Traditionally, trademark owners have had two distinct avenues for protecting their marks. One is through opposition or cancellation proceedings at the United States Patent & Trademark Office’s Trademark Trial & Appeal Board (TTAB) and the other is through federal litigation. The results in these two fora can sometimes be inconsistent, but that may be about to change. The US Supreme Court has been asked to weigh whether federal courts are bound by the findings of the TTAB related to likelihood of confusion. In a recently filed petition, trademark owner B&B Hardware, Inc. claims that a federal district court and the Eighth Circuit failed to properly defer to a TTAB finding that its registered mark “Sealtight” is likely to be confused with another mark, “Sealtite.”
B&B manufactures and sells a fastener product used predominately in the aerospace industry under the “Sealtight” name. Hargis Industries, Inc. manufactures a line of screws commonly used in the construction of metal buildings under the “Sealtite” name. Both parties have used the marks since the early 1990s. B&B registered its mark with the PTO in 1993, but Hargis’s attempts to register its mark have been repeatedly denied due to a likelihood of confusion with B&B’s mark.
For over 15 years, the parties have been locked in litigation over the marks. In 2006, B&B brought claims of trademark infringement and unfair competition against Hargis in the US District Court for the Eastern District of Arkansas. Hargis filed counterclaims of false advertising and false designation of origin. In 2007, while the federal case was pending, the TTAB denied Hargis’s latest attempt to register its “Sealtite” mark, finding that a likelihood of confusion exists with B&B’s “Sealtight” mark.
B&B sought to introduce the TTAB’s decision regarding likelihood of confusion into evidence in the federal case, but the district court refused to admit it. Thereafter, the jury rejected B&B’s claims in their entirety and returned a verdict in Hargis’s favor. On appeal, B&B argued that the TTAB’s decision was controlling and precluded the district court from relitigating the issue, but the Eighth Circuit disagreed.
In its petition, B&B argues that the Eighth Circuit’s rejection of the TTAB’s likelihood of confusion decision reinforces a circuit split. In the Eighth Circuit, TTAB findings on likelihood of confusion are afforded no weight in subsequent federal district court proceedings. But in the Third and Seventh Circuits, TTAB findings are given preclusive effect, and the likelihood of confusion cannot be relitigated later by district courts. Other circuits apply preclusion to varying degrees: the Fourth Circuit, for example, considers the TTAB findings to be “powerful evidence;” the Eleventh Circuit has held that TTAB findings are entitled to “great weight;” and in the Fifth Circuit, TTAB findings are “controlling unless the contrary is established.”
B&B argues that earlier findings on likelihood of confusion should be given preclusive effect – meaning that the issue cannot be relitigated in or by a later court – because the “likelihood of confusion” tests applied by the TTAB and in each circuit are substantively the same. If the issue is first litigated in a federal district court, the TTAB gives preclusive effect to the court’s findings and will not relitigate the issue. Similarly, as TTAB is the expert forum, earlier TTAB findings should control over later federal court proceedings. Accepting TTAB findings as controlling also promotes judicial economy because parties would no longer litigate the same issue – likelihood of confusion – before the TTAB and again in federal court.
If the petition is granted, the Supreme Court could create new authority preventing federal district courts from relitigating likelihood of confusion once the TTAB has addressed the issue. Such a holding could dramatically narrow the issues presented in the thousands of trademark cases filed in federal district court each year and could significantly reduce the number of cases even filed. A trademark owner who receives an unfavorable ruling in the TTAB would not later bring claims in federal court. But a trademark owner who receives a favorable ruling in the TTAB could bring infringement claims (or non-infringement declaratory judgment actions) with increased confidence on their merits.
Hargis’s response to the petition is due November 20, 2013. Arent Fox is continuing to monitor this case and other trademark cases of interest. For more information, please contact Anthony Lupo, Randall Brater, or Leah Montesano.