Victory for Finnegan client PNC in first case to apply B&B Hardware to issue of trademark priority

Finnegan client PNC uses the mark SPENDOLOGY for online budgeting tools, and a third-party company, Spendology LLC, simultaneously began “using” the identical mark for virtually identical services. In an attempt to take advantage of the near-simultaneous adoption of the mark, the plaintiff repeatedly tried to extort money from PNC, alleging common law trademark infringement. This case was initially litigated at the Trademark Trial and Appeal Board (TTAB), where PNC prevailed on a motion for summary judgment on the issue of trademark priority. The TTAB ruled in favor of PNC, finding PNC had prior rights in the mark. A suit was then filed in federal court seeking an injunction and $120 million in damages. Between the time when the TTAB made its ruling and the time when the plaintiff filed suit, the Supreme Court handed down its decision in the B&B Hardware case, which held that TTAB decisions on issues of likelihood of confusion could have issue preclusive effect. Given that decision, Finnegan filed a motion to dismiss the plaintiff’s claims on collateral estoppel grounds in view of the prior TTAB decision on the issue of “priority of use.” The presiding judge in the U.S. District Court for the District of Maryland ruled in favor of PNC in a complete victory on the motion to dismiss the plaintiff’s lawsuit. This was one of the first cases to apply the Supreme Court’s decision in B&B Hardware, Inc. v. Hargis Industries, regarding the preclusive effect of TTAB decisions, and was the first to consider how that decision applies to issues other than likelihood of confusion. The case was appealed to the Fourth Circuit, where it was dismissed after briefing on a procedural ground, only to be reinstated and taken up on the merits. The Fourth Circuit squarely affirmed the district court ruling on the ground that the issue of priority decided by the TTAB was identical to the issue of priority presented to the district court. Finally, the plaintiff requested a writ of certiorari from the U.S. Supreme Court, which was denied.