In cancellation and opposition proceedings, the Trademark Trial and Appeal Board ("TTAB") makes an administrative determination whether a trademark registration (or application for registration) should be cancelled or rejected. To make this determination, the TTAB considers whether the mark in the challenged registration (or application) is confusingly similar to existing trademark rights.
Likelihood of confusion is also usually the central issue in trademark infringement litigation. The tests for likelihood of confusion in TTAB proceedings and civil litigation, however, are often different. The TTAB ordinarily considers the trademarks of the parties and the associated good and services as shown in the parties' respective trademark applications or registrations. As actually used in commerce (the test in civil litigation), the trademarks, and the goods or services with which they are used, may differ from the descriptions in the trademark registrations or applications. Differences in the marks, associated goods or services, marketing channels, and intended consumers as actually used in commerce may not be relevant in the administrative context unless those differences are apparent from the trademark application or registration.
In B&B Hardware, Inc. v. Hargis Industries, Inc., 2015 US Lexis 2119,2015 WL 1291915 (March 24, 2015), the U.S. Supreme Court determined when a TTAB ruling on likelihood of confusion has a preclusive affect in subsequent civil litigation. B&B owns the mark SEALTIGHT registered for fastener products used in the aerospace industry. Hargis applied to register SEALTITE for construction fasteners. The TTAB sustained B&B's opposition to the Hargis application, finding a likelihood of confusion. In District Court, however, the jury found the Hargis SEALTITE trademark was not likely to cause confusion. The Eighth Circuit affirmed. The Supreme Court reversed and remanded.
A leading treatise on trademark law (McCarthy, Trademarks and Unfair Competition) takes the position that TTAB decisions have preclusive effect only if the TTAB considered the effect of marketplace usage of both marks. In its amicus brief the American Intellectual Property Law Association ("AIPLA") agreed with the McCarthy treatise. The Supreme Court majority essentially adopted the view of the McCarthy treatise.
"If a mark owner uses a mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a District Court in infringement litigation. By contrast, if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding the same issue. Thus, if the TTAB does not consider the market-place usage of the parties' marks, the TTAB's decision should 'have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.'"
Slip Opinion at 18 (quoting 6 McCarthy Trademarks and Unfair Competition § 32:101 at 32-246).
"So 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."
Slip Opinion at 22.
Justice Ginsburg concurred in the opinion emphasizing the Court's recognition that "for a great many registration decisions issue preclusion obviously will not apply." The one paragraph concurrence also cites to the McCarthy treatise.
Justices Thomas and Scalia dissented. Their reasoning, however, is not based on the evidence considered by the TTAB; instead, the dissenting Justices reject the presumption that agency decisions resolving disputes in an adjudicatory setting have preclusive effect on Article III Courts. Finding no indication Congress intended preclusive effect, the dissenting Justices would affirm the Eighth Circuit giving no deference to the TTAB determination.
Litigants concerned with losing their "day in court" now are likely to skip or suspend TTAB proceedings and initiate a civil action to avoid the risk of issue preclusion. TTAB proceedings may be suspended if "a civil action … may have a bearing on the case." 37 CFR § 2.117.
Commentators have suggested that giving preclusive effect to TTAB decisions will increase the cost of the administrative proceedings. Instead, by eliminating "two bites at the apple" the Supreme Court decision may somewhat reduce both the number of TTAB proceedings and the total cost of enforcing trademark rights in civil actions.