Friday, May 03, 2013

Divided 8th Circuit Panel Says TTAB 2(d) Decision Has No Preclusive Effect in Infringment Suit

B & B Hardware sued Hargis Industries for trademark infringement, unsuccessfully claiming that defendant's use of the mark "Sealtite" for "self-drilling and self-taping screws" infringed B&B's mark "Sealtight" for fasteners used in the aerospace industry. The TTAB had sustained B&B's opposition to registration of the "Sealtite" mark on the ground of likelihood of confusion with B&B's mark. The district court rejected B&B's contention that the TTAB decision should be given preclusive effect on the likelihood of confusion issue and the United States Court of Appeals for the Eight Circuit agreed. The panel majority ruled that because the TTAB is not an Article III court, its decision on the issue of likelihood of confusion is not entitled to preclusive effect in a subsequent trademark infringement action between the parties. B & B Hardware, Inc. v. Hargis Industries, Inc., 106 USPQ2d 1660 (8th Cir. 2013).

The appellate court distinguished an earlier 8th Circuit precedent in which a decision of the CCPA (the CAFC's predecessor) was given preclusive effect on the issue of likelihood of confusion, observing that the CCPA was an Article III court at the time. The TTAB is not an Article III court and therefore the appellate court need not follow the earlier decision.

Moreover, even if the TTAB decision were entitled to preclusive effect, that would not be appropriate here because "the same likelihood-of-confusion issues were not decided by the TTAB as those brought in the action before the district court."

The simple fact that the TTAB addressed the concept of “likelihood of confusion” when dealing with Hargis’s attempt to register its mark does not necessarily equate to a determination of “likelihood of confusion” for purposes of trademark infringement. In reaching its determination, the TTAB used only 6 of the 13 factors from In re E.I. DuPont DeNemours & Co., 476 F.2d 1357, 1361 (CCPA 1973) .... *** When considering the question of likelihood of confusion for purposes of trademark infringement, in this Circuit, courts apply the six-factor test from SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir. 1980). *** Although some of the I.E. DuPont factors are the same or comparable to the SquirtCo factors, "for collateral estoppel to apply, the [TTAB] must have examined the 'entire marketplace context'" as is done in trademark infringement cases.

The TTAB ignored the marketplace usage of the marks and products, and so preclusion is not appropriate here, said the majority. The products were not similarly priced, similarly marketed, or intended to be used in conjunction with or in substitution for one another. And so the district court properly refused to apply preclusion.

The appellate court further ruled that the TTAB decision was not entitled to deference, and that the district court did not abuse its discretion in excluding the evidence of the TTAB decision before the jury. Hargis had argued that this evidence would be too prejudicial.

The dissent would have accorded preclusive effect to the TTAB's decision, in line with a statement by the Supreme Court that "giving preclusive effect to administrative factfinding serves the value underlying general principles of collateral estoppel: enforcing repose."

As to the test applied by the district court, the dissent urged that the modest differences in analytical approach between the TTAB test and the 8th Circuit test do not justify the refusal to apply collateral estoppel. Moreover, the dissenting judge asserted that the TTAB did consider the entire marketplace context.

TTABlog comment: There seems to be a split in the circuits on this issue. Hello, Mr. Court, Mr. Supreme Court, please pick up the white courtesy phone!

Text Copyright John L. Welch 2013.


At 8:27 AM, Anonymous Mark Donahey said...

Let's keep score. I've got cases from three circuits. Any others to add to the list?

No Preclusive Effect for TTAB 2(d) Finding:
* 2nd Cir: Levy v. Kosher Overseers Ass'n of America, Inc., 104 F. 3d 38, 42 (2nd Cir. 1997) ("For a TTAB or Federal Circuit determination of 'likelihood of confusion' to have collateral estoppel effect in a trademark infringement action, the TTAB or the Federal Circuit must have taken into account, in a meaningful way, the context of the marketplace.") (Decision)
* 8th Circuit: B & B Hardware, Inc. v. Hargis Industries, Inc., Appeal No. 11-1247 (8th Cir. May 1, 2013) (Decision).

Preclusive Effect for TTAB 2(d) Finding:
* 3rd Circuit: Jean Alexander Cosmetics, Inc. v. L'OREAL USA, 458 F. 3d 244 (3rd Cir. 2006) (Decision).

At 1:10 PM, Anonymous Anonymous said...

I have no idea why a District Court or Appeals Court would give the TTAB any deference. Much like how the TTAB ignores decisions by examiners, TTAB's decisions (the TTAB being composed largely of former examiners) should equally be ignored.

At 4:48 PM, Anonymous Tal Benschar said...

The inquiry of likelihood of confusion in a cancellation or opposition proceeding before the TTAB is different than the inquiry in an infringement case in federal court. It is basic TTAB law that it considers a use of the trademark for the goods listed to the full extent covered by the application or registration, regardless of factors not in the application/registration, for example price, market segment, use of other marks (such as house marks) etc. OTOH, it is basic trademark law that to determine infringement, all these factors -- what the defendant is actually doing, not what it could do -- must be taken into account.

In discussing a preclusive effect, we are discussing collateral estoppel, or issue preclusion, not claim preclusion. (The TTAB lacks jurisdiction to entertain an infringement claim, so there is no claim preclusion.)

A basic requirement of collateral estoppel is that the issue decided in the first case must be the same as what is at issue in the second case. In these kind of cases, that requirement is not meant. Even though both are labelled "likelihood of confusion," the inquiries are different. I accordingly don't see how preclusion can apply (unless there is something very unusual about the TTAB proceeding or the registration at issue.)

At 9:38 AM, Anonymous Anonymous said...



At 11:48 AM, Blogger TMAttorneyHeller said...

I agree with Tal Benshar comments. I advise clients that winning or losing in a TTAB proceeding does not mean they lose the right to use the mark. Only a federal trademark infringement case would result in a lost of trademark rights.


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