In a case that is certain to have far-reaching implications for trademark practitioners, and is contrary to the numerous amicus briefs filed on behalf of multiple intellectual property organizations, the U.S. Supreme Court has issued its decision in B&B Hardware, Inc. v. Hargis Industries, Inc. and resolved the question of whether a Trademark Trial and Appeal Board determination on the issue of likelihood of confusion should have preclusive effect on later district court infringement litigation. In a 7-2 decision penned by Justice Alito, the Supreme Court held that TTAB decisions are entitled to preclusive effect so long as the ordinary elements of issue preclusion are met. The Court noted the many similarities between the likelihood of confusion factors considered by the TTAB and the federal courts in their respective proceedings, the many procedural similarities, including the fact that both are governed by the Federal Rules of Civil Procedure and Federal Rules of Evidence, and the fact that both allow discovery and depositions. The Court rejected the argument that issue preclusion should not apply because the stakes for registration are lower than for infringement, noting that the benefits of registration are “substantial” and that “there is good reason to think that both sides will take the matter seriously.”
Significantly, the Court did acknowledge that in infringement litigation, the district court “considers the full range of a mark’s usages, not just those in the application.” Accordingly, where the TTAB in any given case has not considered the full marketplace usage of the parties’ marks, the Court concluded that under ordinary rules of issue of preclusion such decisions should not be accorded preclusive effect.
Judge Ginsburg issued a short and important concurrence underscoring that for a great many registration decisions issue preclusion should not apply because contested registrations are often decided based upon “a comparison of the marks in the abstract and apart from their marketplace usage.” In such cases, she emphasized, there should be no preclusion of the likelihood of confusion in a later infringement suit.
In a lengthy dissent, Justice Thomas (joined by Justice Scalia) wrote that he saw no authority for giving TTAB decisions preclusive effect over Article III courts in subsequent trademark infringement suits. Indeed, he noted, “several features of the [Lanham] Act support the contrary inference.” Among other things, the Lanham Act authorizes the TTAB to determine only matters of registration, rather than the right to use a mark. This “limited job description” indicates that the TTAB’s conclusions regarding registration were never meant to become decisive on matters of use.
In view of the Court’s decision, it remains to be seen whether parties will now choose to go “all out” at the TTAB with the knowledge that the decision may be accorded preclusive effect, or whether they will skip the TTAB altogether and head straight to district court. It means that TTAB decisions should be appealed to preserve factual issues. And district courts will have to wrestle with the question of what it means for the TTAB to consider “marketplace usage.” As a strategic matter, TTAB plaintiffs may want to think twice about asserting common law rights outside the scope of their pleaded registrations or introducing other evidence of marketplace use, so as to preserve their ability to bring an infringement action later.