Preclusive Effect of TTAB Likelihood of Confusion Rulings to be Determined by The Supreme Court

Written by Daniel DeLuca

B&B Hardware, Inc. v. Hargis Industries, Inc.

Case Summary:

The trademark dispute between B&B Hardware, Inc. (“B&B”) and Hargis Industries, Inc. (“Hargis”) has been ongoing for over a decade. Plaintiff B&B registered their SEALTIGHT mark with the PTO in 1993. B&B had produced fasteners for various uses within the aerospace industry under this mark for a few years before registration. Hargis produces self-drilling screws for which they tried to register the mark SEALTITE in 1996. Hargis was ultimately unsuccessful in its attempt to have the B&B mark canceled.

The USPTO published the SEALTITE mark for opposition in 2002. Shortly thereafter, B&B instituted an opposition claiming that there was likely to be confusion between the proposed Hargis mark and their own SEALTIGHT mark. By the end of the process, the TTAB found that the marks were confusingly similar and ultimately sustained B&B’s opposition and denied the Hargis mark registration. Shortly before this result, B&B had initiated a suit against Hargis in federal district court, alleging trademark infringement. When the district court began the jury trial, the TTAB had already made its finding that there was a likelihood of confusion between the two marks. B&B tried to argue that the TTAB finding of likelihood of confusion should preclude the court from reexamining the issue, or at least result in the court showing some deference by admitting the TTAB holding to evidence for the jury’s consideration. The district court rejected both arguments, and a jury verdict was returned in favor of Hargis, finding that there was no likelihood of confusion between the marks. B&B then appealed the case to the Eighth Circuit.

On appeal, the Eighth Circuit sought to address three issues. First whether the TTAB finding of likelihood of confusion was entitled to a preclusive effect. Second, whether the same decision should at least be entitled to deference. And lastly, whether the trial court erred in keeping the TTAB decision from the jury.

The Eighth Circuit began by noting that there is precedent recognizing that administrative agency decisions that are judicial in nature may be entitled to preclusive effects. Univ. of Tenn. v. Elliott, 478 U.S. 788 (1986). However, to support a finding that issue preclusion is appropriate for a given case, the Eighth Circuit noted that the five-factor test set forth in Robinette should be considered. The Robinette factor most relevant to the facts of the B&B case was that the issues sought to be precluded must be the same issues involved in the original lawsuit. Robinette v. Jones, 476 F.3d 585, 589 (8th Cir. 2007).

The Eighth Circuit found that the likelihood of confusion test used by the TTAB, while similar to the test used by the District Court was ultimately a different test because one was for determination of registration status, and the other was for determination of infringement. Despite significant overlap in the substance of the factors used in each analysis, the Eighth Circuit was able to distinguish the analysis of the TTAB from the District Court. One factor that the Eighth Circuit emphasized was the consideration of the marketplace context and channels of trade. In the court’s view, the Eighth Circuit did not give enough weight to market context, noting that the channels of trade for each mark did not overlap significantly, a factor that would cut in favor of Hargis. Because the tests were different, the Eighth Circuit found that the TTAB finding of likelihood of confusion was not entitled to preclusive effect. In addition, the court found that there was no need to give deference to the TTAB decision, as infringement is a separate issue from registration. Lastly, the court found that it was not an error for the district court to keep the TTAB decision from the jury, as it would be likely to confuse the jury, and had minimal probative value. It should be noted that despite this ruling, Judge Colloton wrote a dissent, arguing that the tests are too similar for a finding of no preclusive effects.

Other Circuit Results:

As with many cases that make their way to the Supreme Court, the issue of whether a TTAB likelihood of confusion ruling should have a preclusive effect has become the subject of a circuit split. While the Eighth Circuit considers the TTAB decision to be unworthy of both preclusive effect and deference due to the lack of emphasis on the factor of marketplace context, other circuits disagree.

The Fifth and Eleventh for example, have decided to give the TTAB the benefit of the doubt, as they are in theory experts on such matters, and will only overturn them if there is a high amount of evidence present that cuts in favor of a contrary finding. Freedom Sav. & Loan Ass’n v. Way, 757 F.2d 1176, 1181 (11th Cir. 1985); American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 10 (5th Cir. 1974).

The Third and Seventh Circuits give preclusive effect to TTAB findings of likelihood of confusion even in trademark infringement cases, because in their view the issue of likelihood of confusion should not be litigated twice. Jean Alexander Cosmetics, Inc. v L’Oreal USA, Inc., 458 F.3d 244, 254 (3d Cir. 2006); EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 746 F.2d 375 (7th Cir. 1984).

Lastly, the Second Circuit, like the Eight Circuit, found that the TTAB is susceptible to undervaluing the importance of market context, and therefore requires a finding that the TTAB must have taken the marketplace context into account in a meaningful way in order to support preclusion of the issue. Levy v. Kosher Overseers Assn of Am., Inc., 104 F.3d 38, 42 (2d Cir. 1997).

Implications of B&B Hardware, Inc. v. Hargis Industries, Inc.:

 

In its current state, the law at issue in this case is unclear and therefore leads to unpredictable results. No matter what the Supreme Court decides, the result will make the law more uniform and predictable. Until the Supreme Court makes its decision, it should be noted that whether a TTAB finding of likelihood of confusion will have a preclusive effect is highly dependent on which circuit the case is in. Practitioners seeking to promote holdings of preclusive effects should emphasize the weight given to marketplace context.

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