Applying Preclusion Based on TTAB Decision, Ohio District Court Denies Non-Infringement Counterclaim

In view of the TTAB's decision in Buzz Seating Inc. v. Encore Seating, Inc., Opposition No. 91210838 (August 23, 2016), the U.S. District Court for the Southern District of Ohio applied both issue preclusion and (dubiously) claim preclusion in dismissing Defendant Encore's counterclaim seeking a declaratory judgment of non-infringement. Buzz Seating Inc. v. Encore Seating, Inc., Civil Action No. 1:16-cv-1131 (June 16, 2017).

The Board sustained Buzz Seatings's opposition to registration of the mark FLITE for "Office furniture, including chairs," finding the mark likely to cause confusion with Buzz's previously used, identical mark for stacking or side chairs (see photo above). The Board found the involved goods to be closely related, since Encores executive chairs and Buzz's side chairs could be used in the same office.

As for channels of trade, the Board ruled that "the legally identical goods must be presumed to be sold in the same channels of trade." [Question: since Buzz does not own a registration for its mark, is it entitled to a presumption as to its own channels of trade? - ed.]. In any case the Board found that "both Opposer and Applicant sell their chairs through independent representatives to dealers or distributors who, in turn, sell them to the ultimate users." Executive chairs and side chairs, the Board found, "can be sold by the same dealers or distributors to the same customers."

Buzz Seating then sued Encore trademark infringement and unfair competition. Encore filed a counterclaim seeking a declaratory judgment of non-infringement. Buzz Seating moved to dismiss Encore’s counterclaims based on the doctrines of res judicata (claim preclusion) and collateral estoppel (issue preclusion), in view of the TTAB's decision.

Issue Preclusion: The district court, however, found that Encore failed to prove material differences between the usages identified in the opposed application and the actual usage. The district court found the difference between "Office furniture, including chairs" and "executive chairs" to be not material. Moreover, the TTAB rejected that same basic argument. The Board also considered the actual channels of trade for the involved goods.

Claim Preclusion: Moreover, the district court ruled, even if there were a material difference between the actual goods, and even if the TTAB discussion was dictum, Encore's claim "still would be barred under a claim preclusion analysis." Encore's claim based on executive chairs "specifically was or could have been litigated in the administrative proceedings." Therefore, the requirements of claim preclusion were satisfied.

And so the Board dismissed the counterclaim.

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TTABlog comment: The district court was determined to get rid of this counterclaim. Was this a proper application of B&B
in the issue preclusion context? The court's application of claim preclusion seems wrong to me. One is a claim of for a declaratory judgment of non-infringement: there is no such parallel claim at the TTAB. Non-infringement is an issue, not a claim.

Text Copyright John L. Welch 2017.