Last week the Federal Circuit held that, like patent decisions, ITC decisions pertaining to trademark infringement and validity are not entitled to preclusive effect. Swagway v ITC, No. 2018-1672 (May 9, 2019). The Court reached its conclusion because it saw "no reason to differentiate between the effect of the Commission's patent-based decisions and the Commission's decisions regarding trademarks."
In 2016, Segway filed a Complaint at the ITC alleging patent and trademark infringement by several respondents, including Swagway. During the investigation, and in an effort to avoid a potentially preclusive decision from the ITC, Swagway moved for partial termination of the investigation regarding the trademark infringement allegations on the basis of a consent order stipulation. The ITC did not specifically address Swagway's motion but in the Initial Determination ("ID"), the ALJ found Swagway's use of the SWAGWAY designation infringed Segway's trademarks. Swagway appealed the infringement decision and the ITC's failure to enter the proposed consent order.
Swagway wanted to avoid any issue of preclusion in the co-pending district court case in Delaware, which was stayed pending resolution of the Federal Circuit appeal. On appeal, Swagway argued that the difference between its proposed consent order and the orders issued by the ITC was the preclusive effect it believed would be afforded to the ITC's final decision and its resulting orders. At the Federal Circuit hearing, Swagway agreed to withdraw its argument regarding the consent order motion if the Court held that the Commission's trademark determinations are not entitled to preclusive effect.
After a de novo review based on the well-known DuPont factors, the Federal Circuit affirmed the Commission's finding of trademark infringement.
The Court then turned to the issue of whether the ITC's decision had any preclusive effect. The Court pointed out that it previously determined that ITC decisions on patent issues have no preclusive effect and they saw "no reason to differentiate between the effect of the Commission's patent-based decisions and the Commission's decisions regarding trademarks." Therefore, the Court held that "the Commission's trademark decisions, like its patent decisions, do not have preclusive effect." Accordingly, the Court saw no practical difference between the proposed consent order stipulation and the Commission's exclusion order – noting that either way, the SWAGWAY-branded personal transporters could not be imported into or sold within the United States.
It has long been understood that patent decisions from the ITC do not have preclusive effect. With the Federal Circuit's confirmation that trademark decisions will be treated similarly, uncertainty around asserting trademark infringement at the ITC is arguably reduced. Since the Court concluded trademark decisions have no preclusive effect and other tribunals are not estopped from fresh consideration of the same issues previously addressed by the ITC, Complainants seeking to enforce their trademarks may find the ITC a more appealing forum. However, as we discussed earlier (here), litigants at the ITC should be aware that some circuits have reached different conclusions.
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