Friday, December 15, 2017

SDNY Applies B&B Hardware Issue Preclusion Based on 2004 TTAB Decision

In a trademark infringement suit in the Southern District of New York, the U.S. district court granted plaintiff's motion for summary judgment, ruling that issue preclusion applied to the issue of likelihood of confusion based on a 2004 TTAB decision [pdf here]. The court found defendant's mark LIANA for wine confusable with plaintiff's previously registered mark LIANO for wine. Defendants argued that "their actual marketplace usage of LIANA is materially different from that with the TTAB adjudicated," but the court disagreed. Did the court properly apply B&B Hardware? Cesari S.R.L. v. Peju Province Winery L.P. et al., Civil Action No. 17 Civ. 873 (NRB) (S.D.N.Y.  Dec. 11, 2017).

According to B&B Hardware, issue preclusion applies to TTAB adjudications, the Court concluding that "[s]o 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."

Defendants pointed out that their actual usage is limited to wines from grapes grown in Northern California, wines purchased by sophisticated customers, new world wines, wines priced between $40 and $60 per bottle, and wines sold on specific websites and at specific wineries.

The court, however, found this to be a "distinction without a difference in this context."

The specific trade channels and classes of consumers that purportedly characterize the LIANA mark’s usage are among the “reasonable trade channels” and “usual classes of consumers” the TTAB considered. In other words, the marketplace usage the TTAB considered, wines, entirely encompasses the narrower usages defendants proffer in this litigation. Wines purchased by sophisticated consumers, after all, are still wines. Because defendants have not offered any evidence that LIANA is used with respect to goods other than wines (bicycles or soda, for instance), there are no “non-disclosed” usages that might necessitate a successive adjudication. See B&B Hardware, 135 S. Ct. at 1307-08.

The court therefore granted plaintiff's motion for summary judgment against the one defendant involved in the prior TTAB proceeding, but not to the other defendants because plaintiff failed to prove that they controlled the applicant in the TTAB proceeding or in this litigation.

Read comments and post your comment here.

TTABlog comment: Is this a correct reading of B&B Hardware? I think not. The Board did not limit its consideration to actual marketplace conditions, and therefore I think the Board's decision does not automatically end the discussion. Remember what Justice Ginsburg said in her concurring opinion in B&B Hardware. She concurred 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."

Text Copyright John L. Welch 2017.


At 7:19 AM, Anonymous Joe Dreitler said...

I think many of us believed that this would be the result in many district courts. They can get a case off of their docket and have a Supreme Court case to support their position. How many circuit courts want to rebverse and get another trip to the Supreme Court. If trademark owners do not like this result, this is a decision that needs to be addressed with legislation, much the Anti-Monopoly decision and others where there was a consensus that it was a wrong application of theLAnham Act.

At 8:59 AM, Anonymous Anonymous said...

Unfortunately this judge just didn't understand B&B.

At 9:22 AM, Anonymous Paul Reidl said...

I agree, John, but understand how a court could get confused. in B & B the Court rejected the argument that preclusion could NEVER apply because the TTAB does not look at the real world. The Court's decision was a narrow one in that it held that preclusion COULD apply if all of the elements for preclusion were satisfied. But I could see how someone could see the Court's rejection of the argument as meaning that the differences between the TTAB and the real world are irrelevant.

At 11:24 AM, Anonymous Anonymous said...

Totally contrary to what B&B counsels. The district judge rejected the notion that evidence of actual market contextual facts (which were inadmissible and/or not-even-in-existence in the TTAB proceeding 10 years earlier) means that the new infringement case is different from the prior TTAB case. Although there is no mention of it, another obvious point of material distinction is that the case now presents 10 additional years of market competition, and if there is little to no actual confusion, that would be a highly significant new fact. Did the lawyer defending against preclusion somehow fail to raise this point?? Or did the judge just ignore it?

This sort of wrong-headed decision is why a lot of TM lawyers freaked out about B&B. I criticized their freak-out at the time, but this decision shows that they may have had more of a basis to be concerned than I initially thought. I just didn't contemplate that a court could screw up the preclusion analysis this badly.

At 2:18 PM, Anonymous Anonymous said...

It's a lazy opinion that uses facile circular logic to find preclusion.

We're not seeing the full impact B&B (due to dumb rulings like this) is having.

I've been involved in several matters where the possibility of preclusion is impacting evaluation of risk, strategy in uspto, etc.

Of course, preclusion has always been around. But B&B brought it to the forefront and courts are unable or unwilling to see its nuances.


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