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Supreme Court to Decide Whether Issue Preclusion Applies to TTAB Findings on Likelihood of Confusion in Infringement Litigation

By Tim Buckley

On December 2, 2014, the Supreme Court heard oral arguments in B & B Hardware v. Hargis Industries, which presents the following issues for resolution:

1. Whether the Trademark Trial and Appeal Board's (TTAB or Board) finding of a likelihood of confusion precludes a party from relitigating that issue in infringement litigation, in which likelihood of confusion is an element; and
2. Whether, if issue preclusion does not apply, district courts are obliged to defer to the Board's findings concerning likelihood of confusion absent strong evidence to rebut them.


Since 1997, B & B and Hargis have been contesting each other's rights in the marks "SEALTIGHT" for aerospace fasteners and "SEALTITE" for construction fasteners, respectively. B & B was the first to the market and also won the race to the Patent and Trademark Office (PTO), receiving a certificate of registration in 1993 for "SEALTIGHT" based on an application filed in 1990. Hargis filed an application to register "SEALTITE" in 1996, but registration was refused based on a likelihood of confusion with B & B's senior mark. Multiple administrative and judicial proceedings ensued, and in 2007 the TTAB again denied Hargis's application to register SEALTITE based on a likelihood of confusion.

In a subsequent action for infringement by B & B against Hargis, the Eastern District of Arkansas refused to apply issue preclusion on the question of likelihood of confusion and submitted the case to a jury, which returned verdicts against B & B on all of its claims and for Hargis on all of its counterclaims. The United States Court of Appeals for the Eighth Circuit affirmed, reasoning that the TTAB is not an Article III court, and the likelihood of confusion issues decided by the TTAB were not the same as those brought in the action before the district court.

The doctrine of issue preclusion, or collateral estoppel, is appropriate where (1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and actually decided, (3) there was full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits.

B & B maintains that Congress's use of the language "likely to cause confusion" throughout the Lanham Act at 15 U.S.C. §§ 1052(d) (registration), 1114(1)(a) (infringement of registered marks), and 1125(a)(1)(A) (infringement of unregistered marks) indicates that the concept has the same meaning in each context, and therefore the issue of likely confusion is the same in TTAB proceedings and in infringement suits. As the registration provision mandates consideration of a mark as it is "used on or in connection with the goods of the applicant," the TTAB's inquiry is not divorced from marketplace context. Moreover, because the TTAB follows the Federal Rules of Civil Procedure and Federal Rules of Evidence, B & B argues that TTAB proceedings are similar to civil actions, so preclusion should apply.

In opposition, Hargis argues that registration proceedings and infringement actions resolve distinct issues, in that the TTAB looks to whether an applicant's mark "so resembles" another mark that it is likely to cause confusion, whereas district courts are tasked with deciding whether a party's actual use of the mark in the marketplace is likely to cause confusion. At oral argument, Hargis's attorney, Neal Katyal, detailed technical aspects of trademark prosecution and paraphrased the Federal Circuit's decision in Mayer/Berkshire as follows:

[A] claim of infringement before the court and a . . . likelihood of confusion before this Board are different claims. . . . [I]n Board proceedings, likelihood of confusion is determined independent of the context of actual usage. In an infringement action, on the other hand, the context of the use of the mark is relevant. Mayer/Berkshire Corp. v. Berkshire Fashions, Inc., 424 F.3d 1229, 1233 (Fed. Cir. 2005) (internal quotations omitted).

Hargis's lawyer also distinguished the Lanham Act from sections 315 and 325 of the patent statute, which under certain circumstances explicitly provide for preclusion in civil actions after the Patent Trial and Appeal Board (PTAB) issues a final written decision. The Lanham Act contemplates some effects of TTAB decisions in the infringement context (e.g., presumptions of validity and ownership), but it is silent on the issue of preclusion.

The Circuit Courts of Appeal have taken scattered approaches to this issue. The Third and Seventh Circuits have each applied issue preclusion, albeit with different justifications. Jean Alexander Cosmetics, Inc. v. L'Oreal USA, Inc., 458 F.3d 244 (3d Cir. 2006); EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 746 F.2d 375 (7th Cir. 1984). The Fifth and Eleventh Circuits deny preclusive effect to TTAB decisions, but apply a form of deference. Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 10 (5th Cir. 1974); Freedom Sav. and Loan Ass'n v. Way, 757 F.2d 1176 (11th Cir. 1985). The Second Circuit, which is regarded by some practitioners as the preeminent court with respect to intellectual property law, conducts an "identity of issues" analysis and applies preclusion only when the TTAB has determined likelihood of confusion by reference to the entire marketplace context of the conflicting marks, as required in infringement actions. Levy v. Kosher Overseers Ass'n of Am., Inc., 104 F.3d 38 (2d Cir. 1997). J. Thomas McCarthy, author of the leading treatise on trademarks and unfair competition, endorses the Second Circuit's approach. 6 McCarthy on Trademarks and Unfair Competition § 32:101 (4th ed.).


The Supreme Court will likely hold that issue preclusion does not attach to TTAB findings on likelihood of confusion. In its amicus curiae brief, the International Trademark Association (INTA) took the position that TTAB determinations should not have preclusive effect in subsequent civil court proceedings because of the significant differences in the standards and procedures applied by the TTAB and federal courts.

The Trademark Manual of Examining Procedure (TMEP) at section 1207.01(a)(iii) provides that the "nature and scope of a party's goods or services must be determined on the basis of the goods or services recited in the application or registration." (emphasis added). Section 1207.01(c)(iii) provides that if "a mark (in either an application or a registration) is presented in standard characters, the owner of the mark is not limited to any particular depiction of the mark. . . . The rights associated with a mark in standard characters reside in the wording (or other literal element, e.g., letters, numerals, punctuation) and not in any particular display."

The TTAB is required to consider trademarks in hypothetical scenarios that do not comport with reality. For instance, it must presume that a registered standard character mark could be used in the same manner of display as an applied-for mark presented in special form, even if the registered mark is in fact only used in one particular manner. In infringement litigation, by contrast, Article III courts consider how the marks are actually used in the marketplace and how consumers encounter conflicting marks. These different standards reflect the fact that the TTAB's primary focus is on the registrability of marks, whereas Article III courts are concerned with the actual use and effect of marks on consumers in the marketplace.

At oral argument Justices Scalia and Breyer apparently struggled to grasp the differences between the relevant inquiries in Board proceedings and infringement litigation. Justice Ginsburg was more receptive to the Respondent's arguments and noted at the outset that perhaps preclusion should not apply because the stakes are much higher in infringement litigation. Chief Justice Roberts proposed a general rule of preclusion unless the issue of use in litigation involves something "other than what the TTAB would have been looking at . . . ."

The high court may take a middle ground and align itself with the Second Circuit by requiring preclusion only if the likelihood of confusion issues before the TTAB and district court are in fact identical. Regarding the second issue presented, if preclusion does not apply, district courts may nevertheless be required to give deference to decisions of the TTAB because of that administrative body's expertise in the field.

The court's opinion is expected to be released by April or May. Further analysis will be provided at that time.

Timothy J. Buckley is an associate at the law firm of Powley & Gibson, P.C. in New York. The views expressed herein are those of the author and do not necessarily reflect those of the Powley & Gibson firm or its clients.

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