Upping the Ante – TTAB Rulings & Issue Preclusion

This past December, the Supreme Court heard oral arguments in the case of B&B Hardware, Inc. v. Hargis Indus., Inc. wherein the main issue to be determined by the Court is whether the Trademark Trial and Appeal Board’s (TTAB) likelihood of confusion determinations should have a preclusive effect in a trademark claim filed in Federal Court.

This case comes to the Supreme Court after a fifteen year long battle between the two companies regarding B&B’s SEALTIGHT trademark for itsfastener product used in the aerospace industry and Hargis’ SEALTITE trademark for a self-sealing fastener product used in the metal-building industry. B&B’s SEALTIGHT mark was registered first, in 1993, and then in 1996 Hargis’ application to register its SEALTITE mark was denied by the PTO because the PTO found the two marks to be “substantially identical,” which would lead to a “likelihood of confusion” for consumers. In 1998, after Hargis unsuccessfully appealed to the PTO’s TTAB to cancel B&B’s mark, B&B file a trademark infringement claim against Hargis in US District Court of Arkansas. In 2000, a jury found for Hargis stating that B&B’s SEALTIGHT mark was “merely descriptive and had not acquired a secondary meaning.” The US Court of Appeals for the Eighth Circuit affirmed this ruling in 2001.

Following these rulings in favor of Hargis, Hargis amended its TTAB Petition to Cancel the B&B SEALTIGHT mark to include the Eighth Circuit’s merely descriptive ruling. In 2004 the TTAB rejected the district court’s ruling, reasoning that the court did not making any findings on the likelihood of confusion and because the mark had already been registered for more than five years, thus obtaining distinctiveness. Furthermore, the TTAB rejected Hargis’ argument that the SEALTIGHT mark was merely descriptive.

In 2006 B&B filed a claim in district court alleging trademark infringement, however the Arkansas District Court ruled that the TTAB’s likelihood of confusion finding did not have preclusive effect in federal courts; the Eighth Circuit affirmed the decision. As a result of these cases as well as similar ones in other Circuits, on July 1, 2014 the Supreme Court took the case to determine whether the TTAB’s likelihood of confusion decision precludes Hargis from re-litigating the same issue in a trademark infringement Federal Court action.

B&B argues for preclusion by contending that the text of the Lanham Act regulates a single concept of likelihood of confusion, and highlights the similarities and compatibility of the tests for registration at the TTAB and infringement in Federal Court. On the contrary, Hargis argues that the likelihood of confusion inquiry at the infringement level is different from that of the TTAB registration proceedings.

The outcome of the Supreme Court’s decision will have significant implications on not only judicial efficiency in trademark infringement litigation, but if preclusion is found, the ruling will increase the importance of oppositions and cancelations proceedings at the TTAB. If the Supreme Court rules that TTAB likelihood of confusion determinations are preclusive, then those parties who file trademark oppositions and cancelations will have to spend more time, effort and money on such proceedings than was done previously, as a result of the finality of the decisions.