Trademark Practitioners Beware: Issue Preclusion May Now Apply To TTAB Findings More Often Than You Think

Trademark owners and practitioners who took heart in the Supreme Court's seemingly confined holding that issue preclusion can but does not necessarily apply to likelihood of confusion determinations by the Trademark Trial and Appeal Board (TTAB) in inter partes proceedings have cause for concern after the Eighth Circuit issued a terse order last week reversing course in B&B Hardware, Inc. v. Hargis Industries, Inc. The Eighth Circuit's order should heighten practitioners' sensitivity to the risks of forgoing appeal of unfavorable TTAB determinations.

The Eighth Circuit's decision comes after more than a decade of litigation between the parties. B&B, owner of the SEALTIGHT mark, had successfully defeated Hargis's registration of the mark SEALTITE in opposition proceedings occurring simultaneously with infringement litigation commenced by B&B in federal district court. In the TTAB's decision denying registration (issued before the infringement action went to trial), it found a likelihood of confusion between the two marks. Critically, Hargis did not appeal the TTAB decision (which could have entitled Hargis to de novo review in federal court).

The infringement action continued apace and three years after the TTAB's decision, a jury agreed with Hargis, finding no likelihood of confusion between the two marks as used in the marketplace. B&B Hardware, Inc. v. Hargis Industries, Inc., 736 F. Supp. 2d 1212, 1214 (E.D. Ark. 2010). Although B&B argued that Hargis could not contest likelihood of confusion because of the preclusive effect of the earlier TTAB decision, the district court disagreed, id., and the Eighth Circuit Court of Appeals affirmed, B&B Hardware, Inc. v. Hargis Industries, Inc., 716 F.3d 1020, 1024 (8th Cir. 2013).

In rejecting the availability of issue preclusion, the Eighth Circuit's primary rationale was that the TTAB gave undue weight to the two marks' "appearance and sound when spoken" and not enough weight to "the marketplace usage of the marks and products," particularly the fact that "the types of fasteners are different and marketed to vastly different industries and customers." 716 F.3d at 1025. Because marketplace usage was "a critical determination of trademark infringement," application of issue preclusions was not appropriate. Id. at 1025-26.

The Supreme Court appeared to disagree. Justice Alito, writing for the majority, concluded that "the real question . . . is whether likelihood of confusion for purposes of...