The U.S. Supreme Court recently issued a decision that may significantly impact how Trademark Trial and Appeal Board (“TTAB”) cases are litigated and whether potential litigants elect to forego TTAB litigation in certain circumstances. In B&B Hardware, Inc. v. Hargis Industries, Inc., 135 S. Ct. 1293 (2015) (“B&B Hardware”) the Supreme Court held that TTAB decisions concerning likelihood of confusion can have a preclusive effect in subsequent district court infringement actions. Indeed, “so long as the other ordinary elements of issue preclusion are met, when the issues adjudicated by the TTAB are materially the same as those before a district court, issue preclusion should apply”1.
At issue in B&B Hardware was B&B’s use of SEALTIGHT for fasteners used in the aerospace industry and its objection to Hargis’ use of SEALTITE for self-drilling screws for the construction industry.
The ruling is particularly noteworthy since the TTAB is not an Article 3 court, but rather an administrative agency, with limited jurisdiction, namely: to decide upon the registerability of trademarks filed with the USPTO. Prior to B&B Hardware, the general consensus among trademark litigators was that federal district courts had to give deference to TTAB decisions, but were never obliged to follow TTAB likelihood of confusion rulings based on res judicata and/or issue preclusion. B&B Hardware expressly rebukes such a contention and in doing so, makes TTAB decisions much more important and the stakes between litigants in a TTAB proceeding much higher.
The Supreme Court’s decision has elicited significant legal discourse, with both supporters and critics. The International Trademark Association (INTA), arguably the preeminent trademark organization, submitted an amicus brief arguing against TTAB decisions having a preclusive effect in district court trademark infringement actions. INTA emphasized that TTAB litigation is typically focused on abstract comparisons of the marks at issue and the recited goods in the applications and/or registrations (i.e., the file histories), rather than how the goods are actually used in commerce. The Court too made this observation in its decision.2
Perhaps wary of the potential breadth of its decision, the Supreme Court claims that issue preclusion will only apply to a limited number of TTAB cases where materially similar or identical usages litigated before the TTAB are before the district court.
However, to suggest that marketplace use is rarely considered in TTAB proceedings is not entirely accurate. Indeed, the controlling precedent for likelihood of confusion analysis in opposition and cancellation actions before the Board is In the Matter of the Application of E.I. Dupont DeNemours & Co., 476 F.2d 1357 (1973). The Supreme Court acknowledged as much and also noted that the likelihood of confusion analysis in Dupont is very similar to tests applied in trademark infringement litigation.3. In Dupont, the TTAB sets forth 13 “factors” that “must” be considered when in evidence in determining likelihood of confusion.4
While it is well-established that the two most important Dupont factors in TTAB proceedings are whether the competing marks themselves are confusingly similar and whether their respective corresponding recitation of goods or services are related (See, e.g., Federated Foods, Inc. v. Fort Howard Paper Co., 544 F.2d 1098 (CCPA 1976), the remaining 11 Dupont factors are arguably marketplace factors, namely:
“(3) The similarity or dissimilarity of established, likely-to-continue trade channels.
(4) The conditions under which and buyers to whom sales are made, i.e. “impulse” vs. careful, sophisticated purchasing.
(5) The fame of the prior mark (sales, advertising, length of use).
(6) The number and nature of similar marks in use on similar goods.
(7) The nature and extent of any actual confusion.
(8) The length of time during and conditions under which there has been concurrent use without evidence of actual confusion.
(9) The variety of goods on which a mark is or is not used (house mark, “family” mark, product mark).
(10) The market interface between applicant and the owner of a prior mark:
(a) a mere “consent” to register or use.
(b) agreement provisions designed to preclude con fusion, i.e. limitations on continued use of the marks by each party.
(c) assignment of mark, application, registration and good will of the related business.
(d) laches and estoppel attributable to owner of prior mark and indicative of lack of confusion.
