CAFC Affirms TTAB in WINNIE-THE-POOH Summary Judgment on Collateral Estoppel

In a precedential decision, a divided panel of the CAFC affirmed the TTAB's entry of summary judgment in a consolidated proceeding (eleven oppositions and one cancellation) involving trademark rights in various Winnie-the-Pooh marks. The Board ruled (here) that collateral estoppel barred SSI from re-litigating the issue of ownership, and that absent ownership, SSI's claims for likelihood of confusion, dilution, and fraud must fail. Stephen Slesinger, Inc. v. Disney Enterprises, Inc., 105 U.S.P.Q.2d 1472 (Fed. Cir. 2012) [precedential]. [mp3 of oral argument here].


This case is a chapter in a long-running dispute concerning rights arising out of the works of A.A. Milne. The TTAB proceeding involved only the registrability of certain trademarks relating to those works. The controversy centers around a 1983 agreement between the parties. SSI claimed that certain rights in the Winnie-the-Pooh works were reserved to it by the agreement, whereas Disney maintained that the agreement assigned all of SSI's ownership rights (including trademark rights) to Disney.

At the TTAB, Disney moved to dismiss all of SSI's claims on the ground that SSI is collaterally estopped from re-litigating the issue of ownership of the marks because that issue was decided in 2009 in a civil action between the parties in the U.S. District Court for the Central District of California. The district court found that Slesinger granted its rights to Disney and "may not now claim infringement of any retained rights."

SSI argued that the district court did not actually decide the that issue, and further that any such determination was not necessary to the district court's judgment. It asserted that the court decided only whether Disney's uses were authorized, without having to reach the issue of whether there was an assignment or a mere license of the rights.

The Board, treating the motion as one for summary judgment, found that collateral estoppel barred Slesinger’s claims and it granted Disney’s motion.

The CAFC panel majority observed that the Board’s decision to grant summary judgement is reviewed without deference. The appellate court observed that collateral estoppel requires four elements: (1) a prior action presents an identical issue; (2) the prior action actually litigated and adjudged that issue; (3) the judgment in that prior action necessarily required determination of the identical issue; and (4) the prior action featured full representation of the estopped party.

SSI conceded that the first and fourth factors were satisfied. As to the second factor, SSI maintained that the district court failed to consider properly the scope of the 1983 agreement, noting for example that the district court did not use the word "assignment." The CAFC concluded otherwise. It agreed with the Board's statement that "[t]he clear wording of the district court’s order does not support SSI’s contention that the decision was focused only on whether a particular array of uses by Disney of the POOH works was authorized." Moreover, as the Board concluded, the "unambiguous nature of the contracts is strongly supported by the conduct of the parties over the nearly 50 years of their relationship." Both SSI and Disney parties treated the agreements as a complete assignment of  rights to Disney. "With such a clear explanation that Slesinger conveyed all rights completely to Disney, it is immaterial that the district court used the terms 'transfer' and 'grant' rather than 'assignment.'"

With regard to the third factor, the CAFC found the district court’s ruling to be neither incidental nor collateral. It directly addressed SSI's ownership interest in the Pooh rights, and that evaluation was "clearly an essential element of the judgment." The district court had to decide the issue of ownership before taking up the issue of whether Disney’s uses of the marks were infringing. It was also essential to determine ownership before considering SSI's request to correct the subject registrations to Slesinger’s name.

Therefore, the CAFC agreed with the Board that collateral estoppel applied, and it affirmed the Board's decision.

Circuit Judge Reyna dissented, maintaining that the district court did not decide ownership of the trademarks, and furthermore that a decision on ownership was not necessary to the district court’s decision concerning trademark infringement. In a nutshell, Judge Reyna asserted that the district court "was asked to resolve whether the transfer effected a license (for use), or an assignment (sale) of the trademarks." The court could have decided that Disney had a license to use the mark, and therefore was not an infringer. "The district court’s failure to definitively and expressly state whether the transfer was a license or assignment is striking and illuminating," and there is a reasonable doubt as to whether the district court decided that issue.

Moreover, Disney did not have to be an owner of the marks to avoid the infringement claim. "[O]wnership of the Pooh trademarks was not the only rational basis on which a fact finder could find non-infringement. An equally rational basis is that Disney was an authorized user under a license. It follows that collateral estoppel cannot apply."

There, Judge Reyna concluded that the TTAB had erred.

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Text Copyright John L. Welch 2012.