September/October 2015
IP Litigator
Authored by Danny M. Awdeh and Brian R. Westley
In a case that has received considerable attention in trademark circles, the U.S. Supreme Court in March ruled that Trademark Trial and Appeal Board (TTAB) decisions on likelihood of confusion are entitled to preclusive effect in later district court infringement litigation. Specifically, the Court in B&B Hardware, Inc. v. Hargis Industries, Inc. ruled that TTAB decisions are entitled to preclusive effect so long as the "ordinary elements" of issue preclusion are met. The seven-to-two decision authored by Justice Alito was a setback for some practitioners who had urged the Court to adopt a bright-line rule that TTAB findings on likelihood of confusion do not have a preclusive effect on subsequent district court litigations. In its amicus brief, the International Trademark Association (INTA) warned that failing to adopt this rule could result in "a substantial negative effect on the now-straightforward administrative proceedings before the TTAB."1 INTA explained that in an effort to preserve their position in future litigations, parties would likely seek to introduce far more evidence, perhaps turning relatively efficient and less costly TTAB proceedings "into full-blown court-like battles."2 Six months after B&B Hardware was decided, the long-term implications remain far from clear. However, there is reason to believe that rather than having a profound impact on trademark proceedings, the Court's ruling will have a fairly narrow application.
The context of the Court's ruling pertains to the TTAB, an administrative board within the U.S. Patent and Trademark Office (USPTO),3 and the federal courts. When a trademark owner believes that another mark should not be allowed to register because it is too similar to its own, it has two primary options. It can institute an opposition proceeding before the TTAB. The owner can alternatively (or also) file a lawsuit for trademark infringement in federal court.
Opposition proceedings before the TTAB are similar to civil litigation. TTAB proceedings, for example, are governed by the Federal Rules of Civil Procedure and Evidence and allow for discovery and depositions. Unlike civil litigation, however, there is no live testimony. "Proceedings before the Board are conducted in writing, and the Board's actions in a particular case are based upon the written record therein."4 Parties can submit transcribed testimony, taken under oath and subject to cross-examination, and also request oral argument.5 Importantly, the TTAB only has the ability to cancel a trademark registration or refuse a pending application; it cannot offer injunctive or monetary relief. After the TTAB decides whether a mark should be permitted to register, a party can then seek review by the U.S. Court of Appeals for the Federal Circuit, or it can file a new action in district court.6 In district court, the parties can conduct additional discovery and the case is decided de novo.7
Deciding whether to oppose a mark at the TTAB or to bring litigation in civil court often is a strategic issue for litigants. While trademark law consists of various foundational factors to be considered in determining a likelihood of confusion—including the similarity of the marks, trade channels, and evidence of actual confusion—these factors are not identical in each tribunal. At the TTAB, 13 factors are set out in In re E.I. DuPont DeNemours & Co.8 Each of the federal circuits also has created its own list of factors. Significantly, the TTAB focuses on the goods/services set forth in the trademark application or registration when applying these likelihood-of-confusion factors, as opposed to focusing on real-world conditions.9 However, in federal district court litigation, the parties' actual use of the marks takes center stage. As such, a district court's likelihood of confusion analysis typically accounts for packaging and advertising, trade channels, the presence of well-known house marks, coexistence with other similar marks, the existence or lack thereof of actual confusion, etc.
The B&B Hardware case involved two parties engaged in a protracted trademark dispute spanning more than two decades. In 1990, Petitioner B&B Hardware, Inc. (B&B) began manufacturing and selling fastener products to the aerospace industry under the mark SEALTIGHT. B&B was granted a U.S. trademark registration for its SEALTIGHT mark in 1993. Meanwhile, Respondent Hargis Industries, Inc. (Hargis) began manufacturing and selling self-drilling and self-taping screws used in the metal-building industry under the mark SEALTITE. Hargis later applied to register its SEALTITE mark, but B&B Hardware opposed Hargis's application before the TTAB, asserting a likelihood of confusion due to the similarity of the marks.
