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March 26th, 2015
Supreme Court Rules on Precedential Impact of Trademark Trial and Appeal Board Decisions
The recent Supreme Court decision in B&B Hardware, Inc. v. Hargis Industries, Inc. contains some important news for trademark owners and practitioners.
The decision examines a fairly technical question: whether a Trademark Trial and Appeal Board ("TTAB") decision on the likelihood of confusion of two parties' trademarks can preclude the parties from having a federal court consider that issue in a subsequent litigation. (The TTAB is part of the U.S. Patent and Trademark Office. It is an administrative agency that adjudicates disputes concerning the registerability of trademarks.)
Here is what you should know about the decision and its implications:
The Court found that a TTAB decision on likelihood of confusion may have preclusive effect, but only where the "usages adjudicated by the TTAB are materially the same as those before the district court." As the Court recognized, a "great many" TTAB decisions will have no preclusive effect at all. That is because the scope of facts considered in a federal court infringement litigation is generally broader than that considered in a TTAB proceeding. In the TTAB, the review is based on the use described in the parties' respective trademark filings, as opposed to the parties' actual use in the marketplace, which can be quite different.
The B&B case involves a dispute between B&B Hardware, Inc. ("B&B") and Hargis Industries, Inc. ("Hargis") that has been fought for nearly 20 years. B&B filed an opposition with the TTAB against Hargis's application for SEALTITE for metal screws for use in construction. B&B alleged that Hargis's mark was not entitled to registration because it was confusingly similar to B&B's federally registered trademark, SEALTIGHT, for metal fasteners for use in the aerospace industry. The TTAB ruled in B&B's favor, and Hargis did not file an appeal. Instead, Hargis asked a federal district court to review the issue of confusion in a pending litigation between the parties.
B&B argued that the TTAB already decided that confusion was likely, and that the District Court was consequently precluded from making its own determination of that issue. However, the District Court ruled that the TTAB's decision had no preclusive effect because the TTAB is an agency and not a court. The action proceeded, and the jury subsequently found that there was no likelihood of confusion. B&B appealed to the Eighth Circuit Court of Appeals, which affirmed the District Court's decision. B&B then petitioned the Supreme Court to review the case.
While the Supreme Court's decision in B&B may have limited application, it nonetheless is likely to have practical impact. Under the Trademark Law, a party that loses in a TTAB proceeding has the option of appealing the decision to the Federal Circuit Court of Appeals, or filing a new action before a federal district court. Particularly in cases where the parties' uses closely mirror those described in their federal trademark filings, the risk of being precluded from having a court consider likelihood of confusion in a new action may result in a higher number of appeals. The B&B decision also is certain to play a part in trademark litigation strategies, both in the decision of whether to fight a dispute in federal court or before the TTAB, and in the manner and extent to which the parties build their evidentiary records when they are before the TTAB.
If you have questions about the B&B decision, or about any other trademark or brand management issues, please contact Catherine M. C. Farrelly at email@example.com or any other member of the Frankfurt Kurnit Trademark & Brand Management Group.
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