For the first time in history, the U.S. Supreme Court held that courts should give preclusive effect to administrative decisions issued by the U.S. Patent and Trademark Office’s Trademark Trial and Appeal Board (“TTAB”) in trademark matters if the ordinary elements of issue preclusion are met. As Justice Ginsburg hinted in her single-paragraph concurrence to the 7-2 decision in B&B Hardware, Inc. v. Hargis Industries, Inc., Case No. 13-352, this will happen relatively rarely because TTAB proceedings consider at least one party’s marks in a relatively abstract setting, that of a federal application or registration (in order to determine whether the mark should register or the registration should be canceled). In contrast, trademark infringement cases consider the way the mark is actually used in the marketplace. Nevertheless, after this decision, mark owners should be more careful about deciding whether to appeal an adverse TTAB decision, about limiting the evidence they introduce in TTAB proceedings, and about whether the TTAB is the appropriate forum for the dispute in the first place.
In this case, Hargis applied to register the mark SEALTITE for fasteners in the construction industry. B&B, which owns the federally-registered mark SEALTIGHT for fasteners in the aerospace industry, opposed registration of Hargis’ mark on the grounds that the marks were likely to be confused. B&B also sued Hargis for infringement in district court. When the TTAB found in B&B’s favor (and Hargis did not appeal), B&B asked the district court to give the judgment preclusive effect so that Hargis would be prevented from arguing an absence of any likelihood of confusion in the district court litigation. The district court declined, and the jury ultimately found in favor of Hargis. B&B appealed to the Eighth Circuit, and then petitioned the U.S. Supreme Court for certiorari.
Generally, when a court tries and decides an issue of fact or law essential to a valid, final judgment, that decision is conclusive in a subsequent action between the same parties. This doctrine is known as “issue preclusion.”
Issue preclusion is available unless it is evident Congress did not intend for issue preclusion to apply. Precedent indicates that issue preclusion presumptively applies not just between courts, but between a court and an administrative agency acting in its judicial capacity.1 Nothing in the Lanham Act itself prevents the doctrine of issue preclusion from applying. However, historically courts have granted only persuasive effect to decisions of the TTAB as an administrative agency with particular expertise in the subject matter.
The Court found no categorical reason for refusing to apply the doctrine of issue preclusion in the SEALTITE case. Although the TTAB considers different factors in its likelihood of confusion analysis compared to those considered in the Eighth Circuit, the same legal standard is applied and the factors are generally similar. Since likelihood of confusion for purposes of registration is the same standard as likelihood of confusion for purposes of infringement, issue preclusion may apply.
However, the Court found only that issue preclusion may apply. Trademarks are like exotic birds. One cannot fully know and understand them when observing them in the locked cage of an application or registration. Rather, considering them in their natural habitat, the marketplace, is key to full appreciation.
For example, when an intent-to-use application is the subject of an opposition proceeding, facts about how the applicant will actually use the mark may not yet be established. If the opposer prevailed and the applicant later used the mark in a way that was not contemplated by the TTAB, the TTAB’s decision may not be the basis for issue preclusion.
Even in a case that involves an in-use application, the full scope of the applicant’s use of the mark in the marketplace may not be captured by the application at issue. Defenses available to “infringement” claims brought in court, such as equitable estoppel or acquiescence or unclean hands, may not have been available to defendants before the TTAB. Accordingly, the range of evidence that the TTAB considers may be slightly narrower or even much narrower than what a district court could consider in an infringement action. Courts will have to determine whether those differences are sufficiently material to refrain from applying issue preclusion in any particular case. The concurrence emphasizes this fact in pointing out that only in rare cases will issue preclusion arise from a TTAB decision.
B&B v Hargis offers no bright line rules. Notwithstanding its admonishment about the rare applicability of issue preclusion and the dissent’s invitation to a constitutional challenge, most litigants will be chastened to take TTAB decisions seriously. Litigants may choose to appeal adverse decisions from the TTAB more often, may prefer the TTAB as a forum (where disputes may be less expensive than litigation in district court, but may still carry similar weight) in the hope that the decision will resolve liability related to use and registration, and may be more eager to ensure that all evidence is introduced at TTAB proceedings. This will likely increase the frequency and expense of TTAB actions and the work for the TTAB judges. In addition to considerations of registrability, mark owners should consult with their attorneys about possible repercussions of TTAB proceedings and plan accordingly from the outset.
1The Court was not presented with a constitutional challenge to the application of this doctrine between courts and administrative agencies (though the dissent clearly invites one).