While the TTAB was deciding the matter, the parties were litigating the likelihood-of-confusion issue in federal court. Before the district court issued its ruling, the TTAB determined that SEALTITE—when "used in connection with 'self-piercing and self-drilling metal screws for use in the manufacture of metal and postframe buildings' "—could not be registered because it "so resembles" SEALTIGHT when "used in connection with fasteners that provide leakproof protection from liquids and gases, fasteners that have a captive o-ring, and 'threaded or unthreaded metal fasteners and other related hardware . . . for use in the aerospace industry' as to be likely to cause confusion."10
Following the TTAB's decision, B&B argued to the district court that Hargis could no longer contest likelihood of confusion because of the TTAB's preclusive effect. The district court disagreed, reasoning that the TTAB is not an Article III court. The jury then returned a verdict for Hargis, finding no likelihood of confusion. B&B appealed to the Eighth Circuit, which accepted for the sake of argument that agency decisions could have preclusive effect, but affirmed the district court's ruling because, among other reasons, the TTAB uses factors different from the Eighth Circuit to evaluate likelihood of confusion.11
The Supreme Court granted certiorari to determine whether the district court should have applied issue preclusion to the TTAB's decision that SEALTITE is confusingly similar to SEALTIGHT.
While not taking sides in the specific dispute involving B&B and Hargis, various intellectual property organizations weighed in on the potential implications of the Court's decision, most notably INTA, a global organization of trademark practitioners with more than 6,400 members in 190 countries, and the American Intellectual Property Law Association (AIPLA), a national bar association with 15,000 members involved in patent, trademark, copyright, and unfair competition law.
INTA filed an amicus brief imploring the Court to "adopt a bright-line rule that TTAB findings on the likelihood of confusion ought never be given issue-preclusive effect in a federal district court proceeding."12 INTA reasoned that such a ruling was necessary because of the distinctly different purposes of the TTAB, which focuses on the issue of registrability, and the federal courts, which focus on real-world factors based on the actual use of the marks at issue. As such, INTA explained, "The TTAB's focus on the marks as they appear in the application, devoid of marketplace context, renders its determination of likelihood of confusion fundamentally different than that of a civil court."13 Because the parties' actual use of the marks is at issue in a federal district court litigation, INTA explained, "the likelihood of confusion inquiry requires the district court to consider the full market context in assessing likelihood of confusion, including the parties' respective packaging and advertising, the locations where their goods and services are offered, the sophistication of consumers, the use of any house marks, the extent to which the marks coexist with other similar marks, and the existence or lack thereof of actual confusion."14 And while acknowledging that "some of the DuPont factors involve matters of marketplace context," INTA stated that "these factors typically have no import in TTAB proceedings."15 Although INTA reasoned that some TTAB determinations could have a preclusive effect, such as which party owns prior rights, decisions on likelihood of confusion should not be given such deference.
AIPLA urged the Court to rule that TTAB decisions concerning likelihood of confusion only should preclude subsequent trademark infringement litigation "in limited and perhaps rare circumstances."16 Issue preclusion should not apply, AIPLA explained, when "the Board simply compared the marks as they appeared in the trademark applications and registrations at issue" rather than comparing how the marks were used in the marketplace—the analysis typically conducted in trademark infringement lawsuits.17 AIPLA gave examples of situations in which the TTAB does not consider the marketplace context of the marks and when preclusion should therefore not apply, such as: when the application at issue was based on an intent to use; when the application was for a standard-character word mark and the applicant's use of the mark in the marketplace consisted of a stylized mark or logo; and when the opposer relied solely on its rights under one or more registrations, and the TTAB did not consider the opposer's use of its marks in the marketplace.
