In March 2015, the Supreme Court of the United States handed down a case that could have a substantial effect on trademark matters in the United States. In B&B Hardware, Inc. v. Hargis Industries, Inc., the Supreme Court reversed the finding of the Eight Circuit Court of Appeals in a trademark dispute involving two metal fastener manufacturers that were concurrently involved in a Trademark Trial and Appeal Board (TTAB) proceeding and a trademark infringement lawsuit in civil court. In the ruling, the Supreme Court held that a finding of a likelihood of confusion by the TTAB would preclude re-litigation in federal court if the ordinary elements of issue preclusion are met.
Background of the Dispute
B&B Hardware holds a registered trademark for the name of its product SEALTIGHT, while Hargis Industries applied to register a trademark for its product SEALTITE. B&B raised an opposition to the trademark for Hargis, arguing that a high likelihood of confusion existed with its own type of metal fastener. In order to determine whether a trademark would create a likelihood of confusion, deception, or mistake in the face of opposition, the TTAB considers only how the mark is used in regard to the goods involved the application or registration. The TTAB generally does not extend its analysis to how the trademark will be used in commerce. The TTAB ultimately denied the trademark application filed by Hargis Industries finding that confusion was likely to occur.
Before the TTAB issued its decision, B&B also filed a trademark infringement claim in civil court and requested an injunction because use of the SEALTITE brand name was likely to cause confusion, deception, or mistake. Once the trademark denial was issued, B&B argued that the decision would preclude Hargis Industries from arguing that there would be no likelihood of confusion and thus moved for summary judgment in its favor. The court denied this motion, stating that the decision by the TTAB—a federal agency—would not preclude a decision in court. The decision was largely based on the fact that the TTAB does not do as thorough of an analysis as is required in an infringement claim, especially regarding the use of the mark in the marketplace. Both the district court and the Court of Appeals for the Eighth Circuit found that no preclusion existed based on the TTAB decision.
Supreme Court decision and Impact
In a 7-2 decision, SCOTUS disagreed with the lower courts and held that issue preclusion could exist based on the determination of the TTAB so long as the other requirements of issue preclusion are met. Generally, these elements are that an issue of fact or law was actually litigated, that the issue was decided in a valid and final judgment, and that the determination was essential to the judgment. The fact that the TTAB may use different factors in deciding a likelihood of confusion does not automatically prevent preclusion.
This decision may have an effect on trademark litigation in the future. For example, because more weight will be given to the TTAB decision, pursuing an opposition to a trademark based on likelihood of confusion could become more complicated and costly. Businesses may fight harder to oppose a trademark in the TTAB because they may not have the chance to present evidence on the matter in a subsequent court case. Litigation strategies regarding likelihood of confusion issues will have to evolve to ensure that trademarks are best protected