The U.S. Supreme Court heard oral argument last week in a much anticipated trademark matter, B&B Hardware Inc. v. Hargis Industries Inc. et al. The primary question presented was whether a likelihood-of-confusion determination in a contested administrative proceeding regarding trademark registration should have preclusive effect in future trademark infringement litigation between the same parties over use of the same mark in commerce. The justices also considered, if the administrative determinations do not have preclusive effect, what deference, if any, may be appropriate at the litigation stage.

A transcript of the argument is available here

The owner of a federally registered trademark generally possesses exclusive rights to use its mark in connection with a distinct set of goods or services. If a new entrant, or junior user, applies to register a similar mark for goods or services that are related to those offered under the senior trademark owner’s mark, then the senior user may challenge the application on the basis that registration would damage its exclusive rights. The senior user may attempt to block registration of the junior user’s trademark by initiating an opposition proceeding before the Trademark Trial and Appeal Board (TTAB) of the U.S. Patent and Trademark Office (USPTO). The standard at the TTAB is whether registration of the junior user’s trademark is likely to cause confusion between the respective trademarks in connection with the recited goods or services. The TTAB has no authority to enjoin a party’s use of a trademark, though. If the senior user wishes to block the junior user’s use of its trademark, it must initiate trademark infringement litigation in state or federal court. The standard there is whether the junior user’s use of its trademark is likely to cause confusion.

The main question at oral argument focused on whether the likelihood of confusion analyses in TTAB proceedings and infringement litigations are sufficiently similar to support preclusion. The TTAB previously had found that registration of Hargis Industries’ SEALTITE mark in connection with metal fasteners for use in the construction industry was likely to cause confusion with B&B Hardware’s senior SEALTIGHT mark, registered in connection with metal fasteners for use in the aerospace industry. However, a district court jury found that Hargis Industries’ use of its SEALTITE mark, which it commonly used in conjunction with the terms BUILDING FASTENERS, was not likely to cause confusion with B&B Hardware’s SEALTIGHT mark. The U.S. Court of Appeals for the Eighth Circuit affirmed, holding that the TTAB’s decision denying registration of Hargis Industries’ SEALTITE mark did not preclude the jury verdict, and finding that the district court did not err in instructing the jury that the TTAB decision should be accorded little, if any, weight.

Counsel for Hargis Industries, arguing against preclusion, attempted to explain the distinction between the confusion analyses in the two venues. For example, counsel argued, the TTAB does not consider in its likelihood-of-confusion analysis how the parties actually use their marks, but rather compares the marks only as they appear on the respective registrations or applications. Further, counsel argued, the TTAB does not consider the goods with which the marks are actually used. Instead, the goods as claimed in the registration or application frame the TTAB’s analysis. Accordingly, by way of example, counsel asserted that if an applicant were to claim a broad range of goods in its application for a mark, it may be denied registration, even if its comparatively narrow use of the mark would not be sufficient to support a finding of infringement. The justices appeared to struggle with the examples provided by counsel for Hargis of the differences between the likelihood-of-confusion inquiries.

In questioning B&B Hardware’s counsel, the justices explored whether the different stakes before the TTAB did not warrant an exception to the general rules of issue preclusion. The justices also questioned whether Congress intended TTAB proceedings to provide expeditious resolution to disputes between rightsholders and, if so, whether a ruling effectively upping the stakes of those proceedings would defeat congressional intent. Finally, the justices queried why ordinary rules of issue preclusion should not apply, with exceptions applicable where justified by the circumstances of each individual case.

The case is the Court’s first substantive trademark case in a decade, and its decision, if in favor of preclusion, could dramatically alter the landscape for trademark owners and applicants. The resulting higher stakes, increased cost, and expansion of scope of TTAB proceedings could even alter the manner in which the TTAB conducts those administrative proceedings.