TTAB Registration Decisions May Have Issue Preclusion Effect
On March 24, 2015, in B&B Hardware, Inc. v. Hargis Industries, Inc., the Supreme Court raised the stakes and importance of decisions by the Trademark Office, in particular those in contested opposition and cancellation proceedings. A win or loss in the Trademark Office now may be used against you in a court case on trademark infringement. As a result, all trademark owners involved in contested Trademark Office proceedings should re-evaluate whether they would be better off litigating in court. The balance between the lower cost of the streamlined Trademark Office proceedings and the higher cost and higher stakes litigation in court has now shifted. Of course, each case must be considered on its individual facts, so please contact one of our trademark attorneys if you would like to discuss your situation in more detail.
B&B and Hargis have long contested each other’s rights in the mark "SEALTIGHT" for fasteners. B&B was the first to the market and registered the mark first. B&B opposed Hargis’s later application for registration based on a likelihood of confusion with B&B's senior mark and the TTAB refused registration. Hargis did not appeal the opposition decision. In a subsequent district court action for infringement by B&B against Hargis, B&B argued that the issue of likelihood of confusion should be decided in its favor because of the earlier TTAB decision – in effect, Hargis should be precluded from arguing that there is no likelihood of confusion. The district court refused to apply issue preclusion on the likelihood of confusion question, and the jury found Hargis did not infringe B&B’s mark. The Eighth Circuit affirmed the district court’s refusal to give the TTAB’s findings preclusive effect, reasoning the TTAB is not an Article III court, and the likelihood of confusion issues are different in the two forums—the TTAB decides if a registration should be issued for a mark, while courts generally decide if someone is infringing a mark.
The Supreme Court reversed the Eighth Circuit’s decision and held that, so long as the other ordinary elements of issue preclusion are met, when the trademark usages adjudicated by the TTAB are materially the same as those before a district court, issue preclusion should apply. Even though the TTAB and courts are weighing different interests (e.g., the right to register versus the right to use), their standards are “not fundamentally different, and, more important, the operative language of each statute is essentially the same.” The Court observed, however, that issue preclusion will not apply for “a great many” TTAB decisions, because the “ordinary elements” of preclusion will not have been met. For example, “[i]f the TTAB does not consider the market-place usage of the parties’ marks, the TTAB’s decision should have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.”
What It Means
This case, to some extent, resolves a split between different circuit courts across the U.S. on the question of TTAB issue preclusion, and clarifies that circuits should not apply a bright-line ban like the one used by the Eighth Circuit. The Court observed “[t]here is no categorical reason why registration decisions can never meet the ordinary elements of issue preclusion. That many registrations will not satisfy those ordinary elements does not mean that none will.” This case also makes clear that any loss at the TTAB should be carefully reviewed to consider if it should be appealed and/or if it might have preclusive effect on future proceedings. Potential litigants should carefully evaluate both the TTAB and the courts when considering the most advantageous forum for bringing a trademark dispute.