In yet another intellectual property-focused case, the Supreme Court has ruled that a decision by the Trademark Trial and Appeal Board (TTAB) may have a binding, preclusive effect on later litigation in a federal district court. The opinion came with a narrowed focus, allowing preclusion for issues adjudicated by the TTAB that are “materially the same” to those the parties take to the federal court, if the “other ordinary elements of issue preclusion” are also met. (Read the full opinion here)
The parties in B&B Hardware v. Hargis Industries were battling over whether the TTAB’s denial of registering Hargis’s “Sealtite” trademark because of the likelihood of confusion with B&B’s previously registered “Sealtight” mark would be binding in a later infringement case brought under the Lanham Act. Here, the Court was specifically asked whether the TTAB’s finding would preclude a district court from making a contrary decision – that is, that Hagis’s “Sealtite” was not confusingly similar with B&B’s “Sealtight.” By ruling that such preclusion may apply, the Court overturned the Eighth Circuit’s decision and resolved a split among other U.S. Circuit Courts of Appeals.
The Court did offer an example of where a TTAB decision would not meet the required elements for issue preclusion. For instance, if a trademark owner used its mark in a way that was materially the same as those listed in its registration application, the TTAB would be deciding the same likelihood of confusion issues as the trial court would in an infringement claim. However, if the mark owner utilizes its mark unlike those described in its application, then the TTAB is not deciding the same issue. The Court concluded that if the TTAB does not consider the marketplace usage of a mark, then the TTAB’s decision should not have a “‘later preclusive effect in a suit where actual usage in the marketplace is a paramount issue.’”
Traditionally, the TTAB, which is a federal agency, decides whether a new trademark may be registered, and it provides an avenue for previously registered marks to oppose new applicants. The TTAB considers such things as likelihood of confusion between same or similar marks, and its decisions did not have a preclusive effect on a later trademark infringement claim. This in effect gave parties a second bite at the apple when they took their infringement cases to trial.
In its opinion, the Supreme Court quashed all arguments that the TTAB used lesser standards than a trial court, and that despite any differences in procedure, there is no reason to doubt the TTAB’s “quality, extensiveness or fairness.”