AIPLA disagreed with the Eighth Circuit's holding that the specific list of likelihood of confusion factors must be the same for issue preclusion to apply. AIPLA explained that these factors merely are "guideposts," and that if differences between the factors were part of a preclusion analysis, then decisions by other circuits could never be issue preclusive.18 AIPLA warned, however, that a broad application of issue preclusion could significantly affect inter partes practice before the TTAB, where the parties typically invest fewer resources than in a lawsuit. "For example, if a TTAB ruling on likelihood of confusion routinely became the last word on likelihood of confusion, parties may feel compelled to introduce significantly more evidence, object more to the other side's evidence, and generally handle the proceeding more aggressively."19
The United States (i.e., the PTO and Justice Department), meanwhile, argued that the district court in B&B Hardware should have given the TTAB's decision preclusive effect. In its amicus brief, the United States asserted that the TTAB does, in fact, consider evidence of how marks are used in the marketplace in evaluating a likelihood of confusion, including the products on which the marks appear and the members of the public to whom the marks are directed.20 The United States noted that the 13-factor test set out in DuPont and applied by the TTAB includes the "conditions under which and buyers to whom sales are made"; the "fame of the prior mark (sales, advertising, length of use)"; and the "nature and extent of any actual confusion."21 Importantly, however, the United States acknowledged that the TTAB only considers those uses disclosed in the application and encompassed by the opposer's registration.22 As such, "issue preclusion applies only for those usages actually adjudicated by the Board and for those usages that do not materially differ from the usages adjudicated by the Board."23 In B&B Hardware, the United States argued that the uses adjudicated by the TTAB appeared to be identical to those litigated before the district court as thus preclusion should apply. Finally, the United States emphasized to the Court the importance of preclusion in protecting the public. "If parties using particular marks cannot quickly obtain final determinations about their respective rights, it will be more difficult for the public to rely on marks in selecting products for purchase."24
In issuing its ruling in B&B Hardware on March 24, 2015, the Supreme Court held that courts should give preclusive effect to TTAB decisions if the "ordinary elements" of issue preclusion are met, that is, "[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim."25 The Court readily noted, however, that issue preclusion would not apply to a "great many" registration decisions because the ordinary elements will not be met. "For those registrations," the Court stated, "nothing we say today is relevant."26 The Court also explained that just because issue preclusion likely will not occur in many cases, that is not a reason to never apply it.
In reaching its decision, the Court dispensed with the Eighth Circuit's primary objection to issue preclusion: That the TTAB considers likelihood-of-confusion factors different from the Eighth Circuit. Justice Alito noted that (1) "the factors are not fundamentally different," and (2) that "if federal law provides a single standard, parties cannot escape preclusion simply by litigating anew in tribunals that apply that one standard differently."27 Justice Alito further explained that likelihood of confusion for purposes of registration at the TTAB is the same standard as likelihood of confusion for purposes of infringement at the federal courts. The distinction, Justice Alito wrote, is that while the TTAB typically analyzes marks, goods, and trade channels as set forth in the application, infringement litigation considers the non-disclosed usages of the marks.28 Just because the TTAB does not consider the same usages as a district court does not mean it is applying a different likelihood of confusion standard to those usages it does consider. As such, in those cases in which the trademark owner is using its mark in ways that are "materially the same" as its registration/application, the Court held that the TTAB is deciding the same likelihood of confusion issues as a district court does in an infringement litigation. If, however, a trademark owner is using its mark in ways that are materially different from its registration/application, then the TTAB is not deciding the same issue.29 "Thus," Alito wrote, "if the TTAB does not consider the marketplace 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."30 The Court noted that "trivial variations" between real-world uses of a mark and those usages set out in the trademark application do not create different issues. (The Court's decision does not elaborate on what might constitute "material" versus "trivial" variations in use.) Finally, the Court held that preclusion can still apply even if the TTAB places more weight on factors than it should. When that happens, Justice Alito explained, the "aggrieved party should seek judicial review."31
