The Supreme Court addressed the preclusive effect of decisions of the USPTO’s administrative court, the Trademark Trial and Appeal Board (TTAB), on district court trademark infringement proceedings in B&B Hardware, Inc. v. Hargis Indus., Inc. In its ruling this week, the Court held that a district court should give preclusive effect to a TTAB decision if the ordinary elements of issue preclusion are met. Although the result might not be considered particularly surprising, the impact on trademark owners and litigants could be significant. 

This case involved a long-running conflict between similar trademarks, SEALTIGHT and SEALTITE, used with fasteners for the aerospace and construction industries, respectively. B&B owned a federal registration for the SEALTIGHT mark covering metal fasteners for use in the aerospace industry, and opposed Hargis’ application to register the SEALTITE mark for fasteners used to make metal and post-frame buildings. The TTAB found a likelihood of confusion between the marks, and denied registration on that basis.

At the same time it was prosecuting the opposition proceeding in the TTAB, B&B sued Hargis for trademark infringement under the Lanham Act. When the TTAB issued its decision, B&B argued that the district court was bound to rely on the TTAB likelihood of confusion finding under the doctrine of issue preclusion. The district court disagreed, and a jury found no likelihood of confusion between the marks, and thus no infringement. B&B appealed the district court’s decision on issue preclusion, which the U.S. Court of Appeals for the Eighth Circuit upheld. The Supreme Court then granted B&B’s petition for certiorari.

The Supreme Court started with the touchstone elements of issue preclusion: (1) was the issue actually litigated and determined by a valid and final judgment?; and (2) was the determination essential to the judgment?  There is no reason that an agency decision cannot ever provide the basis for issue preclusion, the Court noted, and neither the text nor the structure of the Lanham Act forbids it. In addition, rather than focus on the slightly different factors used by the TTAB and district courts to determine likelihood of confusion, the Court noted the similarity of the likelihood of confusion standard itself. 

Thus, the Court found that the real issue to be decided when a party argues for issue preclusion is whether a mark owner’s actual uses of its mark are materially the same as the uses covered by the owner’s application or registration. If so, issue preclusion applies; if not, it doesn’t. The Court gave, as an example of a trivial or nonmaterial difference, the addition of descriptive or nondistinctive elements to a mark.

Key Takeaways of B&B Hardware Decision

• The key to asserting or defending against issue preclusion based on a TTAB decision is whether the actual uses of the relevant marks materially differ from those covered by the applications and registrations. Materiality is a fact-driven standard, and thus will require additional guidance from the courts to define its parameters. 
• In TTAB proceedings involving likelihood of confusion, litigants should carefully strategize to either create or eliminate potential material differences, making sure to highlight the differences in order to lower the chances of issue preclusion, or to downplay or remove the differences in order to increase the chances.
• Although not covered by the Supreme Court’s decision, its holding may impact the TTAB’s historical willingness to suspend cases when a TTAB litigant files a related district court case for infringement or for a declaratory judgment of non-infringement.

If the B&B Hardware decision raises questions or to determine its impact on you, please contact experienced intellectual property counsel. 

© 2015 Perkins Coie LLP