Precedential No. 25: Issue Preclusion Applies to Standing, Says TTAB

In November 2015, the Board dismissed a cancellation petition brought by NH Beach Pizza LLC because NH failed to prove standing. [TTABlogged here]. NH then filed a new petition for cancellation on the same ground as the prior petition. Respondent moved for summary judgment on the basis of collateral estoppel (issue preclusion) because the issue of standing had already been decided against Petitioner NH. The Board granted the motion and dismissed the new petition. NH Beach Pizza LLC v. Cristy’s Pizza Inc., 119 USPQ2d 1861 (TTAB 2016) [precedential].

Under B & B Hardware, Inc. v. Hargis Indus., Inc., issue preclusion bars the re-litigation of the same issue in a second action.

The application of issue preclusion requires: (1) identity of an issue in the current and a prior proceeding; (2) actual litigation of that issue in the prior proceeding; (3) that determination of the issue was necessary in entering judgment in the prior proceeding; and (4) that the party with the burden of proof on that issue in the second proceeding had a full and fair opportunity to litigate the issue in the prior proceeding.

There was no factual dispute that would preclude entry of summary judgment.

As to the first element, Petitioner pled the same basis for its standing as in the first proceeding: that it uses "the generic term ‘beach pizza’” to promote its goods and that respondent claimed that this usage caused actual consumer confusion.

As to the second element, the issue of standing was actually litigated and decided in the prior proceeding. The fact that the basis for the decision was NH's failure to provided evidence of its standing does not change the fact that the issue was actually litigated.

NH wrongly asserted that the original case was dismissed "without prejudice." The Board noted that the case was "dismissed." In any event, even in a case dismissed without prejudice, the issue decided is subject to issue preclusion. Claim preclusion may not apply, but issue preclusion will bar the re-litigation of the same standing argument in a second proceeding.

The Board pointed out that NH could have rectified its evidentiary deficiencies by pursuing an appeal of the Board’s decision pursuant to Section 21(b) of the Trademark Act, 15 U.S.C. § 1071(b), which would have allowed NH an opportunity to submit new evidence regarding its standing. [As I suggested in the first blog posting - ed.].

The third factor was met because the standing determination was necessary to the Board's prior decision. "Indeed, it was the reason that the Board dismissed the Prior Action."

Finally, the fourth factor was satisfied because Petitioner NH was fully represented in the prior proceeding and had a full and fair opportunity to introduce testimony or other evidence on the issue of its standing. .

And so the Board dismissed the petition for cancellation with prejudice.

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TTABlog comment: Double ouch!

Text Copyright John L. Welch 2016.