United States: Eighth Circuit Court Of Appeals: On Remand From Supreme Court, Circuit Court Gives Preclusive Effect To Trademark Trial And Appeal Board Decision On Likelihood Of Confusion

B&B Hardware, Inc. v. Hargis Industries, Inc., __ F.3d __, 2015 WL 5011460 (8th Cir. Aug. 25, 2015)

In March 2015, the U.S. Supreme Court held in B&B Hardware, Inc. v. Hargis Industries, Inc., 135 S. Ct 1293 (2015), that a decision of the Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office ("TTAB") on the issue of likelihood of confusion may preclude a federal court from reaching a contrary conclusion on the issue in a subsequent infringement action.  The Supreme Court's ruling is summarized in the following sentence from that opinion:  "So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply."  135 S. Ct at 1310.

Given that the TTAB does not typically look to real-world usages of the marks made by the parties (particularly by the defendant) in assessing likelihood of confusion, while such real-world marketplace conditions are critical to the likelihood of confusion analysis of district courts in infringement actions, many practitioners wondered whether the standard adopted by the Supreme Court in B&B Hardware would ever be met such that a TTAB decision could ever be given preclusive effect in federal court.  We now know the answer is "yes," as the U.S. Court of Appeals for the Eighth Circuit, in its re-examination of the B&B Hardware case following a remand from the Supreme Court, recently gave preclusive effect to the TTAB decision on likelihood of confusion.   

The Facts and Procedural History of the Case

The facts of the case as relevant here are relatively straightforward.  The plaintiff, B&B Hardware ("B&B"), has since 1993 owned a federal registration for the mark SEALTIGHT for metal fasteners used in the aerospace industry.  Meanwhile, the defendant, Hargis Industries ("Hargis"), uses the mark SEALTITE for metal fasteners in the construction industry, and in 2002 applied for federal registration of SEALTITE.  B&B opposed registration of SEALTITE before the TTAB, arguing that it was confusingly similar to SEALTIGHT.  After the parties engaged in discovery and trial, the TTAB concluded that SEALTITE was confusingly similar to SEALTIGHT and could not be registered.  Hargis did not exercise its statutory right to appeal the TTAB's decision to the U.S. Court of Appeals for the Federal Circuit or a federal district court. 

B&B then sued Hargis for infringement in federal district court, claiming that Hargis' use of SEALTITE infringed B&B's rights in SEALTIGHT.  In light of the TTAB's finding of a likelihood of confusion, B&B argued to the district court that the TTAB's decision precluded Hargis from arguing in the district court that there was no likelihood of confusion between the marks.  The district court, however, refused to give preclusive effect to the TTAB's determination.  Ultimately, a jury sided with Hargis, finding no likelihood of confusion between the marks.  B&B appealed to the U.S. Court of Appeals for the Eighth Circuit, arguing that the district court should have given preclusive effect to the TTAB's likelihood of confusion decision.  But the Eighth Circuit affirmed, holding that because the TTAB looks to different factors than do federal courts in making likelihood of confusion determinations, a federal court should never give preclusive effect to a TTAB decision on the likelihood of confusion issue. 

The Supreme Court accepted review of the case and reversed the Eighth Circuit, adopting the rule that a TTAB decision on likelihood of confusion can have preclusive effect so long as "the usages adjudicated by the TTAB are materially the same as those before the district court."  135 S. Ct. at 1310.  It then remanded the case back to the Eighth Circuit to determine in the first instance whether the usages of SEALTIGHT and SEALTITE by the parties adjudicated by the TTAB were materially the same as those before the district court.

The Eighth Circuit's Decision on Remand

In a short per curiam opinion, the Eighth Circuit on remand held that "the usages of the marks adjudicated before the TTAB were materially the same as the usages before the district court."  B&B Hardware, 2015 WL 5011460, at *1.  Specifically, the Eighth Circuit explained that "the TTAB compared the marks in question in the marketplace context when it determined the likelihood of confusion issue for purposes of trademark registration."  Id.  To support this statement, the Eighth Circuit cited to the dissenting opinion of one of the judges on the Eighth Circuit panel when the case was first before that Court, id., in which she stated that "[i]n reaching its decision on likelihood of confusion, the [TTAB] compared the marks in their entire marketplace context, discussing the companies' goods in relation to the fastener industry, the companies' channels of distribution, and the behaviors of consumers in the market for the companies' products."  B&B Hardware, Inc. v. Hargis Industries, Inc., 716 F.3d 1020, 1029 (Colloton, J., dissenting).

Accordingly, the Eighth Circuit remanded the case to the district court with the instruction to "give preclusive effect to the TTAB on the decision of likelihood of confusion" and to hold further proceedings to determine "what remedies may be awarded for infringement."  B&B Hardware, 2015 WL 5011460 at *1.

The Future of TTAB Proceedings After B&B Hardware

The upshot of the Supreme Court and Eighth Circuit decisions in B&B Hardware is that parties in the TTAB and their counsel must carefully consider and determine what types of evidence to solicit and introduce in TTAB proceedings.  Specifically, if the parties before the TTAB treat the proceeding like a federal court litigation, including asking for and introducing real-world evidence about the parties' marks, products, consumers, and trade channels—like the parties did in B&B Hardware—then it becomes more likely that the TTAB will base its decision on such real-world evidence and that a federal court, in turn, will give the decision preclusive effect. 

It would seem, however, that there are still categories of TTAB cases that generally should be ineligible for preclusive effect under B&B Hardware—namely, TTAB proceedings relating to intent-to-use applications or applications (or registrations) based on foreign registrations for marks that are not yet in use in the U.S., since neither of these types of applications involve any actual use by the defendant in the U.S. for the TTAB to examine. 

But even in those cases, litigants who are unhappy with the TTAB's decisions likely will now be more inclined to appeal the decisions to the U.S. Court of Appeals for the Federal Circuit or to a federal district court.  Litigants would be reluctant to forego review of a TTAB decision by a federal court now given the risk later down the road that a federal court then will hold that the TTAB decision has preclusive effect.  

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