Post by Dan Lorentzen
Although trademarks exist outside of the federal trademark system set out in title 15 of the U.S. Code (the Lanham Act), federal trademark law provides a number of benefits to mark owners who register their trademarks through the United Stated Patent and Trademark Office. In the context of federal trademark law, a trademark owner's rights in a mark, and the validity of that mark, can be tested in two separate types of proceedings: a lawsuit in federal court, or opposition at the USPTO. The recent Supreme Court decision in B&B Hardware, Inc. v. Hargis Industries, Inc. provides important clarification on how determinations in the two types of proceedings interact.
B&B registered its mark SEALTIGHT in 1993 for "“threaded or unthreaded metal fasteners and other related hardwar[e];namely, self-sealing nuts, bolts, screws, rivets and washers, all having a captive o-ring, for use in the aerospace industry.” Hargis began producing metal screws for use in building construction using the mark SEALTITE, and sought to register the mark in 1996. B&B sued Hargis in federal court for trademark infringement and also filed a concurrent opposition to Hargis' registration at the USPTO. A central question in both proceedings was whether there was a likelihood of confusion between Hargis' SEALTITE mark and B&B's already registered SEALTIGHT mark.
Before the District Court had ruled on the likelihood of confusion, the Trademark Trial and Appeal Board (TTAB) of the USPTO ruled on the opposition proceeding, determining that Hargis' mark could not be registered because there was a likelihood of confusion with respect to B&B's mark. Hargis did not appeal the TTAB decision to either a district court or the Federal Circuit. B&B, in turn, argued to the District Court that as a result of the TTAB's decision, Hargis could not contest likelihood of confusion in the pending court proceeding. Following Eighth Circuit precedent, the District Court disagreed, reasoning that the TTAB is not a judicial body created by Article III of the Constitution, and so the TTAB decision could not have preclusive effect on the District Court. The jury ultimately found there to be no likelihood of confusion. B&B appealed to the Eighth Circuit, which affirmed the District Court on the basis that the TTAB weighs different interests (e.g., the right to register versus the right to use) and applies different factors in determining likelihood of confusion than a district court would.
On ultimate appeal, the Supreme Court resolved a Circuit-split on this issue and held that determinations of likelihood of confusion at the USPTO could be preclusive for subsequent determinations in litigation. The Court concluded that an administrative determination, such as by the USPTO, can be preclusive for determinations of the same issue in federal court when the administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate. The Court further determined that although the specific factors used by the district courts and the USPTO for determining likelihood of confusion may be different, the underlying legal standard is the same for both litigation and registration. However, the holding is limited to situations where the application/registration at issue in the TTAB proceedings covers goods and services that are "materially the same" as those at issue in the federal court proceeding.
It is worth noting that the Court's opinion relates to TTAB decisions regarding likelihood of confusion for trademark registration—that is, determinations proceedings such as oppositions where the parties have a chance to "litigate" the pertinent issues. The same type of preclusion would not apply simply as a result of registration of a mark with the USPTO.
As a result of this decision, parties considering taking action against a federal trademark applicant or registrant should carefully compare the goods/services shown in the trademark application/registration to the their own goods and services to determine whether they should proceed in the TTAB or a federal court. Additionally parties trademark applicants/registrants who lose at the TTAB should strongly consider an appeal of that decision because that decision may now have preclusive effect in later federal court cases.
The full decision is available here.