The Interpretation of the Nice Class Headings in the European Union, or the Art of One Hand Clapping André Pohlmann

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1 The Interpretation of the Nice Class Headings in the European Union, or the Art of One Hand Clapping André Pohlmann Content-Based Prohibitions on Federal Registration and the Constitutional Right to Petition Theodore H. Davis Jr. Raising the Stakes: Trademark Litigation in the Wake of B & B Hardware, Inc. v. Hargis Industries, Inc. Alexandra H. Bistline Commentary: Canada Weakens Trademark Structure by Demolishing Use Foundation Sheldon Burshtein Commentary: Redskins, Eskimos, and Indians: The Canadian Approach to Disparaging Trademarks Tamara Céline Winegust, Noelle Engle-Hardy, and Susan J. Keri Commentary: Inures to the Benefit and Trademark Licensing Kenneth A. Adams July August, 2015 Vol. 105 No. 4

2 Vol. 105 TMR 867 RAISING THE STAKES: TRADEMARK LITIGATION IN THE WAKE OF B & B HARDWARE, INC. v. HARGIS INDUSTRIES, INC. By Alexandra H. Bistline I. INTRODUCTION It is a well-known axiom that every litigant is entitled to its day in court. 1 However, it is equally well understood that once that day in court has come and gone, the litigant may not later relitigate the same issues in another forum in the hope of receiving a different outcome. 2 Rather, once an issue is actually litigated and decided in a final decision, that issue is forever settled as between the parties. 3 This principle, which in modern terms is known as issue preclusion, is intended to protect [parties] from the expense and vexation attending multiple lawsuits, conserve[ ] judicial resources, and foster[ ] reliance on judicial action by minimizing the possibility of inconsistent decisions. 4 In B & B Hardware, Inc. v. Hargis Industries, Inc., the Supreme Court faced the question of whether this principle applies to decisions by the Trademark Trial and Appeal Board (TTAB) of the United States Patent and Trademark Office (USPTO) in a later district court infringement action between the same parties. Although certain features of trademark law suggested that giving issue-preclusive effect to TTAB decisions might be inappropriate, the Supreme Court declared that a district court should give preclusive effect to determinations by the TTAB when the ordinary factors of issue preclusion are demonstrated. 5 In light of the fundamental procedural and substantive differences between the determinations made in Federal courts and those made before the TTAB, this article suggests that the Supreme Court s decision is at least partially incorrect and should Associate, Pirkey Barber PLLC, Associate Member, International Trademark Association. She would like to thank William G. Barber and Louis T. Pirkey for their invaluable guidance and insight throughout the writing and editing process. 1. See, e.g., Robert G. Bone, Rethinking the Day in Court Ideal and Nonparty Preclusion, 67 N.Y.U. L. Rev. 193, 193 (1992) ( Everyone, it is said, has a right to her own day in court. ). 2. See, e.g., Astoria Fed. Sav. & Loan Ass n v. Solimino, 501 U.S. 104, 107 (1991) ( [A] losing litigant deserves no rematch after a defeat fairly suffered. ). 3. Baldwin v. Iowa State Traveling Men s Ass n, 283 U.S. 522, 525 (1931). 4. Montana v. United States, 440 U.S. 147, (1979). 5. B & B Hardware, Inc. v. Hargis Indus., U.S., 135 S. Ct (2015).

