Today, the Supreme Court ruled that federal court decisions on “likelihood of confusion” can be precluded by an earlier ruling of the Trademark Trial and Appeal Board (“TTAB”) on the same issue. B&B Hardware Inc. v. Hargis Industries Inc. et al., No. 13-352, slip op. (March 24, 2015). In a 7-2 ruling, the Supreme Court held: So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before a district court, issue preclusion should apply.
The trademark dispute between B&B Hardware, Inc. and Hargis Industries, Inc. has been on-going for nearly two decades. In 1993, B&B registered SEALTIGHT® for metal fasteners used in the aerospace industry. In 1996, Hargis sought to register SEALTITE for metal screws for use in the manufacture of metal and post-frame buildings. The U.S. Patent and Trademark Office “USPTO” approved Hargis’ application for publication; B&B opposed the application asserting that SEALTITE could not be registered because it is confusingly similar to B&B’s SEALTIGHT registration. Invoking many of the likelihood of confusion factors set out in In re E.I. DuPont DeNemours & Co., 476 F. 2d 1357 (CCPA 1973), the TTAB sided with B&B, and refused registration for the SEALTITE application. Despite a right to do so, Hargis did not seek judicial review in the Federal Circuit or the District Court.
B&B also sued Hargis in District Court for trademark infringement. B&B argued that Hargis could not contest likelihood of confusion in the District Court because of the preclusive effect of the TTAB decision. However, the District Court disagreed, reasoning that the TTAB is not an Article III court and therefore does not have preclusive effect. The jury returned a verdict for Hargis finding no likelihood of confusion. B&B appealed to the Eighth Circuit which affirmed, holding that preclusion was unwarranted because (1) the TTAB and the Eighth Circuit use different factors to evaluate likelihood of confusion; (2) the TTAB placed too much emphasis on the appearance and sound of the marks; and (3) Hargis bore the burden of persuasion before the TTAB while B&B bore the burden before the District Court. Holding that a court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met, the Supreme Court reversed the judgment of the Eighth Circuit and remanded for further proceedings.
In the opinion written by Justice Samuel A. Alito, the Court concluded that likelihood of confusion for purposes of trademark registration is the same standard as likelihood of confusion for purposes of infringement, even though the TTAB applies slightly different factors to assess likelihood of confusion than the factors applied by courts in each Circuit. Under 15 U.S.C. § 1052(d), the USPTO cannot register a mark which “so resembles” another mark “as to be likely, when used on or in connection with the goods of the application, to cause confusion, or to cause mistake, or to deceive.” In an infringement action, the court must decide whether the defendant’s use of a mark in commerce “is likely to cause confusion, or to cause mistake, or to deceive” with regards to the plantiff’s mark. See 15 U.S.C. § 1114(1)(a) for registered marks and 15 U.S.C. § 1125(a)(1)(A) for unregistered marks.
The Supreme Court cautioned that in many trademark registration decisions, issue preclusion will not apply because the ordinary elements of issue preclusion will not be met. However, the Court held that here, there is no categorical “reason to doubt the quality, extensiveness, or fairness” of the TTAB procedures, which are in large part exactly the same as in federal court, and the likelihood of confusion standard before the TTAB and the District court are identical.
Hargis argued that issue preclusion should never apply to TTAB decisions because the stakes for registration are much lower than for infringement. However, the Supreme Court emphasized that Congress’ creation of an elaborate registration scheme with so many important rights attached to trademark registration confirms that registration decisions can be weighty enough to ground issue preclusion.
As a practical matter, today’s decision could impact how aggressive trademark owners enforce, and defend, their rights in opposition proceedings, which could have preclusive effect in infringement actions.