B&B Hardware, Inc. v. Hargis Industries, Inc.

The U.S. Court of Appeals for the Eighth Circuit held that a Trademark Trial and Appeal Board’s (TTAB) decision on likelihood of confusion was not entitled to preclusive effect in a federal trademark infringement action, and that it was not an abuse of discretion for a district court to reject admission of the TTAB decision into evidence. B&B Hardware, Inc. v. Hargis Industries, Inc., Case Nos. 10-3137, 11-1247 (8th Cir., May 1, 2013) (Shepherd, J.) (Colloton, J., dissenting).

For more than a decade, B&B Hardware and Hargis Industries have been in litigation over B&B’s mark SEALTIGHT and Hargis’s mark SEALTITE. B&B filed a federal trademark infringement and unfair competition case in district court arguing that a 2007 TTAB decision denying registration of Hargis’s mark based on likelihood of confusion with B&B’s mark should be given preclusive effect in the infringement action. The district court refused to apply collateral estoppel based on the TTAB decision, reasoning that the TTAB is not an Article III court. The district court also refused to enter the TTAB decision into evidence on the basis that it would be misleading and confusing to the jury. After the jury issued a verdict in favor of Hargis, B&B appealed.

The 8th Circuit agreed that collateral estoppel was not appropriate as the TTAB is not an Article III court of competent jurisdiction. The court acknowledged that there may be instances when administrative agencies are acting a judicial capacity such that collateral estoppel may be appropriately applied. Nevertheless, the Court found that the TTAB did not decide “the same likelihood of confusion issues” as those brought before the district court because the likelihood of confusion analysis used to grant or deny trademark registration differs from the likelihood of confusion analysis required for a federal trademark infringement claim. The 8th Circuit likewise affirmed the district court’s decision to exclude the TTAB decision from the evidence presented to the jury, noting that the TTAB and jury do not use identical factors to evaluate likelihood of confusion, and because the jury is instructed to analyze and apply the likelihood of confusion factors in a particular manner. As such, the TTAB’s ultimate conclusion regarding likelihood of confusion had minimal probative value.

In dissent, Circuit Judge Colloton argued that the court should give preclusive effect to the TTAB’s decision regarding likelihood of confusion. In response to the majority’s cited precedent regarding the preclusive effect of decisions made by administrative agencies, Judge Colloton noted that the Supreme Court more recently emphasized that “giving preclusive effect to administrative fact-finding serves the value underlying general principles of collateral estoppel.” While the TTAB may have engaged in a slightly different method of analyzing likelihood of confusion, Judge Colloton reasoned that “modest differences in analytical approach to the same ultimate issue … do not justify dispensing with collateral estoppel.” He further noted that the majority’s reasoning would deny preclusive effect to any TTAB decision because the method of balancing used by the TTAB in connection with registration or cancellation actions is not appropriate in an infringement action. That the majority disagreed with the method of the TTAB’s likelihood of confusion analysis should not deny its preclusive effect.