Supreme Court Rules that TTAB Decision May Have Preclusive Effect
In an attention-grabbing decision, at least in trademark circles, the Supreme Court ruled yesterday that, in an action for trademark infringement, "[s]o long as the other ordinary elements of issue preclusion are met, when the uses adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply" to the issue of likelihood of confusion. The Court reversed the decision of the Eight Circuit that held that the TTAB decision in favor of B&B was not entitled to preclusive effect because, inter alia, the TTAB and the Eighth Circuit use different factors to evaluate the issue. B&B Hardware, Inc. v. Hargis Industries, Inc., 113 USPQ2d 2045 (2015).
The Court held that issue preclusion can be grounded on the decision of an administrative agency. Both Supreme Court precedent and the Restatement (Second) of Judgments "make clear that issue preclusion is not limited to those situations in which the same issue is before two courts." [The Court did not address the question of whether this application of issue preclusion is constitutional because that Article III issue was not properly raised.] The Court found nothing in the Lanham Act that bars application of issue preclusion in this type of case.
Nor is there any categorical reason why TTAB decisions on registration can never meet the ordinary elements of issue preclusion. The Court agreed with Professor McCarthy that issue preclusion applies when "the issues in the two cases are indeed identical and the other rules of collateral estoppel are carefully observed."
The Court found that, despite some differences in the factors applied by the TTAB and the Eight Circuit in assessing likelihood of confusion, the test were not fundamentally different. The standard for purposes of registration is the same as for purposes of infringement. Because the TTAB considered the mark as shown in the application for the goods identified in the application, its determination regarding likelihood of confusion may not resolve the issue as to usages that are not disclosed. However, that is not a reason for concluding that issue preclusion may never apply.
If a mark owner uses its mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a district court in infringement litigation. By contrast, if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding the same issue. Thus, if the TTAB does not consider the marketplace usage of the parties’ marks, the TTAB’s decision should “have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.” 6 McCarthy §32:101, at 32–246.
The Court remanded the case to the Eight Circuit, directing it to apply the following rule: "So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply."
Justice Ginsburg concurred in the majority opinion, on the understanding that "for a great many registration decisions issue preclusion will obviously not apply," because the decisions often involve "a comparison of the marks in the abstract and apart from their marketplace usage."
Justices Thomas and Scalia dissented, finding inadequate support for the proposition that common law principles of preclusion should apply to decisions of administrative tribunals, or that Congress implicitly authorized the decisions of the TTAB to have preclusive effect.
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TTABlog note: When a losing TTAB party seeks review by way of civil action under Section 1071, it is entitled to a trial de novo. Often infringement claims are added to the action. If additional or new evidence is submitted, it would seem that preclusion goes out the window. Is B&B v. Hargis a rare case where the opposition and civil action are simultaneous, with no appeal from the TTAB ruling?
Text Copyright John L. Welch 2015.
posted by John L. Welch @ 3/25/2015
6 comments
6 Comments:
This decision creates more questions then it answers. What about other issues that arise in inter partes actions, i.e., 2(e)(3), 2(a) etc... For instance, the Redskins issue, what if they later want to sue someone for infringement but there is a TTAB opinion that cancelled the mark because it is barred by 2(a)?
What about a default judgement in an inter partes proceeding? Could that have a preclusive effect in subsequent litigation? For example, what if an applicant elects to abandon the application at issue without consent, but proceeds to use the mark without a registration and is later sued for infringement?
A default judgment has no issue preclusive effect since no particular issue has been decided. It does have claim preclusion effect, in that the losing applicant cannot get a registration by re-filing the same application.
It raises a whole new level of procedural contentiousness in every Opposition/Cancellation. Section 2(d) is not the same as Section 32 for the obvious reason. Both deal with likelihood of confusion. One has only to do with registration and the other, if proven, usually results in an injunction barring use. While duPont may be somewhat similar to the Polaroid or Frisch's factors employed by district court judges, in practice they are not applied the same way for the reason that federal judges have applied a stricter standard given the power of an injunction. The numbers of successful 2(d) Oppositions in my reading of the last 37 years is much higher than finding of likelihood of confusion and injunctions issued in federal courts. There are numerous reasons for this, chief among them the fact that a Board finding of likelihood of confusion has not required an Applicant to cease use of a mark, whereas in federal courts it results in some type of prohibition on use or modification of use.
Will the Board assume the role of a civil court? In my experience the majority of Board actions have not required either the discovery, the testimony or the amount of evidence that parties produce in civil proceedings where the right to use is at stake. Can lawyers now afford not to treat a Board proceeding like they would a full blown infringement case in a federal court?
We also have this body of law sitting there that said filing an Opposition was not grounds for a civil suit declaratory judgment action. Medimmune lowered that bar, but given that a TTAB decision on likelihood of confusion can control, it fails the laugh test to say that filing an opposition against a use based application does not rise to the level of seeking a federal court to rule that there is no likelihood of confusion.
Since a lot of districts do not get that many trademark cases, it's pretty easy for a federal judge with a crowded criminal docket to take the easy way out and say that the Supreme Court has given me the chance to get rid of this by saying that there is a likelihood f confusion, so I'm agreeing with that, issuing an injunction and take it up on appeal if you want to argue that you deserve a trial de novo.
Finally, the case law is equivocal on whether a decision by a federal judge finding no likelihood of confusion in an infringement action is binding on the USPTO in an application to register the mark found not confusing. Given that Sections 2(d) and 32 are for very different purposes, that result is somewhat understandable. So we have the incredible outcome that an Article III judge can be bound by the decision of the PTO’s ALJ’s on the ultimate issue in an infringement suit – likelihood of confusion, but the Trademark Examiners are not bound by a decision of no likelihood of confusion by an Article III judge.
Not much thought given to the ramifications of this decision on the substantive law, just an effort to deal with administrative law and who cares about trademark law day to day. Incredibly poor decision that adds complexity and costs to a subject that really did not need either.
Will preclusion be "out the window" if the evidence sought to add on de novo appeal was available during the TTAB proceeding? I don't see why it would be. For that reason, I expect bigger records and broader discovery in TTAB cases going forward as parties will not want to miss covering all the evidence and all the DuPont factors for fear that they can't raise them later. I also believe there is likely to be an uptick in the number of Board proceedings because corporations may be able to essentially get the same results as federal court with in an easier to manage proceeding with less expense and greater predictability.
I expect an opposers will take a favorable judgment to an infringement action and ask for an injunction and an award of damages. I would do it.
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