On December 2 and 3 the Supreme Court heard oral argument in B&B Hardware, Inc. v. Hargis Industries, Inc. (the effect of an administrative determination of likelihood of confusion) and Hana Financial, Inc. v. Hana Bank & Hana Financial Group (allocation of a trademark tacking determination between judge and jury). Both cases concern what issues a district court may determine in a trademark infringement suit.
When is Trademark Tacking Appropriate?
Trademark rights are based on priority of use. Tacking is used to extend trademark priority by going back to the date of first use of an older mark. Tacking allows the trademark owner to make slight modifications over time without losing the "priority" date of the first use of the original mark. Tacking is permitted when the new and old marks are so similar consumers would consider them "legal equivalents".
In Hana Financial, Inc. v. Hana Bank & Hana Financial Group the Ninth Circuit Court of Appeals held the determination of legal equivalents – based on consumer impression – is a determination for the jury. The district court allowed the defendant to present evidence of advertising to show earlier use of the HANA mark. The jury determined that Hana Bank had priority of use based on earlier use of HANA OVERSEAS KOREAN CLUB, which later became HANA WORLD CENTER, and eventually HANA BANK. The Ninth Circuit affirmed.
The Ninth Circuit treats whether marks are legal equivalents as a question of fact. The Sixth Circuit and Federal Circuit treat determination of legal equivalents as a question of law.
In an Amicus brief the American Intellectual Property Law Ass’n (AIPLA) argues tacking should be a factual issue for the jury. The leading treatise also concludes "whether two marks present the same commercial impression should be an issue of fact, not an issue of law." 3 McCarthy Trademarks & Unfair Competition § 17:26 (4th Ed. 2014).
Most courts (but not the Second, Sixth and Federal Circuits) treat likelihood of confusion (consumer impressions of 2 marks used by different parties) as an issue of fact. Tacking turns on consumer impressions of 2 marks used by the same party. The Supreme Court could hold tacking is a factual determination. Factual determinations are entitled to greater deference on appeal. Although the standard for tacking is higher than the standard for likelihood of confusion, the resolution by the Supreme Court could have implications for treatment of likelihood of confusion in the Second, Sixth and Federal Circuits.
When is a TTAB Ruling on Likelihood of Confusion Preclusive?
Likelihood of confusion usually is the central issue in trademark infringement litigation. A civil suit can be filed to prevent likelihood of confusion. If a trademark registration will create a likelihood of confusion, an alternative to civil litigation is offered by an administrative proceeding – an opposition if the registration has not yet issued and a cancellation if the registration has issued. Opposition and cancellation proceedings are brought before the U.S.P.T.O. Trademark Trial and Appeal Board ("TTAB").
In B&B Hardware, Inc. v. Hargis Industries, Inc., the Eighth Circuit held an administrative determination of likelihood of confusion has no preclusive effect. B&B owned the SEALTIGHT registered trademark for fastener products used in the aerospace industry. Based on the B&B registration, the TTAB sustained B&B's opposition to the Hargis application to register SEALTITE for construction fasteners. In district court litigation the B&B SEALTIGHT trademark was found not to cause confusion with no difference to the TTAB decision. The Eighth Circuit affirmed the district court decision and refused to apply issue preclusion because "the same likelihood of confusion issues were not decided by the TTAB as those brought in the action before the district court." 716 F.3d 1020, 1024 (8th Cir. 2013). The dissenting opinion argues the TTAB did consider actual use in commerce, but gave greater weight to other factors.
The tests for likelihood of confusion in an administrative Opposition proceeding and in litigation often are different. The TTAB usually considers the word marks of both applicant and opposer as shown in their trademark applications or registrations, not the marks as used in commerce. Differences in the marks, associated products, marketing channels, and intended consumers (relevant in the litigation context) may not be relevant in the administrative context unless those differences are apparent from the trademark application or registration itself.
In its Amicus brief the AIPLA argues TTAB decisions may have preclusive effect in narrow circumstances where the TTAB considered evidence of marketplace usage of both marks. Accord 6 McCarthy, Trademarks and Unfair Competition § 32:99, 101 (4th Ed. 2013).
A decision allowing preclusive effect to TTAB decisions could increase the cost of TTAB proceedings, but could decrease the cost of civil litigation. Generally, a party to a TTAB proceeding could avoid any preclusive effect by filing suit in court. TTAB proceedings may be suspended if “a civil action … may have a bearing on the case.” 37 CFR § 2.117.
Hana Financial, Inc. v. Hana Bank, 735 F.3d 1158 (9th Cir. 2013), cert. granted, 134 S.Ct. 2842 (2014), will determine that tacking for marks that are "legal equivalents" is an issue of fact for the jury (unless reasonable minds could not differ) and affirm the Ninth Circuit.
B&B Hardware, Inc. v. Hargis Industries, Inc., 716 F.3d 1020 (8th Cir. 2013), cert granted, 134 S.Ct. 2899 (2014), will determine a finding of likelihood of confusion by the TTAB is preclusive only if the scope of the mark and the scope of its use as considered by the TTAB are equivalent to the scope of the mark and the scope of its use in actual commercial use. The case will be remanded to determine if the TTAB considered the scope of the mark and the scope of its use in actual commercial use.