Today the Supreme Court, in B&B Hardware Inc. v. Hargis Industries Inc. et al., case number 13-352, decided that Trademark Trial and Appeal Board ("TTAB") decisions preclude federal courts from ruling on issues that are "materially the same." The Supreme Court's decision could have a significant effect on the way TTAB proceedings are litigated. Until now, parties may have treated TTAB decisions lightly because they knew they had a second opportunity to defend their interests in court. Parties often withheld resources in TTAB proceedings to reflect this reality. Now, the TTAB will be the final arbiter in many trademark cases. As a result, parties will more adamantly defend their interests in TTAB decisions, likely increasing the resources they put toward that effort as a result of this new reality. Accordingly, the Supreme Court's B&B decision could turn TTAB proceedings into "mini trials."
The case involved a dispute over the SEALTITE mark, which B&B Hardware registered for self-fasteners in 1993. Hargis used the mark on sheeting screws and applied to register the mark in 1996, at which point litigation between the two parties ensued. In 2007, the TTAB refused to register Hargis' mark and found a "likelihood of confusion" between Hargis' mark and B&B's mark. Following the TTAB ruling, B&B filed a suit against Hargis for trademark infringement.
The case turned on whether the TTAB's decision was preclusive. The TTAB found a "likelihood of confusion" between Hargis' mark and B&B's mark. If the TTAB decision precluded the court from ruling in the alternative, then Hargis infringed. If, the TTAB decision was not preclusive, the court could find that Hargis did not infringe.
The U.S. Court of Appeals for the Eight Circuit in B&B held that the TTAB's ruling was not preclusive. B&B appealed to the Supreme Court, and in oral arguments, Hargis' counsel argued that the TTAB's decision should not be preclusive because the TTAB and courts consider different factors to determine "consumer confusion." The TTAB considers only whether marks overlap in goods and services listed in the trademark application, not "real world use" (which is closely considered by courts).
The government argued in support of B&B that the TTAB's inquiry is not "materially different" from that of the courts. The government's counsel explained that "issue preclusion generally depends on whether the analyses in question materially differed, and [Hargis] has not identified any material difference between the issue decided by the board and what was at issue in the infringement case[.]" In fact, "[t]he only actual difference between the two proceedings is that you are not allowed live testimony in front of the TTAB. That alone is insufficient reason to reject preclusion."
The Supreme Court found the Government's argument persuasive. Justice Alito wrote that "[w]hen usages adjudicated by the TTAB are materially the same as those before a district court, issue preclusion" applies. Justice Alito explained that "[t]he fact the TTAB and district courts use different procedures suggests only that sometimes issue preclusion might be inappropriate, not that it always is."
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