Supreme Court Finds TTAB Rulings On Likelihood Of Confusion May Preclude Infringement Litigation In Federal Court

March 26, 2015 | Bulletin No. 1241750.1

The United States Supreme Court recently issued a game-changing opinion on the authority of the U.S. Patent & Trademark Office's (USPTO) Trademark Trial & Appeal Board (TTAB). In B&B Hardware Inc. v. Hargis Industries Inc. et al., case number 13-352, the Court  concluded that a TTAB decision denying trademark registration on likelihood of confusion grounds can have preclusive effect in a later federal court infringement action.

Facts

In 1993, B&B Hardware, Inc. ("B&B") registered its trademark the "Sealtight" trademark in connection with fasteners produced, marketed and sold for use in the aerospace industry. Hargis Industries, Inc. ("Hargis") applied for a "Sealtite" trademark related to screws used in the construction industry. Because of the similar sound of the mark, B&B opposed Hargis' registration before the TTAB. The TTAB sustained B&B's opposition, refusing to register the "Sealtite" mark in view of the prior "Sealtight" registration, concluding that there was a likelihood of confusion between the two marks. B&B also filed a trademark infringement action in the Eastern District of Arkansas to prevent Hargis' use of the "Sealtite" mark. The district court refused to: (i) give preclusive effect to the TTAB ruling; (ii) give deference to the ruling; and (iii) admit the ruling into evidence at the jury trial. The jury found there was no likelihood of confusion. B&B appealed and the Eighth Circuit affirmed on the grounds that the TTAB's test for likelihood of confusion was different from the Eighth Circuit's test for likelihood of confusion.

The Supreme Court Ruling

The Supreme Court reversed a decision from the Court of Appeals for the Eighth Circuit, holding that where the "ordinary elements of issue preclusion are met" and "when the usages adjudicated by the TTAB are materially the same as those before the district court," the application of issue preclusion is appropriate.

The Court first addressed whether an agency decision, like the TTAB, can be a ground for issue preclusion. The Court relied on case law and the Restatement (Second) of Judgments, finding that issue preclusion is not limited to cases where the same issue is before two courts, but will also apply before a court and an administrative agency, like the TTAB. The Court also analyzed the Lanham Act, which grants authority to the TTAB, and determined there is no evident reason why Congress would not want issue preclusion to apply to TTAB decisions.

The Court then addressed the Eighth Circuit's objection to issue preclusion on the grounds that there are different tests to determine likelihood of confusion. The Court explained that likelihood of confusion for trademark registration purposes is the same as likelihood of confusion for infringement purposes. The argument that different "factors" may be used by the TTAB and the federal courts for determining likelihood of confusion was not persuasive. The Court determine that the "factors" – whether the "DuPont" factors used by the TTAB or the “SquirtCo” factors used by the Eighth Circuit – are fundamentally the same. Therefore, this ruling provides a degree of standardization to the likelihood of confusion tests used in the various circuits.

Prior to this ruling, the TTAB had a limited role in confusion based infringement litigation.  Federal courts were able to evaluate the likelihood of confusion de novo, even after the TTAB had made a thorough and decisive determination based on its analysis of the exact same issue.

Take Away

This Supreme Court opinion will require trademark attorneys to reevaluate their litigation strategies involving infringement claims both in federal court and before the TTAB. Also, TTAB opposition proceedings will likely be more vigorously litigated because trademark applicants must focus not only on the registration of their trademark, but also on the implications of an unfavorable TTAB decision on registration that could later impact a federal court ruling on infringement.  Bottom line, trademark applicants can no longer skate through the TTAB proceedings and should be prepared to beef up their evidentiary record pertaining to confusion.

Questions

If you have any questions concerning this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Jennifer Scott | 916.321.4500