Precedential No. 20: Claim Preclusion and Issue Preclusion Inapplicable in VALVOLINE Opposition to MAXVOLINE, Says TTAB

In this Section 2(d) opposition, the Board denied Applicant Sunpoint's motion for summary judgment, ruling that neither claim preclusion nor issue preclusion applies to Opposer Valvoline's claim of likelihood of confusion between its registered marks VALVOLINE and MAX LIFE and Sunpoint's proposed mark MAXVOLINE, all for various automotive lubricants and fluids. A previous cancellation proceeding between the parties had resulted in cancellation of Sunpoint's registration for MAXVOLINE on the sole ground of nonuse. [TTABlogged here]. The Board had also concluded, "[f]or purposes of completeness," that Valvoline did not prove its likelihood of confusion claim. However, because Valvoline won that case and therefore could not appeal from the unfavorable Section 2(d) determination, it was not precluded from bringing that claim again. Valvoline Licensing & Intellectual Property LLC v. Sunpoint International Group USA Corp., 2021 U.S.P.Q.2d 785 (TTAB 2021) [precedential].

The doctrine of claim preclusion, sometimes known by persons of a certain age as res judicata, "bars a second action when there is (1) an identity of parties or their privies; (2) an earlier final judgment on the merits of a claim; and (3) the second claim is based on the same set of transactional facts as the first." See Jet, Inc. v. Sewage Aeration Sys., 55 U.S.P.Q.2d 1854, 1856 (Fed. Cir. 2000); Chutter, Inc. v. Great Concepts, LLC, 119 U.S.P.Q.2d 1865, 1868 (T.T.A.B. 2016).

Issue preclusion, or collateral estoppel, bars a party from re-litigating the same issue in a second action between the same parties, B&B Hardware, Inc. v. Hargis Indus., Inc., 125 S. Ct. 1293, 113 U.S.P.Q.2d 2045, 2051 (2015), and requires "(1) identity of an issue in a prior proceeding, (2) that the identical issue was actually litigated, (3) that determination of the issue was necessary to the judgment in the prior proceeding, and (4) that the party defending against preclusion had a full and fair opportunity to litigate the issue in the prior proceeding." Mayer/Berkshire Corp. v. Berkshire Fashions Inc., 76 U.S.P.Q.2d 1310, 1313 (Fed. Cir. 2005) (citing Montana v. U.S., 440 U.S. 147, 153-55 (1979)).

However, neither claim preclusion nor issue preclusion applies against a party if that party cannot appeal the outcome of the earlier proceeding. See AVX Corp. v. Presidio Components, Inc., 2019 U.S.P.Q.2d 171683, at *4-5 (Fed. Cir. 2019). The Board observed that, "[a]s a general rule, a prevailing party may not appeal from a favorable judgment simply to obtain review of findings it deems erroneous." Mathias v. Worldcom Tech., Inc., 535 U.S. 682, 684 (2002) (per curiam) (citing N.Y. Tel. Co. v. Maltbie, 291 U.S. 645 (1934) (per curiam)).

Here, the sole relief requested by Valvoline in the prior proceeding was cancellation of the MAXVOLINE registration. Although the Board determined that Valvoline had failed to carry its burden to prove a likelihood of confusion, that determination did not change the final judgment. Had Sunpoint appealed from the decision, Valvoline could have asserted likelihood of confusion as an alternative ground for affirmance of the Board's judgment. Sunpoint did not appeal, and so Valvoline received all the relief it sought and could not appeal in its own right. See id.; Maremont Corp. 174 U.S.P.Q. at 396.

The Board therefore denied Sunpoint's motion for summary judgment.

In addition to the summary judgment issue, the Board also addressed Valvoline's motion to amend its notice of opposition to plead the registered mark MAXLIFE TECHNOLOGY as an additional basis for its Section 2(d) claim. The Board granted the motion, finding that Valvoline did not unduly delay in seeking this amendment and that Sunpoint did not show that it would be materially prejudiced by the addition of that mark to proceeding.

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TTABlogger comment: The Board strongly encouraged the parties to proceed via ACR, since the parties had taken discovery in the previous proceeding regarding many of the relevant issues. What would you do? Is the handwriting on the wall with regard to the Section 2(d) issue?

Text Copyright John L. Welch 2021.