No. 41
April 2015

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TTAB opposition proceeding may dictate outcome of trademark infringement action, under U.S. Supreme Court's B & B Hardware decision
(Article by Seth I. Appel, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, Chicago, Illinois, U.S.A.)
B & B Hardware, Inc. v. Hargis Industries, Inc., ___ S.Ct. ___ (2015),

A trademark owner can oppose another party's trademark application by filing an opposition in the U.S. Patent & Trademark Office (USPTO), at the Trademark Trial and Appeal Board (TTAB). If the TTAB finds likelihood of confusion between the parties' marks, it will grant the opposition and refuse registration to the applicant. The TTAB cannot award damages, however, and it cannot enjoin the applicant from using the mark.

To obtain damages or injunctive relief, a trademark owner must bring a trademark infringement action in court. Infringement actions, like opposition proceedings, often turn on the question of likelihood of confusion.

B & B Hardware manufactures fasteners for the aerospace industry under the federally-registered SEALTIGHT mark. Hargis Industries manufactures fasteners for use in construction under the SEALTITE mark. B & B Hardware opposed Hargis Industries' application to register SEALTITE, alleging likelihood of confusion. The TTAB, applying the “DuPont factors,” agreed with B & B Hardware and refused registration to Hargis Industries.

Meanwhile, B & B Hardware sued Hargis Industries for trademark infringement in federal district court. The court declined to give preclusive effect to the TTAB decision, and the jury returned a verdict in favor of Hargis Industries, finding no likelihood of confusion. The Eighth Circuit Court of Appeal affirmed.

The U.S. Supreme Court reversed and remanded. It held that a court should give preclusive effect to a TTAB decision where the issues in the two cases are identical. “Allowing the same issue to be decided more than once wastes litigants' resources and adjudicators' time,” the Court explained.

The Court noted that decisions of an administrative agency such as the USTO commonly form the basis of issue preclusion. Under Supreme Court precedent, an agency decision is presumed to have preclusive effect, unless the relevant statute indicates otherwise. Here, the Court determined that neither the text nor the structure of the Trademark Act bar application of issue preclusion.

The Court emphasized that “the same likelihood-of-confusion standard applies to both registration and infringement.” While the TTAB and courts apply “similar, but not identical” factors to assess likelihood of confusion — the Eighth Circuit, for example, applies a six-factor test— “the factors are not fundamentally different.”

Hargis Industries argued that the standard in opposition proceedings and infringement actions is not actually the same, because the registration provision of the Trademark Act asks whether the marks “resemble” each other, 15 U.S.C. 1052(d), while the infringement provision is directed towards “use in commerce” of the marks, 15 U.S.C. 1114(1). Therefore, the TTAB typically compares the parties’ marks, goods and trade channels as set forth in the relevant registration and application, while courts consider the parties’ overall use of the marks. The Court found that this argument falls short, because “it mistakes a reason not to apply issue preclusion in some or even many cases as a reason never to apply issue preclusion.” It explained: “If a mark owner uses its mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a district court in infringement litigation.” Only in such cases should the TTAB’s determination be binding on the court.

The Court also rejected Hargis Industries' argument that preclusion cannot apply because “the stakes for registration are so much lower than for infringement.” It noted that trademark registration confers important legal rights and benefits. For example, a registration serves as prima facie evidence of the validity of the mark and of the owner’s exclusive right to use the mark in connection with the identified goods or services. Therefore, the Court explained, “there is good reason to think that both sides will take the matter seriously.”

Justice Thomas wrote a dissenting opinion, explaining that the majority's application of administrative preclusion “raises serious constitutional concerns.”