Supreme Court Rules that TTAB Decision May Have Preclusive Effect
In an attention-grabbing decision, at least in trademark circles, the Supreme Court ruled yesterday that, in an action for trademark infringement, "[s]o long as the other ordinary elements of issue preclusion are met, when the uses adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply" to the issue of likelihood of confusion. The Court reversed the decision of the Eight Circuit that held that the TTAB decision in favor of B&B was not entitled to preclusive effect because, inter alia, the TTAB and the Eighth Circuit use different factors to evaluate the issue. B&B Hardware, Inc. v. Hargis Industries, Inc., 113 USPQ2d 2045 (2015).
The Court held that issue preclusion can be grounded on the decision of an administrative agency. Both Supreme Court precedent and the Restatement (Second) of Judgments "make clear that issue preclusion is not limited to those situations in which the same issue is before two courts." [The Court did not address the question of whether this application of issue preclusion is constitutional because that Article III issue was not properly raised.] The Court found nothing in the Lanham Act that bars application of issue preclusion in this type of case.
Nor is there any categorical reason why TTAB decisions on registration can never meet the ordinary elements of issue preclusion. The Court agreed with Professor McCarthy that issue preclusion applies when "the issues in the two cases are indeed identical and the other rules of collateral estoppel are carefully observed."
The Court found that, despite some differences in the factors applied by the TTAB and the Eight Circuit in assessing likelihood of confusion, the test were not fundamentally different. The standard for purposes of registration is the same as for purposes of infringement. Because the TTAB considered the mark as shown in the application for the goods identified in the application, its determination regarding likelihood of confusion may not resolve the issue as to usages that are not disclosed. However, that is not a reason for concluding that issue preclusion may never apply.
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.” 6 McCarthy §32:101, at 32–246.
The Court remanded the case to the Eight Circuit, directing it to apply the following rule: "So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply."
Justice Ginsburg concurred in the majority opinion, on the understanding that "for a great many registration decisions issue preclusion will obviously not apply," because the decisions often involve "a comparison of the marks in the abstract and apart from their marketplace usage."
Justices Thomas and Scalia dissented, finding inadequate support for the proposition that common law principles of preclusion should apply to decisions of administrative tribunals, or that Congress implicitly authorized the decisions of the TTAB to have preclusive effect.
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TTABlog note: When a losing TTAB party seeks review by way of civil action under Section 1071, it is entitled to a trial de novo. Often infringement claims are added to the action. If additional or new evidence is submitted, it would seem that preclusion goes out the window. Is B&B v. Hargis a rare case where the opposition and civil action are simultaneous, with no appeal from the TTAB ruling?
Text Copyright John L. Welch 2015.