Understanding B & B Hardware And Strategic Responses To The Opinion

Introduction

The U.S. Supreme Court's opinion in B & B Hardware Inc. v. Hargis Indus., No. 13-352, 2015 WL 1291915 (U.S. March 24, 2015), is already generating a significant amount of commentary, in large part because of the perception that the decision changes the landscape for trademark law. The consensus appears to be that trademark owners must significantly reevaluate how they handle TTAB matters. In fact, however, the actual holding of the case breaks little new ground except in the Fifth, Eleventh, and District of Columbia Circuits, is consistent with the rules applied by several other regional circuit courts for many years, and, while in the short term may create some apprehension, in the long run will have little impact on litigants who recognize the potential advantages and risks of the opinion and act accordingly. B & B Hardware: The Litigation The primary question before the Supreme Court was what preclusive effect should be given to a finding by the TTAB after an inter partes proceeding. Some argued for the now-defunct bright-line rule applied by the Fifth, Eleventh, and D.C. Circuits that issue-preclusion principles should never apply to the Board's decisions. See Aktieselskabet AF 21. Nov. 2001 v. Fame Jeans Inc., 525 F.3d 8, 12-13 (D.C. Cir. 2008); Freedom Sav. & Loan Ass'n v. Way, 757 F.2d 1176, 1180-81 (11th Cir. 1985); Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 484 F.2d 3, 9-10 (5th Cir. 1974). Nevertheless, this bright-line rule had not been followed by a number of other circuits, which had recognized there are some circumstances under which issue preclusion is appropriate. For example, the Second Circuit held in one pre-B & B Hardware opinion that a TTAB determination of likelihood of confusion could have preclusive effect if the Board looked at the same marketplace factors as those taken into account by a district court. See Levy v. Kosher Overseers Ass'n, 104 F.3d 38, 42 (2d Cir. 1997). The Third Circuit took a different, but not necessarily inconsistent, approach: Under its pre-B & B Hardware case law, issue preclusion was appropriate if the parties had "vigorously litigated" the same issue in a prior proceeding before the TTAB and the requirements for issue preclusion otherwise were met. See Jean Alexander Cosmetics, Inc. v. L'Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006); cf. EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 746 F.2d 375, 377-78 (7th Cir. 1984) (holding Board determinations entitled to preclusive effect when affirmed by Federal Circuit); Flavor Corp. of Am. v. Kemin Indus., 493 F.2d 275, 281 (8th Cir. 1974) (holding Board determinations entitled to preclusive effect when affirmed by Court of Customs and Patent Appeals). In light of this preexisting case law at least generally consistent with the Supreme Court's holding, the sharp response to that holding is surprising.

The actual holding of B & B Hardware is that TTAB decisions may have a preclusive effect in federal trademark litigation "so long as the other ordinary elements of issue preclusion are met." 2015 WL 1291915, at *14. In the Eighth Circuit, those elements include the following:

(1) the party sought to be precluded in the second suit must have been a party, or in privity with a party, to the original lawsuit;

(2) the issue sought to be precluded must have been the same as the issue involved in the prior action;

(3) the issue sought to be precluded must have been actually litigated in the prior action;

(4) the issue sought to be precluded must have been determined by a valid and final judgment; and

(5) the determination in the...

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