This week, the U.S. Supreme Court issued an opinion that could significantly affect litigation of “likelihood of confusion” questions before the U.S. Trademark Trial & Appeal Board (TTAB) and any subsequent litigation in federal court litigation involving the same trademarks.

In B&B Hardware, Inc. v. Hargis Industries, Inc. (argued on December 2, 2014), the Court issued a 7-2 opinion (Justices Clarence Thomas and Antonin Scalia dissenting) holding that TTAB decisions regarding likelihood of confusion have preclusive effect in subsequent district court infringement actions “[s]o long as the other ordinary elements of issue preclusion are met [and] when the uses adjudicated by the TTAB are materially the same as those before the district court.” Previously, the lower courts had been split on to whether TTAB decisions could have such preclusive effect.

The idea of a TTAB decision having preclusive effect on a subsequent district court proceeding may seem unfamiliar to many trademark practitioners. The TTAB is an administrative tribunal and not a traditional Article III court. Courts often apply slightly different legal standards than the TTAB when assessing likelihood of confusion, and the TTAB typically focuses on abstract comparisons of the marks and goods as identified in an application, rather than on how the marks are used or perceived in the marketplace.

The Court held, however, that agency determinations can have preclusive effect, and that issue preclusion should apply when the TTAB has adjudicated materially the same issues that are before the district court. The Court also noted, however, that when the TTAB does not consider the marketplace usage of the marks, “the TTAB’s decision should ‘have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.’” Opinion at 18, (quoting McCarthy § 32:101, at 32-246).

In a concurring opinion, Justice Ruth Bader Ginsburg emphasized her view that the majority’s opinion had a narrow scope. She highlighted the majority’s observation that “for the great many registration decisions issue preclusion obviously will not apply” because contested registrations are often decided upon a “comparison of marks in the abstract and apart from their marketplace usage.” Where this is so, “there will be no [preclusion] on the likel[ihood] of confusion issue.” Concurrence at 1.

There are several practical takeaways. For example, brand owners participating in inter partes proceedings before the TTAB should be careful to note what the TTAB is considering. When the TTAB considers how the marks are used in the marketplace, any decision is more likely to have preclusive effect in a subsequent litigation involving those uses. This potential preclusive effect will likely make TTAB litigation more contentious and potentially more expensive. Further, if a party does not agree with a TTAB decision on likelihood of confusion, it should appeal the decision in a timely manner to a district court where it can get de novo review and expand the factual record to include evidence of how the marks are used and perceived in the marketplace. If a party does not do so, it risks being bound by the TTAB decision even if additional evidence might have pointed to a different result.

Members of our Intellectual Property Department and Trademarks Group represent clients in TTAB proceedings and trademark matters in federal and state court, and advise clients on a wide range of other trademark enforcement and brand protection strategies.

For more information, please contact Jamie B. Bischoff, Trademarks Practice Leader, at 215.864.8207 or bischoff@ballardspahr.com, or Daniel B. Englander at 678.420.9538 or englanderd@ballardspahr.com.


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Intellectual Property
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