Don’t Count on Another Bite at the Apple

The 7-2 decision in B&B Hardware, Inc. v. Hargis Industries, Inc., reversed the Eighth Circuit, which had held that the “likelihood of confusion” standard that the TTAB applies in trademark opposition and cancellation proceedings is different than the standard applied in related infringement actions in federal court and, thus, has no preclusive effect. Instead, the Supreme Court held that issue preclusion ordinarily will apply to a TTAB ruling as long as the ruling satisfies the typical requirements of issue preclusion, including the requirement that the issues before the court are materially the same as those that the TTAB considered. Preclusion will not apply if, for example, a court is called upon to consider particular trademark uses that were not at issue in the prior TTAB proceedings (e.g., if the disputed trademark applications or registrations did not encompass such uses).

The case involves the TTAB’s decision to deny registration of a mark used by Hargis Industries, Inc. (Hargis) based on a finding of likelihood of confusion with a mark owned by Petitioner B&B Hardware, Inc. (B&B). In a parallel federal court infringement lawsuit that B&B had filed, the question arose whether Hargis could contest the TTAB’s finding of likelihood of confusion. Both the district court and the Eighth Circuit held that Hargis was not precluded from contesting the finding of likelihood of confusion.

The Supreme Court reversed, finding no statutory or other reason why ordinary principles of issue preclusion should not apply in this context. However, the Court acknowledged that the TTAB typically analyzes the marks, goods, and channels of trade only as they are delineated in the disputed applications and/or registrations, and without focusing on actual marketplace usage. The Court indicated that, in such cases, TTAB decisions will have no preclusive effect in a subsequent infringement suit where commercial use of the marks is the paramount issue. The Court also repeatedly noted the possibility that dissatisfied parties may seek plenary review of TTAB decisions, including the opportunity to present new evidence, in an appeal to a district court.

Although the impact of the Court’s ruling will not be known for some time, the practical and strategic implications are potentially enormous for trademark owners, applicants, and practitioners. Among the questions and considerations that it brings to the fore are the following:

• Will the TTAB remain the relatively manageable, cost-effective adjudicative tribunal, or will the complexity and expense of TTAB proceedings increase significantly?
• Will the ruling lead the TTAB to adjust its likelihood of confusion analysis so as to provide greater consideration of actual marketplace usage?
• How will the ruling affect parties’ decisions whether and how aggressively to oppose “intent to use” trademark applications, where use evidence is not available, and what, if any, changes will the TTAB make in its likelihood of confusion analysis in such cases?
• What standards will emerge to guide the determination whether commercial use in a district court action is “materially the same” as the uses identified in the disputed applications and registrations that were at issue in a prior TTAB proceeding?
• How will the ruling affect parties’ decisions to appeal TTAB rulings, in whole or in part, and will the nature and scope of such appeals change?
• Will appeals to federal district courts increase, or the majority of appellants continue to file appeals with the Federal Circuit?

Ultimately, TTAB litigants will now need to consider in every important case whether to strategically withhold certain evidence in the hopes of avoiding preclusion or, instead, to offer as much evidence as possible — including, potentially, the kind of “marketplace” evidence that the TTAB has typically refused to consider — in order to maximize its prospects for success in the TTAB.