United States: Supreme Court: Trademark Trial And Appeal Board Decisions On Likelihood Of Confusion Can Have Preclusive Effect In Subsequent Federal Court Litigation

B & B Hardware v. Hargis Ind.,135 S. Ct. 1293 (2015)

The U.S. Supreme Court recently held in B&B Hardware, Inc. v. Hargis Industries, Inc., that a decision of the Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office ("T.T.A.B.") on the issue of likelihood of confusion may preclude a federal court from reaching a contrary conclusion on the issue in a subsequent infringement action. But the key word in the previous sentence is may—not must—and the Supreme Court went out of its way to explain that "for a great many registration decisions" from the T.T.A.B., "issue preclusion obviously will not apply."

It must be initially noted that, before the Supreme Court's decision, a few U.S. federal appellate courts had recognized that in certain circumstances a decision by the T.T.A.B. could have preclusive effect in later federal court litigation (while a few other U.S. federal appellate courts had held that there could be no such preclusive effect). Viewed in this light, the Supreme Court's holding changes little other than taking the rule already applied in some U.S. federal appellate courts and making it a nationwide rule.

But it will be interesting in the coming months to see how federal courts and the T.T.A.B. apply the Supreme Court's holding.

The Facts and Procedural History of the Case

The facts of the case as relevant here are relatively straightforward. The plaintiff, B&B Hardware ("B&B"), has since 1993 owned a federal registration for the mark SEALTIGHT for metal fasteners used in the aerospace industry. Meanwhile, the defendant, Hargis Industries ("Hargis"), uses the mark SEALTITE for metal fasteners in the construction industry, and in 2002 applied for federal registration of SEALTITE. B&B opposed registration of SEALTITE before the T.T.A.B., arguing that it was confusingly similar to SEALTIGHT. After the parties engaged in discovery and trial, the T.T.A.B. concluded that SEALTITE was confusingly similar to SEALTIGHT and could not be registered. Hargis did not exercise its statutory right to appeal the T.T.A.B.'s decision to the U.S. Court of Appeals for the Federal Circuit or a federal district court.

B&B also sued Hargis for infringement in federal district court, claiming that Hargis' use of SEALTITE infringed B&B's rights in SEALTIGHT. In light of the T.T.A.B.'s finding of a likelihood of confusion, B&B argued to the district court that the T.T.A.B.'s decision precluded Hargis from arguing in the district court that there was no likelihood of confusion between the marks. The district court, however, refused to give preclusive effect to the T.T.A.B.'s determination. Ultimately, a jury sided with Hargis, finding no likelihood of confusion between the marks. B&B appealed to the U.S. Court of Appeals for the Eighth Circuit, arguing that the district court should have given preclusive effect to the T.T.A.B.'s likelihood of confusion decision. But the Eighth Circuit affirmed, holding that because the T.T.A.B. looks to different factors than do federal courts in making likelihood of confusion determinations, a federal court should never give preclusive effect to a T.T.A.B. decision on the likelihood of confusion issue. The Supreme Court accepted review of the case and reversed the Eighth Circuit.

The Supreme Court's Decision

In short, the Supreme Court rejected the Eighth Circuit's per se rule that T.T.A.B. decisions can never be entitled to preclusive effect in federal court, holding instead that, in some cases, the T.T.A.B.'s decision may be entitled to preclusive effect. The Supreme Court's ruling can be summarized in the following sentence from the opinion: "So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply." 135 S. Ct. at 1310.

The "ordinary elements" of issue preclusion are set forth in the Restatement (Second) of Judgments, which states: "When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim."

The Supreme Court rejected the argument that issue preclusion should never apply because the procedures used by the T.T.A.B. were different from the procedure used in federal courts (e.g., the T.T.A.B. does not allow for testimony by live witnesses). The Supreme Court noted that proceedings before the T.T.A.B. are governed largely by the Federal Rules of Civil Procedure and the Federal Rules of Evidence and, thus, there is "no categorical reason to doubt the quality, extensiveness or fairness" of the T.T.A.B.'s procedures. 135 S. Ct. at 1309.

Turning to the crux of the case, the Eighth Circuit's primary basis for rejecting issue preclusion for T.T.A.B. decisions was its belief that the T.T.A.B.'s legal analysis of the issue of likelihood of confusion for purposes of deciding registration is different from the analysis in federal court for infringement. Thus, according to the Eighth Circuit, the issue of likelihood of confusion for infringement purposes is never "actually litigated and determined" by the T.T.A.B. The Supreme Court rejected this notion.

First, the Supreme Court held that the text of the U.S. Trademark (Lanham) Act provides the same statutory standard to be applied by the T.T.A.B. and the federal courts, namely "the likelihood of confusion standard," and that this standard was not "fundamentally different" between the T.T.A.B. and the federal courts, notwithstanding the fact that some of the specific nuances of the standard differ between the tribunals. 135 S. Ct. at 1307.