(11) The extent to which applicant has a right to exclude others from use of its mark on its goods.
(12) The extent of potential confusion, i.e., whether de minimis or substantial.
(13) Any other established fact probative of the effect of use.”5
Thus, if the controlling precedent for determining § 2(d) likelihood of confusion in cases before the TTAB specifically requires considering these marketplace factors when in evidence, it is somewhat of a stretch to say that such factors are rarely ever considered by the TTAB. In any event, B&B Hardware makes clear that when marketplace use is considered by the TTAB and is materially similar to the marketplace uses at issue in a district court infringement case, issue preclusion will apply.6
Interestingly, some argue that the holding in B&B Hardware could be construed even more broadly.
Indeed, they argue that even where the TTAB only considers the file histories of an Opposer and Applicant’s respective marks in a TTAB proceeding, issue preclusion could apply where the competing marks and corresponding recited goods are identical or materially the same as the marketplace use at issue in a district court infringement action. Thus, they argue that the absence of marketplace evidence before the TTAB might not necessarily make issue preclusion inapplicable.
In B&B Hardware, the Supreme Court noted “unlike an infringement litigation, the Board’s determination that a likelihood of confusion does or does not exist does not resolve the confusion issue with respect to non-disclosed usages”.7 The Court then states “if a mark owner uses its mark in ways that are materially the same as the usage in its 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”. 8
Unfortunately, the court’s decision is somewhat inartfully written, often interchangeably referring to “uses” and “usages” when it actually means to refer to the “recitation of goods and services” in an application, making a determination on this point difficult. Nevertheless, the Court states “[t]hus, 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 [citation omitted]” Id. at 1308. The foregoing would seemingly militate against one arguing that a decision based merely on the file histories of the marks at issue before the TTAB could also have a preclusive effect in a district court infringement action.
This author believes that the holding in B&B Hardware should not be construed so broadly to apply to TTAB actions where no marketplace use was considered. TTAB litigants relying solely on the file histories for the applications and/or registrations in dispute will run the risk that issue preclusion would not obtain in a subsequent district court infringement action concerning the actual marketplace use of such trademarks at issue before the TTAB. Rather, as was the case in B&B Hardware, litigants should introduce at least some marketplace evidence of the so-called Dupont factors if they want to ensure that any favorable likelihood of confusion decision has preclusive effect in a subsequent district court infringement action.
The following are a few practical considerations to consider, in light of B&B Hardware:
- A Litigant in a TTAB proceeding should consider limiting marketplace discovery as much as possible and relying primarily on the file histories on record with the TTAB if the competing marks and corresponding recitation of goods are more similar than the actual use of the competing marks in the marketplace, to maximize the chances of prevailing before the TTAB;
- When litigants in a TTAB proceeding are engaged in robust discovery covering issues relating to actual marketplace use, litigants should be certain to familiarize themselves with TTAB rules relating to the introduction of evidence to establish an ample evidentiary record, thereby increasing the chances of a favorable Board decision, since it may potentially give rise to issue preclusion in a latter infringement action;
- Potential litigants should consider whether to even file an Opposition or Cancellation action, or to proceed straight to district court where, e.g., one could cause the cancellation of an objectionable registration and potentially recover injunctive relief and an award of actual damages, disgorgement of profits and attorney’s fees in certain “exceptional cases”;
- Where a TTAB action is filed against a litigant and a comparison of the marks and literal recitation of goods and/or services recited in the opposition in the abstract does not present as favorable a case as an infringement case based on actual use, a TTAB litigant would be well served to quickly file a district court action, and move to suspend the TTAB action, pending resolution of the district court case. Such suspensions are routinely granted, except in very limited circumstances;
- Remember that trademark surveys in TTAB proceedings must relate to the actual recitation of goods or services in the applications or registrations. A trademark survey so restricted may be very persuasive before the TTAB, but given little weight in a district court action where the survey must relate to how the marks are actually used in the marketplace.