The US Supreme Court’s March 24, 2015, ruling in B&B Hardware Inc. v. Hargis Industries Inc. will almost certainly change the use and importance of Trademark Trial and Appeal Board (TTAB) proceedings, but there are many open questions about how significant the impact of the Supreme Court’s decision will be. In a 7-2 ruling, the Court held that TTAB decisions on likelihood of confusion for purposes of trademark registration could have a preclusive effect in federal trademark litigation “so long as the other ordinary elements of issue preclusion are met.” In other words, the TTAB’s decision in an opposition or cancellation proceeding could be binding on a federal court in an infringement action, at least in certain circumstances.
The Supreme Court explained, however, that issue preclusion will not always apply. “Issue preclusion applies where the issues in the two cases are indeed identical and the other rules of collateral estoppel are carefully observed,” wrote Justice Samuel Alito in the majority opinion. The majority further explained that:
If a mark owner uses its mark in ways that are materially the same as the usages included in the registration application, then the TTAB is deciding the same likelihood of confusion issue as a district court in infringement litigation. By contrast, if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding the same issue. Thus, if the TTAB does not consider the market-place usage of the parties’ marks, the TTAB’s decision should have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.
In light of this, the majority explained that “for a great many registration decisions issue preclusion will not apply.” This was echoed in Justice Ruth Bader Ginsburg’s concurring opinion, which acknowledged that “contested registrations are often decided upon a comparison of the marks in the abstract and apart from their marketplace usage.”
Notwithstanding the Court’s statements about the limits of issue preclusion, it remains unclear exactly when it will apply. The Court provided virtually no guidance, so there are many unanswered questions that district courts will need to address. For example:
In light of these and other unanswered questions, trademark applicants and challengers would be wise to consider carefully how they will proceed, if at all, at the TTAB. In addition, parties should consider the strategy implications of submitting evidence of marketplace usage to the TTAB.
Despite the uncertainties raised by the B&B Hardware decision, it is clear that the Supreme Court has raised the stakes in TTAB actions, injected additional strategy considerations and likely raised the amount of discovery and motion practice during those proceedings. As such, it is expected that the cost of oppositions and cancellation proceedings will increase.
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