTAB
has not decided the same issue that is before a district court
"there is no reason why any deference would be
warranted." Thus, if a trademark owner uses its mark in ways
that are materially unlike those covered in its
application/registration, then the TTAB is not deciding the same
issue and its decision should have no effect in a lawsuit where
actual usage in the marketplace is paramount. The key issue is
whether a trademark owner uses its mark in materially the same way
as the usages specified in its application.
Finally, issue preclusion is not a one-way street. Thus, in those
cases where a district court decides an issue that overlaps with
the TTAB analysis, the TTAB should give preclusive effect to the
court judgment.
To read the full decision, click
here.
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.