The Court was not persuaded by arguments that preclusion should not apply because of different procedures used by the TTAB and federal courts, that is, that the courts feature live witnesses and TTAB proceedings do not. "Rather than focusing on whether procedural differences exist—they often will—the correct inquiry is whether the procedures used in the first proceeding were fundamentally poor, cursory, or unfair," Alito wrote.32 The Court also rejected Hargis's argument that preclusion should not apply because the stakes for registration are arguably much lower than for infringement. The Court noted that the benefits of registration are substantial (e.g., registration, serves as "constructive notice of the registrant's claim of ownership" of the mark and is prima facie evidence of the validity of the registered mark), and that, therefore, "[w]hen registration is opposed, there is good reason to think that both sides will take the matter seriously."33
In a lengthy dissent, Justice Thomas (joined by Justice Scalia) wrote that he saw no authority for giving TTAB decisions preclusive effect over Article III courts in subsequent trademark infringement suits. Indeed, he noted, "several features of the [Lanham] Act support the contrary inference."34 Among other things, the Lanham Act authorizes the TTAB to determine only matters of registration, rather than the right to use a mark. This "limited job description" indicates that the TTAB's conclusions regarding registration were never meant to become decisive on matters of use, Thomas wrote.35
Although the Court declined to take the "bright line" stance advocated by INTA on likelihood of confusion, the holding of B&B Hardware may, in fact, be narrow enough to minimize concerns about a profound shift in trademark litigation strategy. As Justice Ginsburg stated in her concurring opinion, "The Court rightly recognizes that for a great many registration decisions issue preclusion obviously will not apply."36 That is so, Ginsburg wrote, "because contested registrations are often decided upon a comparison of the marks in the abstract and apart from their marketplace usage. When the registration proceeding is of that character, there will be no preclusion of the likelihood of confusion issue in a later infringement suit."37
Indeed, just three days after the Supreme Court's decision in B&B Hardware, the TTAB, in In re Hughes Furniture Industries, Inc., refused to consider any marketplace use when affirming a refusal to register the mark HUGHES FURNITURE.38
The PTO had refused registration of the HUGHES FURNITURE & Design mark based on a likelihood of confusion with a prior registration for BRADLEY HUGHES for furniture. Applicant argued that the registrant's goods were distinct because the BRADLEY HUGHES mark was used only for luxury, artisan-made furniture, whereas its goods appealed to a broader segment of the public. However, the TTAB found the goods "legally identical" based on the parties' identifications.39 The identification for the BRADLEY HUGHES mark is for "residential and commercial furniture" while HUGHES FURNITURE & Design was for "furniture." Resorting to longstanding precedent, the TTAB held that differences in marketplace realities had no legal significance where the parties' identifications were not so restricted: "Notwithstanding Applicant's argument and evidence regarding the actual scope of its own and the cited Registrant's commercial use of its mark, we may not limit, by resort to extrinsic evidence, the scope of goods as identified in the cited registration or in the subject application."40 The TTAB accordingly gave no weight to evidence showing that the parties targeted different market segments.
Three months later in June, the TTAB, in In re Evolution Rock + Fitness, LLC,41 also refused to consider Applicant's argument that it offered distinctly different services from Registrant because Registrant used its mark exclusively with training for hockey, and Applicant provided a rock climbing gym. The TTAB noted that "when comparing Applicant's and Registrant's services, we must analyze them as they are identified in the application and the cited registration and not limit their scope by resort to extrinsic evidence."42 Because the Registrant's broadly worded recitation of athletic and sports training services encompassed Applicant's more narrowly worded rock climbing training services, the parties' goods were considered in part identical. As such, the TTAB affirmed the refusal of Applicant's mark EVO ROCK + FITNESS & Design based on a likelihood of confusion with the mark EVO & Design.43
That same month, the TTAB refused to consider extrinsic evidence in In re Rum Bum Records, LLC44 when it affirmed the refusal of Applicant's mark BACARDI RECORDS based on a likelihood of confusion with the registered mark BACARDI for music. In seeking to distinguish the parties' goods/services, Applicant argued that Registrant was not involved in the recording business and was not a record label. The TTAB, citing to Hughes Furniture, refused to consider this extrinsic evidence, stating "we must make our determination regarding the relatedness of the goods and services and channels of trade based on the goods and services as they are identified in the registration and applications at issue."45 The TTAB reiterated this point yet again in In re X-Calibur Construction Chemistry Inc.46 ("the question of likelihood of confusion is determined based on the description of the goods in the application and registrations at issue, not on extrinsic evidence of actual use.")
