United States: Federal Circuit Holds That ITC's Trademark Decisions Are Not Binding On District Courts, Creating A Potential Circuit Split

The U.S. International Trade Commission, a quasi-judicial independent agency based in Washington, D.C., is a common forum for patent, trademark, and trade secret disputes. The Federal Circuit has long held that the ITC's rulings on patent infringement and validity issues do not have preclusive effect on later district court proceedings. According to the court, Congress "did not intend decisions of the ITC on patent issues to have preclusive effect." Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1569 (Fed. Cir. 1996) (citing the legislative history of the ITC's governing statute).

In a ruling issued on May 9 in Swagway, LLC v. ITC opinion, the Federal Circuit extended this non-preclusion rule to the ITC's findings in trademark cases as well, seeing "no reason" to distinguish between patent and trademark claims for preclusion purposes. But while this marked the first time the Federal Circuit addressed the issue, other Circuit Courts of Appeals have previously come to the opposite conclusion. The preclusive effect of the ITC's trademark rulings remains questionable, and the issue may be teed up for the Supreme Court.

The ITC Investigation Underlying Swagway

In the underlying ITC proceeding, Segway, Inc., DEKA Products Limited Partnership, and Ninebot (Tianjin) Technology Co., Ltd. (collectively, "Segway") filed a complaint alleging Section 337 violations based on infringement of six patents, as well as infringement of two registered trademarks. The two trademarks—the subjects of the appeal here—were for both the stylized and non-stylized versions of the SEGWAY mark for "motorized, self-propelled, wheeled personal mobility devices, namely, wheelchairs, scooters, utility carts, and chariots." In addition to the patent infringement claims, Segway alleged that Swagway's self-balancing hoverboards (marketed as "SWAGWAY" and "SWAGTRON") infringed Segway's marks.

After institution of the investigation, Swagway moved to terminate the trademark infringement allegations, agreeing to a consent order stipulation not to import products using the designations at issue. Declining to rule on the pending motion for consent order, the ALJ issued an Initial Determination that Segway's patents were not infringed, but finding that the SWAGWAY designation did pose a likelihood of confusion and therefore infringed Segway's trademarks. The ALJ also noted that "[a]ny pending motion that has not been adjudicated is denied." The Commission affirmed the ALJ's overall determinations on likelihood of confusion and trademark infringement, and entered an exclusion order.

The Federal Circuit's Decision

The appeal presented two main issues: (1) whether the Commission correctly ruled on likelihood of confusion and trademark infringement, and (2) whether the Commission erred in denying Swagway's consent order motion. Regarding trademark infringement, the court did not materially disagree with the Commission's analysis of the likelihood-of-confusion issue, and affirmed the Commission's decision in this respect.

As for the consent order motion, the court first noted that practically speaking, there appeared to be virtually no difference between Swagway's proposed consent order and the exclusion order entered by the Commission—each prevented Swagway from importing the accused products. Swagway argued, however, that the Commission's final decision and resulting orders, unlike the consent order, would have preclusive effect on later proceedings—particularly, a co-pending case in the District of Delaware.

The Federal Circuit rejected this reasoning. While this was an issue of first impression for the court, it looked to its prior rulings in the patent context. Noting the Federal Circuit's history of denying the preclusive effect of the ITC on patent issues, the court saw "no reason to differentiate between" the preclusive effects of the Commission decisions in patent and trademark cases. The court then held that the ITC's trademark decisions, like its patent decisions, do not have preclusive effect in subsequent district court proceedings.

Potential Implications and Circuit Split

While this issue was one of first impression for the Federal Circuit, the preclusive effect of ITC trademark rulings has been addressed before in other circuits. Both the Second Circuit (in Union Manufacturing Co. v. Han Baek Trading Co., 763 F.2d 42 (2d Cir. 1985)) and the Fourth Circuit (in Baltimore Luggage Co. v. Samsonite Corp., 977 F.2d 571 (4th Cir. 1992)) previously reached the opposite conclusion, holding that trademark decisions by the ITC can have preclusive effect in district court. Those courts noted that while the legislative history of Section 337 included statements noting that the ITC's patent-related rulings are not intended to be binding on district courts, no similar statement on any non-patent issues (such as trademarks) is present in the statute or legislative history. Indeed, some district courts have also found that the ITC's decisions in other non-patent areas, such as trade secrets, can have preclusive effect as well. See Manitowoc Cranes LLC v. Sany Am. Inc., No. 13-C-677, 2018 WL 582334 (E.D. Wis. Jan. 29, 2018).

So while the Federal Circuit's ruling appears to be a straightforward one, the question of whether ITC trademark rulings have a preclusive effect remains unsettled. Due to this disagreement among the circuits, it is not clear whether preclusion will apply in a given situation. (For example, in this situation, the District of Delaware or the Third Circuit might find the Federal Circuit's decision on the preclusion issue to be non-binding, and find the ITC's trademark infringement decision to have preclusive effect.) Litigants in different jurisdictions will have to pay close attention to their own circuit's take on the issue, or determine which of these approaches preclusion is more likely to adhere to that circuit's past precedent. This circuit split may even lead the Supreme Court to take up the issue, but, for now, litigants will have to wade through slightly murkier territory.

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
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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