Supreme CourtBack in January, we were so bold as to state that “it’s not very often that the United States Supreme Court decides a trademark issue…” Well, it appears that Supreme Court pronouncements in the trademark field are more common than we thought, at least this year. On March 24, 2015, the U.S. Supreme Court, inB&B Hardware, Inc. vs. Hargis Industries, Inc., held that decisions of the Trademark Trial & Appeal Board (“TTAB”) on the issue of likelihood of confusion may be binding on the federal court in the same case if it is appealed.  This is referred to as “issue preclusion.”  For those who don’t know, the TTAB is the administrative tribunal of the United State Patent and Trademark Office, which hears appeals and other matters involving the registerability of trademarks. Its decisions may be appealed to federal court.  Yes, this is technical, but the case is very important for parties who are paying lawyers to litigate before the TTAB and often relitigating the same issues on appeal to federal court.  So, what happened in the B&B Hardware Case?

It’s a long convoluted story but, fortunately, many of the details are not relevant here.  In 1997, B&B Hardware, a manufacturer of fastening products in the aerospace field and owner of the SEALTIGHT trademark, filed a TTAB opposition action against Hargis who was attempting to register SEALTITE for fastening products in the construction industry.  B&B argued that the registration would create confusion in the marketplace with their trademark.  The TTAB agreed and, after examining the legal factors along with the evidence presented by the parties, concluded that the applied-for trademark would create a likelihood of confusion.  Hargis appealed to the federal district court, which rejected B&B’s urging that the TTAB decision be given preclusive effect.  Undeterred, B&B appealed to the federal Circuit Court of Appeals, which affirmed the district court, writing that differences in the standards and burden of proof between the TTAB and court did not warrant issue preclusion. Still undeterred, B&B appealed to the U.S. Supreme Court, which reversed the lower courts, holding that “the court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met.” The Court cautioned that both tribunals must be considering the same issues:

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. By contrast, if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding the same issue. Thus, 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.”…

On its face, one of the implications of the the B&B Hardware decision is that litigants may save resources by not having to re-litigate “likelihood of confusion” issues in federal court.   The counter-argument is that litigants may actually spend more money and resources in TTAB proceedings knowing that  the administrative judge’s decision may preclude the federal court from deciding the issue again.  On the other hand,  the TTAB, in view of its limited jurisdiction, may not be the tribunal a litigant wants to make such decisions and, therefore, it may opt to bypass the TTAB process altogether.  B&B Hardware has made these decisions more difficult and raises the level of uncertainty in the outcome. There has been much written about B&B Hardware and the strategic questions it raises so lawyers will continue to monitor its aftermath.

–Adam G. Garson, Esq.