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Can a court decision have preclusive effect on a TTAB proceeding?




After the Supreme Court decision in B&B Hardware, Julia Anne Matheson and Cathy Liu of Hogan Lovells examine a case considering whether a court decision can have preclusive effect on a TTAB proceeding

1 minute read
In B&B Hardware v Hargis Industries, the Supreme Court stated that a TTAB decision has preclusive effect on a district court litigation provided the conditions for collateral estoppel are fulfilled. If the use of the mark detailed in the application is materially different from the actual use of the mark in the marketplace, the doctrine of collateral estoppel does not apply. In Re FCA US considered whether a court decision has preclusive effect on the TTAB. The Board observed that there was a material difference between the application and the market reality. Furthermore, the proceeding before the TTAB was an ex parte appeal and for any subsequent action to be subject to preclusive effect, it would have to be "between the parties." However, the Board noted that if collateral estoppel is established, a court decision can have preclusive effect on the TTAB.

In March 2015, in a decision that prompted significant anxiety and unease among a large segment of trade mark practitioners, the US Supreme Court ruled that likelihood-of-confusion decisions from the Trademark Trial and Appeal Board (TTAB), the judicial arm of the USPTO, could be entitled to preclusive effect in later district court infringement litigation where "the ordinary elements of issue preclusion" are satisfied, namely, "when an issue of fact or law is actually litigated and determined by a valid and final judgment and the determination is essential to the judgment" ( B&B Hardware v Hargis Industries (135 S. Ct. 1293, 1299-1302)).

The Court’s decision was subject to multiple caveats. In particular, it acknowledged that issue preclusion would probably not apply to "a great many" registration decisions because the "ordinary elements" would not be met. However, the Court rejected the idea, advanced by various trade mark organisations, that just because the likelihood-of-confusion analysis undertaken by the different tribunals can often differ, issue preclusion should never apply.

Understanding the true import of the Court’s decision requires an understanding of the two different tribunals at issue and the analytical framework applied by both in evaluating the question of likelihood-of-confusion between marks. The Lanham Act provides, inter alia, a cause of action for the owner of a registered and/or common law (i.e. unregistered) trade mark against third parties whose marks are confusingly similar to their own. When the issue relates to the registration of that third party mark, a trade mark owner has two options: they can file an opposition proceeding before the TTAB or if certain standing criteria are satisfied, file a lawsuit for trade mark infringement in federal court.

While opposition proceedings before the TTAB are similar to civil litigation in that they are governed by the Federal Rules of Civil Procedure and Evidence, they also differ in some critical respects. The TTAB is only able to adjudicate on the issue of whether a mark is registrable, not use. It cannot issue injunctive relief or monetary damages. Its likelihood-of-confusion analysis is circumscribed by the actual marks and the specific goods, services and, where appropriate, trade channels specified by the registrations and applications before it. Unlike an infringement proceeding before a district court where the focus is on so-called "real world factors," the TTAB’s focus is more tailored to address issues connected to registration.

B&B and the doctrine of collateral estoppel

Where there is more than one proceeding involving the same marks and parties, litigated in different tribunals, the question naturally arises as to whether the determination of the first tribunal to reach a conclusion on likelihood-of-confusion has or should have any preclusive effect on the second.

The Supreme Court considered this issue in the context of an analysis performed by an Article III court and the TTAB in B&B Hardware. In B&B Hardware, B&B applied to register the mark SEALTIGHT for fasteners for use in the aerospace industry. Thereafter, Hargis applied to register SEALTITE for fasteners for use in the construction industry. B&B successfully opposed registration of the SEALTITE mark belonging to Hargis on likelihood-of-confusion grounds in an opposition proceeding before the TTAB. B&B subsequently filed an infringement suit in the district court wherein the jury arrived at an opposite conclusion. When B&B sought entry of judgment consistent with the Board’s decision on collateral estoppel grounds, the district court disagreed and entered judgment consistent with the jury’s verdict. On appeal, the Eighth Circuit affirmed, finding that the TTAB’s decision did not carry a preclusive effect because the Board’s likelihood-of-confusion analysis could be distinguished from that of the district court, particularly as the Board assessed only the goods and services set forth in the marks’ applications and cited registrations, whereas the jury considered those with which the marks were actually connected in the marketplace. 


Collateral estoppel should not apply when the actual use made by the mark owner is materially different from that for which the owner had originally applied


The Supreme Court reversed this decision, concluding that under certain circumstances, TTAB decisions can and should have preclusive effect on district courts if "the ordinary elements of collateral estoppel are met." The Court recognised, however, that extending collateral estoppel to TTAB decisions may not always be appropriate due to the potential for divergence in each tribunal’s approach to assessing likelihood-of-confusion. Thus, the Court concluded, whether a TTAB decision should have preclusive effect will turn on whether the tribunals have addressed the same issue. This occurs when the goods and services the marks are actually used in connection with are materially similar to those disclosed in the applications and registrations. Conversely, collateral estoppel should not apply when the actual use made by the mark owner is materially different from that for which the owner had originally applied. Ultimately, the Court announced, materiality is the key consideration; the Board decision may carry preclusive effect even when there are minor variations between marketplace realities and the applied-for goods and services.

In Re FCA US

Three years after the B&B Hardware decision, the Board evaluated the reverse scenario, namely, whether a district court’s likelihood-of-confusion determination can and should have a preclusive effect in a subsequent TTAB proceeding in In Re FCA US (85650654, 2018 WL 1756431 (Apr. 10, 2018)).

In In Re FCA, the USPTO refused registration of the applicant’s MOAB mark for motor vehicles on grounds of confusing similarity with registrant’s MOAB INDUSTRIES mark for automotive conversion services. While the applicant’s appeal of the USPTO’s refusal was ongoing, the registrant initiated a trade mark infringement suit in the District of Arizona, but the district court, in applying the likelihood-of-confusion factors based on the ways in which the marks were used in the marketplace, arrived at a different conclusion, finding that the applicant’s use of MOAB in connection with JEEP WRANGLER MOAB Special Edition vehicles was unlikely to cause confusion among customers with the registrant’s upfitted vehicles. When the parties appeared before the TTAB for the applicant’s appeal, the applicant argued that the district court’s decision in its favour should have preclusive effect, and that the Board must "defer to the more fulsome record upon which the district court relied to draw its conclusion, and the district court’s careful consideration of likelihood-of-confusion factors."

In examining the records before the respective tribunals, the Board declined the applicant’s effort to extend the district court’s decision to the ex parte proceeding, finding the goods and services the marks were used in connection with in the marketplace materially distinct from those disclosed in the applications and registrations, and the corresponding analysis undertaken by the district court dissimilar from the directive presented to the Board. As noted above, whereas a district court is charged with considering the broader question of the marks’ actual uses based on marketplace realities in its likelihood-of-confusion determination, the TTAB is confined in the ex parte appeal, to evaluate the question of likelihood-of-confusion based solely on the goods and services disclosed in the application and cited registration. In this case, the application and cited registration articulated broader categories of goods and services than were at issue in the district court action and, accordingly, any analysis regarding the similarity of the marks, the similarity of goods and services, and the overlap in trade channels would necessarily diverge. The Board stated:

When we compare the terms of the registration that Applicant now seeks with the issues that were raised in MIL v Chrysler, we see that they differ substantially. The mark that Applicant seeks to register is MOAB. The District Court, in its conclusion of law, refers to a different mark [JEEP WRANGLER MOAB Special Edition] . . . In MIL v. Chrysler, the Court was not considering automobiles in general. Rather, the Court was limiting its consideration to "expensive" "highway-legal, off-road enhanced performance vehicle[s]" that are "upfitted…to enhance their off-road capabilities"…The registration that Applicant now seeks relates to a broader range of goods that includes all "passenger automobiles."

The Board also rejected the applicant’s attempt to rely on B&B Hardware. Citing B&B Hardware, the Board noted the requirement for collateral estoppel: "When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." The TTAB action resulted from an ex parte appeal rather than an inter partes opposition and therefore the Board concluded that the USPTO, which was not a party to the district court action, could not be bound by its determination.


The Board agreed that the doctrine of collateral estoppel could apply to grant a district court decision preclusive effect so long as all the elements of issue preclusion are satisfied


In a nod to the B&B decision, however, the Board agreed that the doctrine of collateral estoppel could apply to grant a district court decision preclusive effect so long as all the elements of issue preclusion are satisfied. The facts of the particular case before it, however, did not satisfy all elements.

What then is the practical effect of the Board’s recent decision in In Re FCA US?  The question of whether the decisions of Article III courts should have preclusive effect over a specialised administrative tribunal is far less controversial, in principle, than the reverse. It is a decision consistent with the positions articulated by the TTAB in its amicus brief and repeatedly in its multiple rulings in the wake of the Supreme Court’s decision. Three years in, the Supreme Court’s ruling has failed to bring about the feared "substantial negative effect on the straightforward administrative proceedings before the TTAB" (INTA Brief at 25).

Julia Matheson

Julia Anne Matheson


  Cathy Liu

Cathy Liu


© Julia Anne Matheson and Cathy Liu. Matheson is an IP partner at Hogan Lovells. Liu is a law clerk.

   



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