Client Alert - The Supreme Court Decides That Some Trademark Office Tribunal Decisions Are Binding In Later Court Cases
Do trademark opposition decisions by the Trademark Trial and Appeal Board (“TTAB”) have preclusive effect in subsequent trademark infringement court actions? In a recent decision, B&B Hardware, Inc. v. Hargis Indus., Inc., 2015 BL 80363, U.S., No. 13-352, 3/24/15, the U.S. Supreme Court answered this question by essentially saying “yes, sometimes, but not in many cases.” To use the Court’s exact language:
So long as the 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.
While the Supreme Court’s opinion provides scant guidance as to what usages would be “materially the same,” this case is an important reminder of the significance TTAB decisions can have. It also may influence how trademark owners and practitioners approach future TTAB proceedings.
The B&B Hardware case involved a prolonged trademark dispute between B&B Hardware Inc. (“B&B”), a manufacturer of metal fasteners sold under the mark SEALTIGHT for use in the aerospace industry, and Hargis Industries Inc. (“Hargis”), a manufacturer of fasteners sold under the mark SEALTITE for use in the construction industry. B&B first registered SEALTIGHT. About three years later, Hargis applied to register SEALTITE. B&B opposed Hargis’ application claiming a likelihood of confusion. The opposition involved extensive discovery, including depositions. The TTAB eventually decided the opposition in favor of B&B, holding that there was a likelihood of confusion, and since Hargis did not appeal, the decision became final.
While the parties were duking it out before the TTAB, they were simultaneously involved in a trademark infringement suit in federal court. B&B argued that Hargis could not assert in District Court that there was no likelihood of confusion because of the preclusive effect of the TTAB administrative decision. The District Court rejected this argument and ruled in Hargis’ favor, holding that there was no likelihood of confusion. On appeal, the Eighth Circuit Court of Appeals affirmed the District Court’s decision. Although the appellate court accepted that some administrative agency decisions can have preclusive effect, it reasoned that TTAB decisions cannot have such effect, because the TTAB uses different factors to determine trademark registrability, and because the TTAB placed excessive emphasis on the sound and appearance of the respective trademarks. B&B appealed to the Supreme Court.
The Supreme Court’s Decision
Finding that, among other things, the Lanham Act does not specifically bar issue preclusion in trademark infringement cases, the Supreme Court reversed the decision of the Court of Appeals, rejecting its denial of issue preclusion on the basis that the TTAB does not rely on the same likelihood of confusion factors as the courts. In doing so, the Court found that the factors are not fundamentally different and that the TTAB and the Courts both essentially apply the same legal standard.
The Supreme Court recognized that the TTAB typically focuses solely on the specific marks, goods, and channels of trade as set forth in the application and the opposer’s registration, without regard to the actual marketplace usage of the marks. However, it concluded that this does not mean that TTAB decisions should never have preclusive effect. Writing for a 7-2 majority, Justice Alito stated:
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 market-place 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.” (quoting 6 McCarthy §32:101, at 32–246.)
Emphasizing that “[m]ateriality, of course, is essential,” the Court opined that “trivial variations between the usages set out in an application and the use of a mark in the marketplace” do not create different issues, just as trivial variations between two marks do not create different marks. The Court also gave short shrift to the argument that granting preclusive effect to TTAB decisions would force parties to expend more “time and energy” when litigating trademark proceedings in the TTAB and bog down the registration process. Reasoning that the “benefits of registration are substantial,” the Court also rejected the argument that granting issue preclusion should never apply to TTAB decisions because the stakes in a TTAB administrative proceeding are lower than those in an infringement action in court.
The Supreme Court remanded the case to the Court of Appeals, stating that it should apply the following rule: "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."
In a terse concurring opinion, Justice Ginsburg emphasized that issue preclusion won’t apply with respect to many registration decisions precisely because TTAB decisions often are decided without regard to marketplace usage of the marks.
Justices Thomas and Scalia dissented on the basis that Congress did not intend for TTAB decisions to have preclusive effect and that the majority’s decision raises serious constitutional concerns associated with the difference between having trademark matters adjudicated by an administrative agency (which is an arm of the executive branch) as opposed to a court of law (which is part of the judicial branch). (The majority, by the way, did not address this constitutional question on the ground that it was not properly raised.)
The Supreme Court’s decision does not provide much guidance as to what use of a mark in the marketplace will be “materially the same” as the usages included in an application for registration. In fact, it’s possible that, on remand, the lower court may determine that the usages adjudicated by the TTAB in the case at hand are not materially the same as those before the District Court and that the TTAB erred by placing more weight on certain factors (such as the appearance and sound of the marks at issue) than it should have.
It is also possible that, going forward, different circuits will interpret “materiality” in different ways. Further, courts may not grant preclusive effect to TTAB decisions in infringement cases precisely because the differences between use in the marketplace and the use considered by the TTAB can often be materially different.
That said, the Supreme Court’s ruling is an important reminder of the significance of TTAB decisions as to likelihood of confusion. This decision may influence how trademark owners and practitioners approach future actions in the TTAB and the courts. It also may influence the weight courts give to TTAB decisions relating to other issues (such as genericism, abandonment, dilution, etc.).
Tips for Trademark Owners
In light of this decision, trademark owners and practitioners will certainly need to give greater thought and consideration to the pros and cons of pursuing a TTAB proceeding instead of an infringement action in court. They should also consider:
1. Committing additional time and resources to TTAB proceedings,
including the use of surveys and expert witnesses.
2. Pursuing civil appeals for de novo review by district courts of
unfavorable TTAB decisions so new evidence relating to marketplace
usage can be considered.
3. Settling opposition and cancellation proceedings to avoid
unfavorable decisions that could have preclusive effect.
4. Requesting TTAB approval to restrict the scope of an applied-for mark
and/or the goods/services in an application/registration during the
course of an opposition or cancellation proceeding, if they want the
application/registration to reflect marketplace usage and increase the
likelihood that a TTAB decision will have preclusive effect.
5. Instituting an infringement action in court and suspending pending
TTAB proceedings, unless they believe the TTAB is a better forum for
For more information, please contact Joel Karni Schmidt.
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