In a decision issued on March 24, 2015, B&B Hardware, Inc. v. Hargis Industries., Inc.,[1] the U.S. Supreme Court held that Trademark Trial and Appeal Board (“TTAB”) decisions may be entitled to preclusive effect in district court litigation.  In a trademark case, issue preclusion applies to prevent a party from relitigating an issue in district court if the usages of a trademark adjudicated by the TTAB are materially the same as those to be considered by the district court, provided that the other elements of issue preclusion are satisfied.[2]

In B&B Hardware, B&B opposed registration of Hargis’ SEALTITE mark on the basis that it was confusingly similar to B&B’s SEALTIGHT mark in connection with metal fasteners.[3]  The TTAB considered the likelihood of confusion under several of the 13 factors provided for in In re E. I. DuPont Nemours & Co., 476 F.2d 1357 (CCPA 1973)—namely, whether B&B SEALTIGHT mark was famous, the similarity of the marks, the similarity of the products, and actual consumer confusion.[4]  Despite the fact that B&B used SEALTIGHT in connection with metal fasteners for the aerospace industry and Hargis used SEALTITE in connection with the construction trade, the TTAB held that the most important factors are the similarity of the marks and the similarity of the products.  The TTAB concluded that SEALTITE “so resembles” SEALTIGHT when “used in connection with fasteners . . . in the aerospace industry” that it was likely to cause confusion.[5]  Hargis did not exercise its right to seek judicial review of the TTAB decision in the Federal Circuit or a district court.[6]

As the opposition proceeding was pending, B&B and Hargis were concurrently litigating Hargis’ alleged infringement of B&B’s SEALTIGHT mark in a district court.[7]  After the TTAB issued its decision that Hargis’ SEALTIGHT mark was likely to cause confusion, B&B sought to apply the TTAB’s decision in the district court proceedings to preclude Hargis from contesting likelihood of confusion.[8]  The district court declined to afford the TTAB’s decision preclusive effect because it held that the TTAB was not an Article III Court.[9]  On appeal, the Eighth Circuit affirmed, but for different reasons.  The Eighth Circuit held that the TTAB used different factors to analyze likelihood of confusion, the TTAB afforded too much weight to the appearance and sound of the marks, and the applicable burdens of persuasion differed in the two proceedings.[10]

The Supreme Court granted certiorari.  The Supreme Court rejected the district court’s holding that an agency decision can never form the basis of issue preclusion because agencies are not Article III courts.[11]  The Court held that issue preclusion is not limited to situations where the same issue is considered by two courts, but can apply even where the same issue is before a court and an administrative agency.[12]  The Supreme Court affirmed its previous decision that issue preclusion applies “except when a statutory purpose to the contrary is evident.”[13]  Nothing in the Lanham Act suggests that issue preclusion is forbidden.[14]

The Court held that the likelihood of confusion standard for registration is the same as likelihood of confusion standard for infringement.[15]  The Supreme Court rejected the Eighth Circuit’s reasoning that different standards apply to the two settings because the TTAB and Eighth Circuit apply different sets of factors to assess likelihood of confusion.[16]  Rather, the Court reasoned, the operative language of the likelihood of confusion standard for purposes of registration is essentially the same as the standard for purposes of infringement.[17] The likelihood of confusion language was central to trademark registration since at least 1881, and registrations may be adjudicated and canceled in infringement litigation just as infringement may be adjudicated in judicial review of registration decisions.[18] 

The Court explained that TTAB decisions are primarily based on the written record and are limited to considerations of trademark usages listed in the application.[19] In contrast, a district court may consider the full range of a trademark’s usages beyond the usages listed in the application.[20]  However, simply because the TTAB does not always consider the same trademark usages as a district court does, does not mean that the TTAB applies a different standard of likelihood of confusion.[21]

The Court concluded that a party cannot avoid the preclusive effect of an adverse judgment by relying on trivial variations between the usages of the trademark in the marketplace and the usages set out in an application. The likelihood of confusion issue before the district court in infringement litigation is the same as the likelihood of confusion issue before the TTAB if the mark owner’s usage of the mark is materially the same as the usages included in its trademark registration.[22]  In contrast, if the usages are materially different, the likelihood of confusion analyses will differ.  Because the TTAB’s decision regarding the registration would then be based on different facts, it does not preclude district court litigation based on the owner’s market use.

Parties engaged in proceedings before the TTAB should consider the preclusive effect of the TTAB’s decision in district court litigation, particularly if the issues in both proceedings are materially the same.  As Hargis discovered, a decision to forego an appeal of the TTAB’s decision may foreclose litigation of that issue in district court.