Supreme Court holds TTAB decisions can have preclusive effect in subsequent infringement actions

Originally published by Tim Kenny (US).

Earlier today, the U.S. Supreme Court issued a landmark trademark decision holding that TTAB rulings on likelihood of confusion can have preclusive effect in subsequent federal court infringement actions. B&B Hardware, Inc. v. Hargis Industries, Inc., No. 13-352, slip op. (U.S. Mar. 24, 2015)

We previously reported on the 18-year fight between B&B Hardware and Hargis Industries that led the high court to address the circuit split on the issue.

Summary of Decision

In a 7-2 decision, Justice Alito delivered the opinion of the Court, beginning with the following statement:

Sometimes two different tribunals are asked to decide the same issue. When that happens, the decision of the first tribunal usually must be followed by the second, at least if the issue is really the same. Allowing the same issue to be decided more than once wastes litigants’ resources and adjudicators’ time, and it encourages parties who lose before one tribunal to shop around for another. The doctrine of collateral estoppel or issue preclusion is designed to prevent this from occurring.

Slip op. at 1.

In this decision, the Court addressed several threshold issues noting that:

(a) agency decisions can “ground preclusion” in a subsequent federal court proceeding;

(b) there is nothing in the Lanham Act that “rebuts the presumption in favor of giving preclusive effect to TTAB decisions where the ordinary elements of issue preclusion are met”; and

(c) “[t]here is no categorical reason why registration decisions can never meet the ordinary elements of issue preclusion.”

Id. at 8-14.

The Court then specifically addressed the Eighth Circuit’s and Petitioner’s primary reasons for objecting to issue preclusion for TTAB decisions and dismissed those objections concluding:

• “[T]he same likelihood-of-confusion standard applies to both registration and infringement.” Id. at 15.


• The fact that the TTAB and district courts use different procedures “only suggests that sometimes issue preclusion might be inappropriate, not that it always is.” at 19.


• That the stakes for registration are not always too low for issue preclusion in later infringement litigation. The Court emphasized that: “When registration is opposed, there is good reason to think that both sides will take this matter seriously.” at 21.

The Supreme Court then held: “So long as the ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before a district court, issue preclusion should apply.” Id. at 22.

The Court did not go into detail on the issue of explaining “materiality,” but noted that “trivial variations between the usage set out in the application and the usage in the marketplace do not create different ‘issues,’ just as trivial variations do not create different marks.” Id. at 18 (citations omitted). However, based on the Court’s decision, it is reasonable to expect that with a strongly contested TTAB proceeding, unless the losing party makes significant changes to its use of the mark(s) at issue – or the context of use considered by the TTAB was otherwise materially different, such as in an opposition to an intent-to-use application – issue preclusion will apply.

Issues for Companies to Consider

This decision will likely have a significant effect on how brand owners make strategic decisions about how and where to police their marks in the future. If you are a brand owner/plaintiff with a strong case, you may be able to get more benefit and certainty out of a TTAB decision now (at a lower cost and less disruption). In making these strategic decisions, brand owners will want to consider at least the following issues:

• Will this decision result in an increased focus and use of TTAB litigation as a less expensive, less disruptive mechanism to address both registration and use issues (through the preclusive effect of a TTAB decision in a subsequent infringement action)?


• In light of the potential increased importance of a TTAB decision, should a company continue to handle part or all of opposition work in-house?


• If opposition work is sent to outside counsel, is it being handled by outside counsel with sufficient trademark litigation experience to develop the issues and evidence in a way that the record will support a preclusive effect in subsequent litigation?


• For marks that are enforced through regular TTAB actions, should companies develop comprehensive evidence files for those important marks to drive down the cost of each TTAB proceeding and be prepared (and show the other side you are prepared) to fully litigate the TTAB proceeding?


• Should your company consider seeking broader discovery (within TTAB limitations) from the opposing party in TTAB proceedings than it would have before this decision?


• In the appropriate circumstance, should your company consider additional strategies within the TTAB proceeding, such as the use of survey evidence or requesting an oral hearing?


• Is your company prepared to fully litigate TTAB proceedings to avoid the potentially negative impact of an adverse decision in subsequent litigation?


• Instead of instituting a TTAB action, should your company consider initiating legal action in federal court, possibly in a more convenient venue (provided that a “justiciable controversy” exists)?

Companies in the position of defendant in a TTAB proceeding will want to consider at least the following issues:

• Is the company prepared to fully litigate the TTAB proceeding to avoid the potentially negative impact of an adverse decision on not only registrability, but on use?


• If you are unsure whether you will win in the TTAB, should the company consider strategies within the TTAB proceeding to avoid litigating all issues or taking all discovery that would insure that the decision would have preclusive effect?


• Or, if you think you have a good chance of prevailing in the TTAB, should your company consider seeking broader discovery (within TTAB limitations) from the opposing party in TTAB proceedings than it would have before this decision? In the appropriate circumstance, should your company consider additional strategies within the TTAB proceeding, such as the use of survey evidence or requesting an oral hearing?


• If a party litigates and does not prevail in a TTAB proceeding involving likelihood of confusion, and does not want to be stuck with the result (even if the perceived basis for the decision is that the TTAB employs different procedures, or that the TTAB may give greater weight to some factors than others), then the company should consider appealing the TTAB’s decision. If the decision is not appealed, and the TTAB considered the marketplace context in its decision, preclusion will apply to the likelihood of confusion issue in a subsequent infringement case.


• Instead of fully litigating the dispute in a TTAB proceeding, should your company consider initiating legal action in federal court, possibly in a more convenient venue (provided that a “justiciable controversy” exists)?

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

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