Issues Resolved in an Administrative Trademark Proceeding May Bind Federal Courts in Subsequent Infringement Actions

Steven A. Abreu

By Steven Abreu. A member of our Trademark Practice Group

July 2015 IP Update

In B&B Hardware, Inc. v. Hargis Industries, Inc., B&B opposed Hargis’s attempt to register its trademark SEALTITE, arguing that it would create confusion with its own SEALTIGHT mark.  The Trademark Trial and Appeal Board (TTAB) agreed and refused to register the mark.  Hargis did not appeal this ruling.

B&B Hardware then sued Hargis for trademark infringement. It asked the federal district court to preclude Hargis from arguing that the mark SEALTIGHT was not similar to SEALTITE because likelihood of confusion had already been decided in B&B’s favor by the TTAB.

The district court denied B&B’s request, and on appeal the Eighth Circuit Court of Appeals agreed because, it said, the courts use different criteria from the TTAB in evaluating likelihood of confusion. In March 2015, the Supreme Court reversed, ruling that TTAB decisions could have a preclusive effect on other trademark proceedings, including those in federal courts.

The Supreme Court held that if the TTAB has materially considered all factors relevant to the federal court’s determination and the normal elements of issue preclusion are also present, then the TTAB’s decision on an issue may preclude further litigation of the same issue in federal court.

Of note, the Supreme Court has not eliminated a party’s ability to appeal a TTAB decision regarding likelihood of confusion to a district court for a new and non-precluded review of the issue.  But in this instance Hargis did not seek an appeal, final judgement was entered, and the second proceeding was a new litigation where likelihood of confusion was again at issue.

As savvy trademark litigators know, in determining whether a mark should be registered or an existing registration maintained, the TTAB does not expressly consider facts regarding the way marks are used in the marketplace. Federal courts do.  Thus, if the additional “marketplace” facts are relevant to the federal court inquiry of the issue and these facts were not considered by the TTAB, a TTAB ruling might not have a preclusive effect.

Nevertheless, the B&B Hardware decision may raise the stakes for future TTAB proceedings. While TTAB decisions on likelihood of confusion will only occasionally meet the criteria for having preclusive effect, some parties may decide to devote more assets and attention to TTAB oppositions and cancellations. We plan to monitor the application of B&B Hardware v. Hargis in future trademark cases and determine if any change in tactics or strategy is necessary.