The Supreme Court has ruled that decisions by the USPTO’s Trademark Trial and Appeal Board (TTAB) can be preclusive in district court litigation that involves the same issues, signaling a renewed importance on the administrative body responsible for adjudicating trademark registration disputes.
In a 7-2 ruling yesterday, the Supreme Court held that so long as the other ordinary elements of issue preclusion are met, and the usages adjudicated by the TTAB are “materially the same” as those before a district court, issue preclusion should apply.1
Prior to the Supreme Court ruling, TTAB decisions on the likelihood of confusion were afforded varying levels of deference depending on the circuit. 2
The justices relied heavily on general principles of issue preclusion in reaching the decision and found that a categorical rule against issue preclusion in TTAB matters was not warranted.
“There is no categorical reason why registration decisions can never meet the ordinary elements of issue preclusion,” the Court said. “That many registrations will not satisfy those ordinary elements does not mean that none will.”3
According to the High Court, the likelihood of confusion assessment for registration is essentially the same as that for district court infringement actions, a fact that favors issue preclusion. The likelihood of confusion test is the central inquiry in trademark registration proceedings as well as infringement litigation, with each circuit and the PTO relying upon a highly similar (but not identical) multi-factor test to determine when confusion between two marks is likely.4 The Court concluded that the operative language – i.e. that a mark is “likely” “to cause confusion, or to cause mistake, or to deceive” – is the same for both and has been central to trademark registration since at least 1881.5 Likewise, it concluded that the district court judges tasked with cancellation of registered marks in infringement proceedings and who provide judicial review of registration decisions do not apply two separate standards for likelihood of confusion.6
Despite the seemingly broad holding of the decision, the Court was cautious to note that issue preclusion may not always apply and provided several examples of when preclusion would not be appropriate. For instance, the Court noted that TTAB decisions would not be preclusive in district court actions where the use of a mark in the marketplace is significantly different from the usages recited in the trademark application, where the TTAB considered a different mark, or where a compelling showing of unfairness arises from holding the decision preclusive.7
In a brief concurring opinion, Justice Ginsburg also suggested that in situations where contested registrations are decided upon a comparison of the marks in the abstract as opposed to their usage in the marketplace – a common practice – there would be no preclusion on the likelihood of confusion.8
Although the Respondent argued that the stakes in TTAB proceedings and for registration are generally lower than infringement litigation – likely because of the availability of monetary damages in district court actions – and should thus not be given preclusive effect, the Court emphasized that proceedings before the USPTO and the TTAB are of considerable importance and should be taken seriously.
“When registration is opposed, there is good reason to think that both sides will take the matter seriously,” the Court said. “Congress’ creation of an elaborate registration scheme, with many important rights attached and backed up by plenary review, confirms that registration decisions can be weighty enough to ground issue preclusion.”9
The decision marks a renewed importance of opposition proceedings in the TTAB. Trademark owners are now likely to apply more resources to TTAB litigation because of its potentially preclusive effect and the immense impact it could have on future district court litigations. Winning at the TTAB will be more important than ever, and it is likely that more parties will seek judicial review of adverse decisions because of the heightened importance of these administrative proceedings.
The dispute that lead to the ruling involved a saga of intertwining TTAB, district court, and Eighth Circuit litigation that “could fill a long, unhappy book,” according to the justices.10
Petitioner B&B Hardware Inc. (B&B) had registered its SEALTIGHT mark in 1993 for use on aerospace fasteners. Respondent Hargis Industries Inc. (Hargis) meanwhile had applied to register the mark SEALTITE for self-drilling screws in 1996. B&B opposed Hargis’ registration in a proceeding before the TTAB, which refused to register the SEALTITE mark based on a likelihood of confusion with B&B’s registered SEALTIGHT mark. However, in addition to a TTAB opposition to the mark, B&B concurrently initiated a district court lawsuit for trademark infringement against Hargis over the same marks. There, a jury found that no likelihood of confusion existed. The Eighth Circuit affirmed the decision. Both the district and appellate court alike refused to admit the TTAB conclusions into evidence and stated that the courts were not required to give any deference to the TTAB’s conclusions because the TTAB used different factors to evaluate likelihood of confusion and purportedly placed too much emphasis on the appearance and sound of the marks, among other reasons.
B&B Hardware argued on appeal to the Supreme Court that the statutory test for the likelihood of confusion used by district courts and the TTAB is one in the same, and that, as a result, TTAB rulings on the likelihood of confusions should be given preclusive effect in district court. Hargis had argued that despite some similarities in the likelihood of confusions analyses used in TTAB and district court proceedings, the difference in the adjudicating bodies, available procedures, permissible evidence, and unique purposes of each type of proceeding weighed against finding TTAB rulings binding or preclusive.
The Supreme Court however found that differences in procedure and slight variations in the likelihood of confusion test suggest “only that sometimes issue preclusion might be inappropriate, not that it always is.”11
“Rather than focusing on whether procedural differences exist—they often will—the correct inquiry is whether the procedures used in the first proceeding were fundamentally poor, cursory, or unfair,” it added, noting that there was “no categorical reason to doubt the quality, extensiveness, or fairness, of the agency’s procedures.”12
The opinion suggests that procedural differences which limit a party’s ability present its case – such as being prevented from introducing material evidence or the TTAB’s bar on live testimony – could become a mechanism for getting around issue preclusion if the party can make a “compelling showing of unfairness.”13