Second, the Supreme Court analyzed whether, in reality, the TTAB actually applies the same likelihood of confusion standard since the T.T.A.B. "typically analyzes the marks, goods and channels of trade only as set forth in the application and the opposer's registration, regardless of whether the actual usage of the marks by the parties differs." 135 S. Ct. at 1307. This was a closely watched facet of the case, as it is well established that the T.T.A.B. does not typically look to the real-world use of the marks made by the parties (particularly the use made by the defendant), while marketplace conditions are critical to the likelihood of confusion analysis of district courts in infringement actions. The Supreme Court acknowledged this difference, stating that "unlike in infringement litigation," the T.T.A.B.'s "determination that a likelihood of confusion does or does not exist will not resolve the confusion issue with respect to non-disclosed usages"—i.e., real-world usages not listed in the application and registration. But the Supreme Court held that this difference did not require a per se rule that T.T.A.B. decisions can never be entitled to issue preclusion. Id. at 1308. Rather, the Court explained that this difference was just "a reason not to apply issue preclusion in some or even many cases." Id. The Court then went on to announce what many view as the key passage from the opinion and the rule for district courts to apply going forward:

If a mark owner uses its mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a district court in infringement litigation. By contrast, if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding the same issue. Thus, if the TTAB does not consider the marketplace usage of the parties' marks, the TTAB's decision should have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.

Id. (emphasis added).

Given the above rule, as well as the T.T.A.B.'s repeated statements in precedential cases that it does not look to real-world usage of the parties' marks in making registration decisions, the Supreme Court readily explained that "for a great many registration decisions issue preclusion obviously will not apply because the ordinary elements will not be met." 135 S. Ct. at 1306.

The Future of T.T.A.B. and Federal Court Proceedings After B&B Hardware

Going forward, the key to whether a T.T.A.B. decision will have preclusive effect in subsequent federal court litigation will come down to a district court judge's determination of whether the T.T.A.B. considered any marketplace usage of the parties' marks and, if it did, if those usages are "materially the same" as the usages at issue in the infringement action. The Court provided little guidance as to which usages are "materially" the same and which are not, but it did provide some helpful hints.

First, the Court explained that "trivial variations" in the parties' marks between the T.T.A.B. and federal court would not be sufficient to avoid preclusion—specifically, a party cannot add "descriptive or non-distinctive elements" to its mark to avoid preclusive effect of a T.T.A.B. decision. Second, since the Supreme Court made clear that "if the TTAB does not consider the marketplace usage of the parties' marks, the TTAB's decision should have no later preclusive effect in a suit," it appears that most, if not all, decisions by the T.T.A.B. concerning intent-to-use applications or applications based on foreign registrations for marks that are not yet in use in the U.S. will not have preclusive effect, since neither of these types of applications involve any use by the defendant in the U.S. for the T.T.A.B. to examine.

But with the exception of these few clear principles discussed above, the impact of the decision on cases where there is real-world usage of the mark by the defendant will not be known until federal courts and the T.T.A.B. start to apply the decision.

As to the T.T.A.B., we will have to wait and see if, in light of the Supreme Court's implicit approval of the T.T.A.B.'s procedures and likelihood of confusion analysis, the T.T.A.B. will begin to consider marketplace usage of the defendant's mark as part of its analysis. Moreover, litigants who are unhappy with the T.T.A.B.'s decisions likely will be more inclined to appeal the decisions to the U.S. Court of Appeals for the Federal Circuit or a federal district court.

As to the federal courts, an additional legal step will be added in almost every federal court case (both currently-pending and newly-filed cases) in which the parties have previously litigated a T.T.A.B. proceeding to conclusion. Specifically, the party that prevailed in the T.T.A.B. will no doubt want to argue to the district court that issue preclusion should apply because the "usages adjudicated by the TTAB are materially the same" as the ones before the district court. The losing party before the T.T.A.B. will obviously argue against such preclusion, arguing that the usages analyzed the T.T.A.B. are not materially the same as the ones before the district court. It will be interesting to see how district courts begin to grapple with these arguments in the coming months and, specifically, whether courts heed the warning of the Supreme Court that "a great many" of the T.T.A.B.'s decisions will not be entitled to preclusive effect.

Finally, it would seem that the Court's decision will have the most impact on the strategies and actions of defendants/applicants in T.T.A.B. proceedings and their counsel. Specifically, because of the analyses used by the T.T.A.B. for likelihood of confusion—i.e., not reviewing real-world usages and acceptance of likelihood of confusion surveys that do not employ real-world situations—it is often easier to prove likelihood of confusion in the T.T.A.B. than it is in federal courts (as the conflicting results of the T.T.A.B. and district court proceedings in B&B Hardware demonstrate). Accordingly, defendants in T.T.A.B. proceedings may wish to try to expand the scope of the proceeding, including by introducing evidence of real-world usages of the parties' marks. Or, as a more drastic measure in higher-stakes proceedings, defendants in T.T.A.B. proceedings may be more inclined to file declaratory judgment actions of non-infringement in federal court in response to the filing of a T.T.A.B. proceeding and ask the T.T.A.B. to suspend the proceeding while the federal court case proceeds (something the T.T.A.B. routinely does).

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions