A version of this article was published in The Daily Record on April 9, 2015.
Fighting to stop an infringing trademark registration may become more necessary, more expensive and more (or less) desirable based on a recent Supreme Court ruling. The court’s decision in B&B Hardware Inc. v. Hargis Industries Inc., No. 13-352 (2015), decided March 25, heightened the focus on the strategy of opposing a trademark registration.
The court held that a ruling regarding trademark registrability at the Trademark Trial and Appeal Board could be applied in a later case regarding whether one of the trademarks infringes on the other. Previously, disputes over registration and disputes over use in the marketplace ran on two parallel tracks. Now the tracks may converge. As the court held: “a court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met.” But the court also acknowledged that “a great many” cases might not fit under its ruling.
The decision leads to new business and legal strategies on whether to oppose an application or fight the infringement directly in court. Because a decision at the TTAB (the administrative tribunal of the U.S. Patent and Trademark Office) may impact later infringement cases, a trademark owner needs to be certain to give full treatment to a TTAB dispute. Previously, a TTAB dispute was only about obtaining a registration. Now, if the parties do not offer all evidence and put maximum effort into a TTAB proceeding, the TTAB decision itself could preclude a later claim of infringement.
Foresight and planning is essential. The TTAB now becomes another forum to consider in determining where to bring a case. Predicting which court would provide a better outcome becomes a question even prior to filing an opposition or cancellation. Consider whether the facts line up better with either likelihood of confusion factors adopted by the TTAB or the factors applied by the circuit where an infringement action could be brought.
Additionally, trademark owners should consider the overlap of goods and services. The TTAB can only compare items listed in a registration and an application. When there is direct overlap, the TTAB may provide better focus; when the use in the marketplace does not match the applied-for goods and services, the federal district court may be better.
A TTAB action is usually a more streamlined and less expensive proceeding than an infringement action in district court. Few proceedings include hearings, and are instead conducted by paper filings only. Under the new ruling, however, parties may (and should) insist that the TTAB evaluate evidence from the marketplace to see how the two parties are using the mark and to understand better what consumer perception may be. Hearings may become more important. If issue preclusion is in the offing, a full fight with all relevant evidence is essential. Also, appealing an adverse TTAB ruling to the district court has not been a routine practice, but now may be more necessary so collateral estoppel is not established.
The Supreme Court’s decision may drive more parties away from the TTAB and into federal court to resolve disputes. Where the TTAB’s sole available remedy is refusal to register a mark, the federal court can, in one proceeding, grant an injunction, impose damages and order that the PTO refuse registration. With the potential added burdens and expense of a post-B&B Hardware opposition or cancellation proceeding, the TTAB proceeding may not be as attractive. On the other hand, a party can choose to present a beefed-up case and focus its resources on the TTAB proceeding.
Accurate projections of the scope of a TTAB proceeding are crucial. The court cautioned that its decision may not apply to “a great many registration decisions” because the “ordinary elements of issue preclusion” may not be met in a TTAB proceeding. If the dispute over infringement might not relate to goods and services that are “materially the same as” those applied-for and registered, this would defeat collateral estoppel. If “the quality, extensiveness or fairness of procedure” followed in the TTAB is different from an infringement action, the TTAB decision has no preclusive effect. For example, the TTAB’s rules disallowing live testimony could be enough of a difference if that is a factor in the case. B&B Hardware likely has spawned a new line of cases concerning whether the TTAB proceedings were sufficient to create issue preclusion.
From a legal theory perspective, the court relied on its determination that the statutory tests for likelihood of confusion are similar enough, whether measuring registrability or infringement. The court also confirmed that an administrative tribunal could create issue preclusion for an Article III (judicial branch) court; the fact that a TTAB decision is eligible for a de novo review by the district court gave the court comfort that the judicial branch was not ceding power to the executive branch.