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Intellectual Property Client Alert

March 23, 2015

The New World of Trademark Litigation After The Supreme Court’s B&B Hardware Decision

by Harvey Feedenberg and Kelly Horein

Last week, the U.S. Supreme Court held that a ruling by the Trademark Trial and Appeal Board (TTAB) may be binding on a federal court that later hears the same issue. The Court’s decision is likely to significantly affect the way trademark owners litigate their rights.

The owner of a trademark has two options for challenging a third-party mark that potentially infringes on its rights. It can oppose or seek to cancel the registration of the third-party mark before the TTAB, which is the neutral body that functions as a court at the U.S. Patent and Trademark Office. Alternatively, it can file a trademark infringement claim in federal court. The TTAB generally is considered the less expensive and more informal venue. Historically, trademark owners have filed an opposition or cancellation, understanding that they can later bring an infringement claim in federal court if they are unsuccessful before the TTAB.

The TTAB and federal courts use fundamentally the same “likelihood of confusion” test to determine whether one party has adopted a trademark that is so similar it infringes on the other party’s rights. The TTAB addresses only the registration of the conflicting mark and not the continued use of the conflicting mark or damages. As a result, it typically limits its consideration to the contents of the application or registration at issue, whereas a federal court considers how the trademarks actually are used in the marketplace. A federal court, in contrast, has the power to cancel a conflicting registration, halt the use of the conflicting mark, and assess damages.

In B&B Hardware, Inc. v. Hargis Industries, Inc., which we first discussed in our 2014 Intellectual Property Year In Review, B&B registered the trademark SEALTIGHT, for use with fasteners in the aerospace industry. Hargis then applied for registration of the mark SEALTITE in connection with screws used in the construction industry. B&B opposed Hargis’ registration before the TTAB. B&B also sued Hargis for trademark infringement in federal court. The TTAB found that confusion was likely because of the marks’ similarities. After the TTAB issued its decision, the district court reached the opposite conclusion.

B&B argued that the federal court should have followed the TTAB’s ruling regarding confusion. Typically, when two different courts are asked to decide the same issue, whatever the first court decides is binding on the second. In this case, both the district court and the Eighth Circuit, on appeal, determined that the federal court was not bound to follow the TTAB’s likelihood of confusion decision.

The Supreme Court found that a likelihood of confusion holding by the TTAB could be binding in a later case if a federal court is asked to decide the same issue. According to the Court, the standards and procedures used by the TTAB and federal courts to determine likelihood of confusion are in large part the same, even though certain evidence may be weighed differently. Nevertheless, the opinion clearly explains that not all TTAB rulings are binding. In fact, many TTAB decisions will not be given preclusive effect, particularly if the way a party actually uses its trademark is different from the evidence of the mark’s use that is set out in the relevant application or registration.

The Court’s decision leaves many unanswered questions. For example, the holding seems to apply only to “likelihood of confusion” decisions. It is unclear whether the decision extends to other trademark issues, like descriptiveness. In addition, the Court did not provide much guidance regarding the impact of the TTAB’s consideration of use beyond the evidence contained in an application or registration.

The practical effects of this decision on trademark litigation could be significant. Parties in TTAB proceedings may now more vigorously assert their rights, at a greater expense to both parties, knowing that this could be their only chance to litigate the likelihood of confusion issue. In some cases, trademark owners may bypass TTAB proceedings entirely, so they can take advantage of certain procedures not available at the TTAB, such as live testimony. Losing litigants are more likely to appeal an unfavorable TTAB decision, or seek review before a federal court, as the decision could be binding in a subsequent federal court case.

Trademark owners who want to challenge a potentially infringing mark face a more complex set of choices than they did before B&B Hardware. With the help of trademark counsel, they can carefully choose the proper forum by assessing the strength of their rights and their ultimate goals in filing a claim, and then the most appropriate litigation strategy to meet these goals.

Intellectual Property Client Alert is presented with the understanding that the publisher does not render specific legal, accounting or other professional service to the reader. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using this material must always research original sources of authority and update this information to ensure accuracy and applicability to specific legal matters. In no event will the authors, the reviewers or the publisher be liable for any damage, whether direct, indirect or consequential, claimed to result from the use of this material.