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Douglas Panzer
March 24, 2015

Breaking News: Supreme Court Says TTAB Finding of Confusion Can Bar Litigation of Same Question

Posted By Douglas Panzer @ 11:46 am
Filed under: Likelihood of Confusion,Litigation,Registration,Trademarks,TTAB

The 18-year trademark dispute in B&B Hardware, Inc. v. Hargis Industries, Inc. has been decided by the Supreme Court in an opinion issued this morning (case 13-352).  The Court summarized the facts as follows:

Respondent Hargis Industries, Inc. (Hargis), tried to register its trademark for SEALTITE with the United States Patent and Trademark Office pursuant to the Lanham Act. Petitioner, B&B Hardware, Inc. (B&B), however, opposed registration, claiming that SEALTITE istoo similar to B&B’s own SEALTIGHT trademark. The Trademark Trial and Appeal Board (TTAB) concluded that SEALTITE should not be registered because of the likelihood of confusion. Hargis didnot seek judicial review of that decision.Later, in an infringement suit before the District Court, B&B argued that Hargis was precluded from contesting the likelihood of confusion because of the TTAB’s decision. The District Court disagreed.The Eighth Circuit affirmed, holding that preclusion was unwarranted because the TTAB and the court used different factors to evaluate likelihood of confusion.

In a ruling that seems surprising at first blush, the Supreme Court held “[s]o 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 a district court, issue preclusion should apply.”

This holding therefore permits issue preclusion before an Article III court to be based upon a finding by an administrative agency of the executive branch.  The majority thoroughly and carefully explained that this was appropriate based on the “straightforward” idea that “once a court has decided an issue, it is forever settled as between the parties.”  Citing the Restatement of Judgments, the Court explained further that the precluded issue need not be raised in two courts, but also “where a single issue is before a court and an administrative agency, preclusion also often applies.”

The Court’s opinion dealt with several technical issues, including the fact that Hargis did not advance an argument that giving issue preclusive effect to an administrative decision would be unconstitutional.  Rather, Hargis based its argument on a narrow construction of the Lanham Act.  Nonetheless, the Court did away with any Constitutional question, mentioning that “the Court has already held that the right to a jury trial does not negate the issue preclusive effect of a judgment, even if that judgment was entered by a juryless tribunal. See Parklane Hosiery Co. v. Shore, 439 U. S. 322, 337 (1979).”

The majority opinion summarized its reasoning:

The real question, therefore, is whether likelihood of confusion for purposes of registration is the same standard as likelihood of confusion for purposes of infringement. We conclude it is, for at least three reasons. First, the operative language is essentially the same; the fact that the registration provision separates “likely” from “to cause confusion, or to cause mistake, or to deceive” does not change that reality.3 See 2 Gilson §5.01[2][a], at 5—17 (explaining that “the same statutory test” applies). Second, the likelihood-of-confusion language that Congress used in these Lanham Act provisions has been central to trademark registration since at least 1881. See Act of Mar. 3, 1881, ch. 138, §3, 21 Stat. 503 (using a “likely to cause confusion” standard for registration). That could hardly have been by accident. And third, district courts can cancel registrations during infringement litigation, just as they can adjudicate infringement in suits seeking judicial review of registration decisions. See 15 U. S. C. §1119; 3 McCarthy §21:20.

While seemingly well-reasoned and thorough in its analysis, Justice Thomas writes in his dissent, “[t]he majority does not address the distinction between private rights and public rights or the nature of the power exercised by an administrative agency when adjudicating facts in private-rights disputes. And it fails to consider whether applying administrative preclusion to a core factual determination in a private-rights dispute comports with the separation of powers.”

The 7-2 decision firmly establishes that TTAB findings of likelihood of confusion can bar litigation of the same question in federal court and no separation of power question exists.

Opinion [PDF]: 13-352_B&B Hardware v Hargis SCOTUS

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