The U.S. Supreme Court issued a game-changing opinion today on the authority of the U.S. Patent & Trademark Office’s (USPTO) Trademark Trial & Appeal Board (TTAB). B&B Hardware Inc. v. Hargis Industries Inc. et al., case number 13-352. In an opinion that is sure to have trademark attorneys reevaluating the basic strategy of trademark litigation involving infringement, the Supreme Court determined that in certain cases federal courts were precluded from overturning a prior likelihood of confusion decision made by the TTAB. This represents the second major trademark decision by the court this term, an area of law that has been largely avoided by the court in recent years.
Prior to this ruling, the role of the TTAB in confusion-based infringement litigation was limited because district courts could evaluate the issue of likelihood of confusion de novo, even after the TTAB had made a clear, thorough and decisive determination based on a reasoned analysis of the exact same issue. As a result, litigants in contested cases would typically bypass the TTAB and move directly to federal court.
Alternatively, well-heeled litigants could engage in TTAB proceedings with less than typical vigor, secure in the knowledge that if the outcome was unsatisfactory they could raise the issue at the district court with only minimal prejudicial effect. Indeed, prior to the Supreme Court’s decision, certain circuits, and the 8th Circuit in particular, did not even grant deference to TTAB decisions on the issue of confusion. This gave entities with large litigation budgets the ability to use the TTAB as a risk-free test court against less well-funded opponents.
The Supreme Court’s decision will likely create a change in the overall litigation strategy of certain cases. Where the likelihood of a confusion case is contested, litigants will be more inclined to forego TTAB proceedings to avoid a potentially preclusive and unfavorable determination. Federal courts offer more control and a more robust framework in which to litigate. Moreover, federal motion practice, discovery and judicial involvement offer litigants the assurance that they have been given every opportunity to plead and support their claims and defenses. When a party can afford it, they will likely proceed directly to federal court to determine whether confusion is present.
Similarly, uncontested cases, as well as those where both sides are financially limited, will likely remain in the streamlined and somewhat less formal proceedings carried out by the TTAB. The Supreme Court has offered such litigants greater peace of mind that they will not navigate through an entire proceeding only to have to begin again at square one should the opposing party decide to haul them into federal court.
This decision is a positive move by the Supreme Court to validate the authority and expertise of the TTAB while making common sense decisions that will eliminate wasteful and duplicitous litigation. The court has again moved to enhance judicial efficiency while forcing litigants to face the realities of their cases and make important strategy decisions earlier in litigation. Consequently, clients who find themselves in trademark infringement disputes ought to engage in frank discussions with their counsel regarding financial limitations and unfavorable facts at the earliest possible opportunity.