Today the Supreme Court announced its decision in B&B Hardware, Inc. v. Hargis Industries, Inc. B&B Hardware (B&B) sells a fastener product in the aerospace industry under the trademark “Sealtight,” which it registered in 1993. Hargis Industries (Hargis) sells self-drilling screws under the mark “Sealtite” in the construction industry. After Hargis applied to register its mark in 1996, B&B opposed the application successfully and also sued Hargis for infringement. In that action B&B argued successfully that Hargis was precluded from litigating the likelihood of confusion issue due to the prior TTAB ruling. The Eighth Circuit affirmed the District Court’s holding.
The Supreme Court addressed the issue of whether a ruling by the Trademark Trial and Appeal Board (TTAB) on the issue of likelihood of confusion was entitled to preclusive effect in later litigation. The Court held that the TTAB decision should be given preclusive effect if the ordinary elements of preclusion established in prior law are met. In reaching its decision the Court found, among other things, that the standard for determining likelihood of confusion in connection with the registration decision is essentially the same as the standard applied in infringement analysis. Specifically, Justice Alito, on the behalf of a 7-2 majority, writes:
“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.’ 6 McCarthy §32:101, at 32-246.”
We will leave analysis of the Court’s reasoning to others and, instead, consider a pair of tactical considerations that may now be relevant to litigation strategy as a result of this decision.
How does the Supreme Court’s Decision Affect the Choice Between Proceeding in Court versus the TTAB?
If an applicant or opposer (or registrant or cancellation petitioner) is as or more concerned with use of a mark as opposed to simply registration, the stakes attendant to proceeding solely before the TTAB are now potentially much higher as an adverse decision on registration could preclude a later action to enjoin use of a mark in commerce. From a practical perspective, that means that litigants may have little choice but to treat the TTAB proceeding as they would a district court proceeding and bring all relevant evidence to bear, including, inter alia. expensive survey evidence. While TTAB proceedings are traditionally considered a more “economical” means of obtaining a desired end, the cost difference between such proceedings and district court litigation is likely to narrow.
How Does the Supreme Court’s Decision Affect Decisions on Evidentiary Submissions in TTAB Proceedings?
While the temptation to introduce as much “relevant” evidence as possible may be increased, so too has the risk of going too far and introducing marketplace usage evidence that might not be relevant to the limited issues considered by the TTAB. The Supreme Court’s ruling is limited to situations where the usages adjudicated by the TTAB are materially the same as those before the district court. The key distinction between TTAB and district court infringement cases is that the Board only determines issues of registrability while the courts can determine both the right to use and the right to register. The TTAB generally focuses on the information contained in the four corners of the applications/registrations at issue and will often not consider other “market” evidence. On the other hand, courts typically consider evidence showing how the marks are actually used in commerce. If the use reflected in the PTO filings and the actual use of a mark in commerce are essentially the same then B&B teaches that the TTAB decision is likely to be binding on the court. Thus, if the parties stick to argument and evidence that is clearly relevant to the limited TTAB inquiry then the preclusive effect of the final ruling should be clear to all.
But what happens if an aggressive TTAB litigant introduces substantial evidence of marketplace use that goes beyond the scope of the use reflected in the PTO filings? Has that litigant inadvertently expanded the scope of the TTAB ruling and the scope of “usage” addressed in that ruling? The answer to this question is unclear. Perhaps there is no issue if the Board expressly rejects such evidence as irrelevant and states that it was not considered in reaching the decision. However, if the Board considers the evidence or does not comment on the evidence at all, the other party could argue that the “usage” for purposes of the TTAB ruling is as broad as that shown in the evidence submitted at trial and that the scope of preclusion has expanded accordingly. This result could be devastating in later litigation between the parties.
Look here for updates as further implications of the Court’s decision become clear.