The Supreme Court, in B&B Hardware , Inc. v. Hargis Industries , Inc., d/b/a Sealtite Building Fasteners et al., No. 13-354 (S. Ct. March 24, 2015) (Available Here), held that as long as the other ordinary elements of issue preclusion are met, when the issues adjudicated by the TTAB in the U.S. Patent and Trademark Office (USPTO) are materially the same as those in a subsequent litigation before a district court, issue preclusion should apply.
B&B Hardware, Inc. (“B&B”) owns the trademark SEALTIGHT for metal fasteners such as nuts, bolts, screws, etc. for use in the aerospace industry. Hargis Industries, Inc. (“Hargris”) attempted to use and to register SEALTITE for self-piercing – self-drilling metal screws for metal and post-frame buildings. B&B opposed the Hargis’ registration in the USPTO before the TTAB and the parties also litigated the matter in federal court. While the litigation was pending, the TTAB issued a decision that Hargis’ mark could not be registered because it was confusing similar to B&B’s mark. B&B argued that Hargis could not contest the TTAB’s likelihood of confusion in the District Court because of issues preclusion. The District Court disagreed and the jury returned a verdict for Hargis, finding no likelihood of confusion. The Eighth Circuit Court of Appeals affirmed the District Court and the Supreme Court granted certiorari.
Both TTAB registration proceedings and District Court litigation proceedings determine whether a likelihood of confusion exists between the mark sought to be protected and the other mark. However, the District Court and the Eighth Circuit held that preclusion was unwarranted because the TTAB and the District Court use different factors to evaluate likelihood of confusion and TTAB placed too much emphasis on the appearance and sound of the marks. The Eighth Circuit also gave weight to the fact that there was a different burden of persuasion at the TTAB than in the District Court. However, in fact, the Eighth Circuit incorrectly assumed that Hargis bore the burden at the TTAB, while B&B bore the burden before the District Court, when in reality, B&B bore the burden at the TTAB as well.
The issue before the Supreme Court was whether the District Court should have applied issue preclusion to the TTAB’s decision that Hargis’ mark was confusingly similar to B&B’s mark. The Supreme Court held that, in a subsequent district court proceeding, the court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met.
The Supreme Court found that where a single issue is before a court and an administrative agency, preclusion often applies. Moreover, there is nothing in the Lanham Act that bars the application of issue preclusion. When a district court decides an issue that overlaps with part of the TTAB’s analysis, the TTAB gives preclusive effect to the court’s judgment. Accordingly, issue preclusion applies where the issues in the two cases are indeed identical and the other rules of collateral estoppel are carefully observed. For example, the parties in both litigations are identical.
The Supreme Court found that the standard for likelihood of confusion for purposes of registration is the same as for purposes of infringement. The district court’s and TTAB’s likelihood of confusion factors are not fundamentally different. The operative language is essentially the same and the Lanham Act language has been in use since 1881. Also, can cancel registrations during infringement litigation and adjudicate infringement using one standard of likelihood of confusion.
The Court acknowledged that 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. Additionally, if the TTAB has not decided the same issue as that before the district court, there is no reason why any deference would be warranted.