The Supreme Court issued its much anticipated decision in B&B Hardware, Inc. v. Hargis Industries, Inc. today.
FACTS: B&B Hardware, Inc., who manufactures and sells metal fasteners for the aerospace industry under the mark SEALTIGHT, opposed an application to register the mark SEALTITE for metal fasteners for the construction industry filed by Hargis Industries, Inc. The TTAB denied registration on the basis the marks were confusingly similar. The TTAB decision was not appealed. The parties were simultaneously engaged in a district court infringement action, and B&B argued that the TTAB’s decision was preclusive on the issue of likelihood of confusion. The District Court disagreed on the grounds that the TTAB is not an Article III court and the jury found there was no likelihood of confusion. The 8th Circuit affirmed on the basis that the TTAB uses different likelihood of confusion factors than a District Court and placed too much emphasis on the sight and sound of the mark, and (incorrectly) on the basis that the party with the burden was different.
DECISION: The Court held that a TTAB decision on likelihood of confusion between marks can result in issue preclusion in an enforcement action in district court but only if all of the general elements of issue preclusion are met. Notably, the Court emphasized that if use in the marketplace is a paramount issue that was not considered by the TTAB, then the decision would not have preclusive effect. The Court explicitly stated “[f]or a great many registration decisions, issue preclusion obviously will not apply because the ordinary elements will not be met. For those registrations, nothing we say today is relevant.”
The Court analyzed the issues of whether an administrative agency decision can ever form the basis for preclusion (it can), whether there is any evident reason why Congress would not want a TTAB decision to have preclusive effect (there is none), and whether there is a categorical reason why registration decisions can never meet the ordinary elements of issue preclusion (there is none).
It is curious that Hargis did not move to stay the TTAB action pending the infringement action (which is often done and could have potentially helped lead to a different result), and it is also notable that Hargis did not appeal the TTAB decision, which would have provided an opportunity for de novo review of the likelihood of confusion issue. As the Court noted: “Undoubtedly there are cases in which the TTAB places more weight on certain factors than it should. When that happens, an aggrieved party should seek judicial review. The fact that the TTAB may have erred, however, does not prevent preclusion.”
This decision underscores the importance of litigating TTAB proceedings as though they would have preclusive effect on the issue of likelihood of confusion, but preserves the ability to revisit the issue in an enforcement proceeding if use in the marketplace is a pivotal issue that was not evaluated in the TTAB.