On March 24, 2015 the United States Supreme Court issued its opinion in B&B Hardware, Inc. v. Hargis Industries, Inc., holding that issue preclusion may apply to findings by the Trademark Trial and Appeal Board (“TTAB”) that are materially the same as those before a federal district court. This case presents a common procedural scenario in the trademark area wherein two different tribunals, the TTAB and a federal district court, are asked to decide the same issue.
The dispute began when Hargis tried to register its trademark for SEALTITE with the United States Patent and Trademark Office. B&B Hardware opposed Hargis’ application, arguing that SEALTITE was too similar to B&B Hardware’s SEALTIGHT trademark. While the TTAB was deciding this issue, the parties were litigating an infringement action regarding the same two marks in district court. After the TTAB found a likelihood of confusion, B&B Hardware argued that Hargis was precluded from disputing in district court whether its use of SEALTITE would cause a likelihood of confusion. The district court rejected B&B Hardware’s argument, and refused to admit evidence of the TTAB’s finding. The Eighth Circuit affirmed, holding that issue preclusion was unwarranted, and that the district court properly excluded evidence of the TTAB’s findings.
Reversing the Eighth Circuit, the Supreme Court held that a TTAB decision may give rise to issue preclusion in a trademark dispute. The Supreme Court accepted B&B Hardware’s argument that the same likelihood of confusion standard applies in registration proceedings before the TTAB and infringement proceedings before federal courts. Moreover, although recognizing procedural differences between the two tribunals, the Court held that these differences alone do not rule out issue preclusion. The Supreme Court also rejected Hargis’ argument that the stakes in a TTAB proceeding (which can only determine the right to registration) are too low for issue preclusion to apply in a later infringement action (which determines the right to actually use a mark).
Notably, the Supreme Court did not issue a blanket ruling stating that issue preclusion wouldalways attach. Rather, the Supreme Court cautioned that “if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding that same issue” and its decision would have no later preclusive effect.
The B&B Hardware decision will likely have a significant impact on inter partes practice before the TTAB. Trademark owners and applicants should carefully consider the potential preclusive effect of a TTAB decision on a pending or subsequent infringement action in district court. While the B&B Hardware case addressed the issue of likelihood of confusion, other common issues, such as descriptiveness, secondary meaning, and dilution, may also be potential grounds for issue preclusion.
As a result of the B&B Hardware decision, proceedings before the TTAB will now be more like infringement litigations in complexity, the scope of factual and legal issues, and of course, cost. Thus, more care should be taken in deciding which forum — the TTAB or federal court — is the best one in which to raise a trademark dispute.