Today, March 24, the Supreme Court issued a decision likely to have a significant impact on the practice of law before administrative tribunals, and specifically on the practice of trademark law and advising clients as to their enforcement options.

Held: The Court held, in a 7-2 decision, that a judgment of the United States Trademark Trial and Appeal Board (TTAB) may have preclusive effect in subsequent litigation. The Court went so far as to endorse the concept of a "presumption" that collateral estoppel from an administrative decision (not just of the TTAB) should apply absent some indication that Congress intended to abrogate that "presumption," and the Lanham Act has no such indicia. That is, as long as the "ordinary elements of issue preclusion are met," collateral estoppel is available. The Court observed that the fundamental question is not whether the first judgment was by an administrative agency rather than an Article III court, but "whether the procedures used in the first proceeding were fundamentally poor, cursory, or unfair." Slip op. at 20. While having called the concept of issue preclusion straightforward, the Court recognized that "it can be challenging to implement" (id.at 9) and remanded for further proceedings.

Key Takeaways:  1. Opposition proceedings before the TTAB must be taken seriously, potentially transforming what was intended to be an inexpensive, expeditious administrative proceeding into a costly mini-trial. 
2. While considering only applicability to a decision of the TTAB, the language of the decision will have wide ranging impact on decisions of any administrative agency quasi-judicial decision.

Case Facts: The dispute resulted from a nearly two-decade long feud between B&B and Hargis and concerned a district court's refusal to apply issue preclusion to the TTAB's finding that Hargis's SEALTITE mark is confusingly similar to B&B's SEALTIGHT® mark. Hargis did not appeal the TTAB decision.

In the district court infringement action involving the same parties and the same mark, B&B argued in favor of issue preclusion, maintaining that the likelihood of confusion issue is the same before both the TTAB and federal courts, and need not be tried again. Hargis countered that registration proceedings and infringement actions resolve distinct issues and, therefore, TTAB decisions should not determine district court rulings. The district court refused to apply preclusion and, at trial, the jury returned a verdict of non-infringement in favor of Hargis. On appeal, a majority for the Eighth Circuit affirmed the district court's ruling and the judgment for Hargis.

Court's Opinion (Alito): Finding B&B's position meritorious, the majority held that "a court should give preclusive effect to TTAB decisions [on likelihood of confusion] if the ordinary elements of issue preclusion are met." Id. at 2. In doing so, the Court clearly stated that administrative agency decisions may properly ground issue preclusion, since "the determination of a question directly involved in one action is conclusive as to that question in a second suit." Id. at 8. The opinion reasoned that there was "nothing" in the Lanham Act barring the application of issue preclusion in TTAB cases. See id. at 8. To the contrary, the majority stated that "Congress' creation of this elaborate registration scheme, with so many important rights attached and backed up by plenary review, confirms that registration decisions can be weighty enough to ground issue preclusion." Id. at 22.

The Court also dismissed Hargis's argument that affording issue-preclusive effect to TTAB decisions would upset the administrative process by "bogging down" TTAB proceedings. See id. at 14. The Court explained that (1) issue preclusion is "available unless it is evident [ ] that Congress does not want it," and (2) the question of whether issue preclusion applies is moot for many registration decisions because they will not meet the "ordinary elements" of the doctrine. Id. For example, the Court's opinion will not apply to those registrations where the trademark issues and/or legal standards before the TTAB and district court are materially different. The Court cited guidance offered by Professor McCarthy's treatise on trademark law stating, "Ultimately, Board decisions on likelihood of confusion . . . should be given preclusive effect on a case-by-case basis." Id. at 15.

Dissent (Thomas joined by Scalia): The dissent questioned the majority's decision to apply administrative preclusion in the context of the Lanham Act, arguing that there was "no justification" to allow agency findings to have preclusive effect in Article III courts. See generally Dissent at 1, 7–9.