In B&B Hardware, Inc. v. Hargis Industries, Inc. (No. 13-352), the U.S. Supreme Court settled the question whether a finding by the Trademark Trial and Appeal Board (“TTAB”) can trigger issue preclusion in later federal court litigation. The Court held that “[s]o long as the ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.”

In 1996, Hargis applied to register its SEALTITE mark with the PTO. B&B opposed, alleging a likelihood of confusion with its own SEALTIGHT mark. The TTAB opposition proceeding “bounced around within the PTO for about two decades.” Following discovery (including depositions), the TTAB ultimately held that Hargis’ mark “could not be registered because it ‘so resembles’ SEALTIGHT.”B&B, meanwhile, had sued Hargis for trademark infringement in district court. Following the TTAB decision, B&B argued that Hargis should not be allowed to re-litigate the likelihood of confusion issue. The district court disagreed. It held that because the TTAB is not an Article III court, its decision had no preclusive effect. The Eight Circuit affirmed on a different ground: because (1) the TTAB uses different factors for evaluating likelihood of confusion, (2) the TTAB placed too much emphasis on the marks’ appearance and sound and (3) the parties’ respective burdens of persuasion were inverse in the TTAB and federal court proceedings.

The Supreme Court reversed and remanded for further proceedings consistent with its opinion. The Court began its analysis by confirming that an agency’s decision can trigger issue preclusion in court-based litigation. The Court cautioned, however, that no bright line rule exists as to whether a TTAB’s decision may serve as a basis for preclusion in a subsequent dispute. Rather, the Court stressed the need to apply the elements of issue preclusion. For example, the core issue litigated in the TTAB by B&B and Hargis – whether the marks “resemble” each other – will often involve different factual questions than an infringement action, which focuses on whether uses in commerce are confusingly similar. The Court noted that issues arising from the relatively “lower” stakes of a TTAB proceeding as compared to an infringement case can be addressed by existing case law that limits the preclusive effect of low-stakes litigation. One particular issue that will be of interest as this issues develops in the courts is what effect, if any, the differences between what is considered in TTAB proceedings (which generally relates only to the applied-for mark as compared to the registered mark) and what is considered in federal court proceedings (how the parties actually use the marks in commerce), has on courts’ analyses of issue preclusion. Ultimately, the preclusive effect must come down to a fact-based analysis as to whether the elements of issue preclusion are met on each case.

The potential for issue preclusion as between the TTAB and district courts will require practitioners to take a harder look at their initial choice of forum. For example, depending on his or her view of the TTAB’s decision-making, counsel may recommend foregoing a TTAB opposition and proceeding directly to district court on an infringement claim, perhaps amending to add a cancellation claim when and if an application results in registration.