Six months after B&B Hardware, it remains to be seen whether parties will now choose to go "all out" at the TTAB with the knowledge that the decision may be accorded preclusive effect, or whether they will sidestep the TTAB altogether and head straight to district court. So far, however, there is little indication that the Court's ruling will bring about a "substantial negative effect on the now-straightforward administrative proceedings before the TTAB."47 The TTAB itself has done little to signal a reason for such a shift. Instead, the TTAB's recent rulings remain consistent with what INTA emphasized in its amicus brief: "The TTAB's focus on the marks as they appear in the application, devoid of marketplace context, renders its determination of likelihood of confusion fundamentally different than that of a civil court."48
As a strategic matter, TTAB plaintiffs may decide to avoid asserting common law rights outside the scope of their pleaded registrations or introducing other evidence of marketplace use, to avoid issue preclusion. But as Hughes Furniture and other recent TTAB decisions indicate, even where the parties seek to introduce evidence of marketplace use, such evidence may have no bearing on the TTAB's decision.
Of course, important questions still remain, particularly what might constitute "material" versus "trivial" variations in use versus registration such that issue preclusion might or might not apply. Outside the issue of likelihood of confusion, such as in the context of priority, the TTAB's decisions may be better suited for issue preclusion.
Endnotes
1 Brief for International Trademark Association in Support of Neither Party, at 25, B&B Hardware, Inc. v. Hargis Industries, Inc., 135 S. Ct. 1293 (2015) (emphasis added).
2 Id.
3 The TTAB consists of administrative trademark judges and high-ranking PTO officials, including the Director and the Commissioner of Trademarks. 15 U.S.C. § 1067(b).
4 B&B Hardware 135 S. Ct. at 1300, citing TTAB Manual § 102.03.
5 Id. at 1300.
6 B&B Hardware at 1301, citing 15 U.S.C. § 1071.
7 Id.
8 In re E.I. DuPont DeNemours & Co., 476 F.2d 1357 (CCPA 1973).
9 Marks should not register if they "so resemble" another prior registered or applied for mark "as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. § 1052(d).
10 B&B Hardware at 1302.
11 Id.
12 Brief for International Trademark Association in Support of Neither Party, at 9, B&B Hardware, Inc. v. Hargis Industries, Inc. (emphasis added).
13 Id. at 14-15.
14 Id. at 15-16.
15 Id. at 20.
16 Brief for American Intellectual Property Law Association in Support of Neither Party, at 2, B&B Hardware, Inc. v. Hargis Industries, Inc.
17 Id. at 2-3.
18 Id. at 9.
19 Id. at 12.
20 Brief for United States as Amicus Curiae Supporting Petitioner, at 4, B&B Hardware, Inc. v. Hargis Industries, Inc.
21 Id.
22 Brief for United States, at 5.
23 Id. at 14.
24 Id. at 35.
25 B&B Hardware at 1303, quoting Restatement (Second) of Judgments § 27, p.250 (1980).
26 Id. at 1306.
27 Id. at 1307.
28 Id. at 1307-1308.
29 Id. at 1297-1298.
30 Id. at 1308 (internal quotations omitted).
31 Id. at 1308.
32 Id. at 1309.
33 Id. at 1310.
34 Id. at 1314.
35 Id.
36 Id. at 1310 (internal quotation marks and citation omitted).
37 Id.
38 In re Hughes Furniture Indus., Inc., 114 U.S.P.Q.2d 1134 (TTAB 2015).
39 Id. at 1137.
40 Id.
41 In re Evolution Rock + Fitness, LLC, 2015 WL 3826706 (TTAB June 3, 2015) (not precedential).
42 Id. at *4.
43 Id. at *6.
44 In re Rum Bum Records, LLC, 2015 WL 4241140 (TTAB June 19, 2015) (not precedential).
45 Id. at *4.
46 In re X-Calibur Constr. Chemistry Inc., 2015 WL 4269976, at *4 (TTAB June 23, 2015) (not precedential).
47 Brief for International Trademark Association in Support of Neither Party, at 25, B&B Hardware, Inc. v. Hargis Industries, Inc. (emphasis added).
48 Id. at 14-15.
Reprinted with permission from the IP Litigator, published by Wolters Kluwer. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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