View Attachment - Thompson & Knight LLP

Client Alert
March 26, 2015
TTAB DECISIONS CAN PRECLUDE COURT DETERMINATIONS
OF LIKELIHOOD OF CONFUSION IN INFRINGEMENT CASES
On March 24, 2015, the Supreme Court issued its decision in B&B Hardware, Inc. v. Hargis
Industries, Inc., holding that a Trademark Trial and Appeal Board (“TTAB”) decision on likelihood of
confusion for purposes of registration of a mark can be binding in a later district court infringement
action.
The decision has significant implications for trademark owners—potentially affecting both
registration decisions and enforcement strategies. Following B&B Hardware, the TTAB’s decision
regarding likelihood of confusion can be binding in later infringement litigation against the same
opponent.
TTAB DECISIONS ON LIKELIHOOD OF CONFUSION CAN HAVE PRECLUSIVE EFFECT
In 1992, Hargis Industries began manufacturing and selling a line of self-drilling screws for use in
the construction of metal buildings under the mark SEALTITE. In 1993, B&B Hardware received a
registration from the USPTO for its SEALTIGHT mark for use with its metal fasteners for the aerospace
industry with a claimed date of first use in 1990. Three years later, Hargis filed an application to register
its SEALTITE mark, which B&B Hardware opposed on the basis of likelihood of confusion with its
existing registration. While the opposition was pending, B&B Hardware sued Hargis for trademark
infringement in federal district court.
While the federal case was pending, the TTAB decided there was a likelihood of confusion
between the parties’ marks, ending the opposition in favor of B&B. Hargis did not appeal the TTAB
decision. Following that decision, B&B Hardware asserted that the TTAB’s decision on likelihood of
confusion should preclude further litigation of that issue in the district court. The district court disagreed
because the TTAB is not a federal court. The case was tried, and the jury rendered a verdict for Hargis
finding that B&B Hardware’s mark was merely descriptive and unprotectable. For the next two decades,
the parties litigated before the TTAB and in federal court. In the appeal leading to the Supreme Court’s
review, the Eighth Circuit held that issue preclusion should not bar Hargis from litigating the likelihood
of confusion issue because the TTAB and the courts used different factors to evaluate likelihood of
confusion.
The Supreme Court relied on the general rule governing issue preclusion: “[W]hen 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,
TTAB Decisions Can Preclude Court Determinations of Likelihood of Confusion
in Infringement Cases
Client Alert
March 26, 2015
whether on the same or a different claim.” B&B Hardware, Inc. v. Hargis Indus., Inc., No. 13-352, slip
op. at 9 (U.S. Mar. 24, 2015). Noting that final decisions in administrative proceedings can have res
judicata, i.e., binding effect, the Court found that nothing in the Lanham Act’s text suggested that
Congress did not intend for TTAB decisions to have preclusive effect and that “absent a contrary
indication, Congress presumptively intends that an agency’s determination . . . has preclusive effect.”
The Court applied the elements of issue preclusion to the TTAB’s likelihood of confusion
standard for purposes of registration and the Lanham Act’s likelihood of confusion standard for trademark
infringement and found they were “the same.” The Court acknowledged that there were “minor
variations” in the factors applied by the TTAB and the courts, but found the differences were not
significant enough to defeat preclusion.
However, the Court did recognize that the TTAB’s likelihood of confusion analysis is often
limited in scope and does not always account for how marks are actually used in the marketplace.
Consequently, TTAB decisions will not have preclusive effect in cases where marketplace usage is a
“paramount issue” due to “material” differences in the usage set out in an application and the use in the
marketplace.
PRACTICAL EFFECTS
It will take time before the implications of the Court’s decision can be fully appreciated. The
decision, however, raises a number of potential issues of which trademark owners should be aware:
•
In deciding whether to initiate or how to defend a USPTO trademark proceeding, trademark
owners need to understand that any resulting TTAB decision may not only affect registration
of their mark, but could be binding in later litigation with the same party.
•
Trademark owners may be forced to more vigorously and fully litigate the issue of likelihood
of confusion at the TTAB because their ability to continue to use the unregistered mark after
the conclusion of the proceeding could also be at stake. This could increase the costs
associated with bringing and defending TTAB proceedings in some cases. However, TTAB
proceedings provide important benefits, including resolution of trademark disputes without
the possibility of damages or attorneys’ fees.
•
If a trademark applicant receives an adverse ruling on the likelihood of confusion issue in a
contested TTAB proceeding, the trademark owner may be at increased risk for a retaliatory
suit for damages and an injunction by the adverse party.
•
Conversely, a trademark owner who obtains a finding of likelihood of confusion by the
TTAB in a contested proceeding may find it much easier to obtain summary disposition of a
trademark infringement claim on a showing of priority and that the TTAB’s decision is
entitled to preclusive effect.
TTAB Decisions Can Preclude Court Determinations of Likelihood of Confusion
in Infringement Cases
Client Alert
March 26, 2015
•
B&B Hardware would appear equally applicable to determinations by the TTAB on issues
other than likelihood of confusion, such as descriptiveness, priority, and genericness.
Moreover, its rationale appears to extend to other administrative agency proceedings at least
where the relevant statute is silent on issue preclusion.
•
Before initiating TTAB proceedings—or any administrative agency proceeding for that
matter—clients need to carefully consider the consequences of an adverse finding by that
agency in subsequent administrative proceedings and litigation.
If you have questions about the information contained in this Client Alert, please contact any of
our intellectual property attorneys listed below or the Thompson & Knight attorney with whom you
regularly work.
CONTACTS:
Herbert J. Hammond
214.969.1607
[email protected]
Deborah L. Lively
214.969.1767
[email protected]
Jennifer S. Sickler
713.653.8611
[email protected]
Megan Dredla Hoyt
214.969.1454
[email protected]
Craig Carpenter
214.969.1154
[email protected]
Justin S. Cohen
214.969.1211
[email protected]
This Client Alert is sent for the information of our clients and friends. It is not intended as legal
advice or an opinion on specific circumstances.
© 2015 Thompson & Knight LLP
TTAB Decisions Can Preclude Court Determinations of Likelihood of Confusion
in Infringement Cases