The United States Supreme Court erased a bright line rule in trademark disputes, which will likely affect how trademark owners handle disputes and the trademark application process. In B&B Hardware, Inc. v. Hargis Indus., Inc. (No. 13-352, March 24, 2015), the Supreme Court held that decisions made by the Trademark Trial and Appeal Board (TTAB) may bind parties that attempt to litigate or re-litigate the same or virtually the same issues in federal court.
When a business or person attempts to register a mark, the public may oppose registration. In B&B Hardware, B&B opposed Hargis' attempt to register SEALTITE, based on B&B's ownership of a registration for SEALTIGHT. The TTAB refused to register Hargis' SEALTITE mark, finding a likelihood of confusion between that mark and B&B's SEALTIGHT mark. In a parallel trademark infringement case in federal court between the same two parties, the district court refused to give any weight to the TTAB's decision regarding the similarity of the marks and a likelihood of confusion between the marks. A jury found no likelihood confusion between the marks. B&B appealed and the Supreme Court ruled that the district court should have imported the TTAB's ruling on similarity and likelihood of confusion into the district court infringement case.
While holding that decisions from federal agencies can apply to district court proceedings, the Supreme Court limited the scope of its decision to those situations in which Congress has not prohibited agency rulings from affecting court proceedings (the trademark law, the Lanham Act, has no such prohibition). In addition, the issue decided by the agency has to have been fully litigated.1 The court expressly noted that for "a great many registration decisions," the TTAB decision will not be binding on the courts. However, the court held that some decisions will be binding.
The lessons from this Supreme Court decision are yet to be fully determined but, at a minimum, parties to TTAB proceedings are likely to fight harder, requiring more time and expense to resolve opposition and cancellation proceedings. The parties will do so based on the very real possibility that the TTAB decision will bind them in any subsequent litigation. In addition, an entity applying for a trademark registration will want to consider carefully the description of goods or services in its application, including a potential description of the channels of trade in which the goods or services will be offered. A properly tailored description of goods and services (and possibly channels of trade) may avoid a TTAB opposition proceeding altogether. In subsequent litigation, parties arguing for or against importation of findings from an earlier TTAB decision will need to compare and contrast the issues and facts that were before the TTAB with what is before the court, such as how the TTAB generally only compares marks as shown in the registrations and applications in the abstract and not how the marks are actually used in commerce.
1. Interestingly, the Supreme Court left open the possibility of a constitutional challenge to issue preclusion based on a litigant's right to a jury trial under the Seventh Amendment.
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