On March 24, 2015, in a case covered here in a previous posting (On Tap at the U.S. Supreme Court: An Important Trademark Case, September 3, 2014), the United States Supreme Court (Supreme Court) held that a determination of likelihood of confusion by the Trademark Trial and Appeal Board (TTAB), in an administrative tribunal which determines registerability, may preclude further litigation of the issue in a subsequent infringement case. In B&B Hardware, Inc. v. Hargis Industries, Inc., the Supreme Court reversed a decision by the Eighth Circuit Court of Appeals, which had determined that a TTAB finding would not bind an infringement court because, among other reasons, the factors considered by the TTAB were not identical to those considered by the trial court. The Supreme Court, though, by a 7-2 vote, held that when the ordinary elements of issue preclusion are met and where the issues in the two cases are identical, the ruling by the agency tribunal controls. The Supreme Court also found that even though the specific factors considered in a likelihood of confusion analysis may vary somewhat, they are not ‘fundamentally different’ and that the ‘likelihood of confusion’ standard is the same for registration and infringement purposes.
This decision makes clear that issue preclusion can be based on an administrative decision, such as a finding by the TTAB. It also found that in the Lanham Act (the federal trademark law), Congress did not express any reluctance to allow TTAB rulings to have preclusive effect.
The TTAB is the administrative court of the United States Patent and Trademark Office. It decides trademark oppositions, in which third-parties attempt to prevent the registration of a trademark, and trademark cancellations, in which third-parties attempt to cancel a registration that already has been issued. The TTAB generally follows the same rules and procedures as federal courts, although there are some substantial differences in how cases are litigated and what issues are decided. In many instances, the TTAB does not consider actual marketplace evidence, which is considered in infringement actions. TTAB proceedings do not have live trials or juries, and the TTAB does not issue injunctions or award damages; it simply rules on registerability.
While Justice Alito, in his opinion, notes that “for a great many registration decisions issue preclusion obviously will not apply”, this decision will require trademark owners and their attorneys to consider carefully the decision to file an opposition or cancellation in the TTAB, where its findings may control the likelihood of confusion issue in later-filed court infringement actions. It is likely that cases in the TTAB will be more hotly contested and heavily litigated, raising the cost of such litigation. TTAB decisions are more likely to be appealed, given the enhanced authority such decisions will now have. In other instances, a potential challenger may decide to forego a TTAB proceeding entirely, choosing instead to bring an infringement action in court, when there is a factual basis for doing so.
There certainly will be a shakeout period as courts work through the ramifications of this decision. In the meantime, brand owners will need to reassess their enforcement strategies, and trademark registration applicants will need to consider carefully the effect of being challenged in a TTAB opposition.