3 868 Vol. 105 TMR be remedied by congressional action. In the meantime, however, trademark owners and practitioners must assess and address the decision and its impact on trademark practice. While the Supreme Court provided little guidance on when these ordinary factors of issue preclusion would be met, the typical procedures followed by the TTAB suggest that preclusion is likely to apply to TTAB decisions unless the issue is likelihood of confusion. This threat of preclusion, even if rarely realized in likelihood-of-confusion determinations, significantly raises the stakes (and the corresponding costs) of an opposition or cancellation proceeding before the TTAB. Although as of yet unclear, it seems likely that this decision will drive more litigants directly to federal court rather than to the TTAB, where they risk the adjudication of issues concerning both registration and use of a trademark in a forum with significant evidentiary and procedural limitations. II. THE STATE OF ISSUE PRECLUSION BEFORE B & B HARDWARE, INC. v. HARGIS INDUSTRIES, INC. Although a relatively simple and intuitive idea, issue preclusion is challenging to implement. 6 While various circuits have adopted their own formulations of the ordinary elements of issue preclusion, 7 the Supreme Court has quoted the Restatement (Second) of Judgments for the general rule that [w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim. 8 For convenience, this general rule can be broken down into four elements that must be shown in order for issue preclusion to apply: (1) the issues in both proceedings must be identical, (2) the issue in the prior proceeding must have been actually litigated and actually 6. B & B Hardware, Inc. v. Hargis Indus., 135 S. Ct. 1293, 1303 (2015). 7. See, e.g., Levy v. Kosher Overseers Ass n of Am., Inc., 104 F.3d 38, 41 (2d Cir. 1997) (Issue preclusion applies when (1) the issues in both proceedings [are] identical, (2) the issue in the prior proceeding [was] actually litigated and actually decided, (3) there [was] a full and fair opportunity for litigation, and (4) the issue previously litigated [was] necessary to support a valid and final judgment on the merits. ); Jean Alexander Cosmetics, Inc. v. L Oreal USA, Inc., 458 F.3d 244, 249 (3d Cir. 2006) (considering whether (1) the identical issue was previously adjudicated, (2) the identical issue was actually litigated, and (3) the issue was necessary to the decision, as well as whether (4) the party being precluded was fully represented in the prior action, (5) the party had a full and fair opportunity to litigate, and (6) the issue was determined by a valid and final judgment); Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 8 (5th Cir. 1974) (holding that a prior judgment precludes relitigation of issues actually litigated and [necessarily] determined in the prior suit, regardless of whether the second suit is based on the same cause of action as the first. ). 8. B & B Hardware, 135 S. Ct. at 1303 (2015) (quoting Restatement (Second) of Judgments 27, at 250 (1980)).

4 Vol. 105 TMR 869 decided, (3) there must have been a full and fair opportunity for litigation in the prior proceeding, and (4) the issue previously litigated must have been necessary to support a valid and final judgment on the merits. 9 If the parties did not have a full and fair opportunity to litigate the issue due to inadequate procedures in the prior proceeding, then issue preclusion will not apply even if the ordinary elements are met. 10 A. Issue Preclusion and the TTAB As long as these elements of issue preclusion are met, the application of issue preclusion will not necessarily be limited to those situations in which the prior proceeding was before an Article III court. As the Supreme Court articulated it in Kremer v. Chemical Constr. Co., the administrative nature of the factfinding process is not dispositive of whether issue preclusion will apply. 11 Instead, the question is whether the opposing parties had adequate opportunity to litigate disputed issues of fact before an administrative agency acting in a judicial capacity. 12 According to the Court, the suitability of administrative preclusion may vary according to the specific context of the rights at stake, the power of the agency and the relative adequacy of agency procedures. 13 Although TTAB procedures incorporate many of the features that courts look for when granting preclusive effect to administrative decisions, 14 circuit courts were split on whether 9. Montana v. United States, 440 U.S. 147, (1979). 10. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 328 (1979) ( [T]he requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most significant safeguard. ) (citations omitted); see also B & B Hardware, 135 S. Ct. at 1303 (citing Restatement (Second) of Judgments 28 (1980) (noting that preclusion should not apply when there were differences in the quality or extensiveness of the procedures followed. )) U.S. 461, 484 n.26 (1982). 12. United States v. Utah Construction & Mining Co., 384 U.S. 394, (1966) ( When an administrative agency is acting in a judicial capacity and resolved disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose. ). 13. Id. 14. See Utah Construction, 384 U.S. at (1966) ( When an administrative agency is acting in a judicial capacity and resolved disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose. ); compare Plaine v. McCabe, 797 F.2d 713, 720 (9th Cir. 1986) (considering whether proceeding is adversarial when determining whether issue preclusion is appropriate); Nasem v. Brown, 595 F.2d 801, 806 (D.C. Cir. 1979) (emphasizing the adversariness of administrative proceedings when considering whether to apply issue preclusion); 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure 4475 (2d ed. 2002) ( Apart from the procedures provided by the agency itself, the opportunity for judicial review may prove important in determining the availability of preclusion. ); Unger v. Consol. Foods Corp., 693 F.2d 703, 705 (7th Cir. 1982) (approving of procedures in which testimony is under oath and cross-examination is permitted as satisfying the requirements for a full and fair opportunity to litigate such that

5 870 Vol. 105 TMR TTAB decisions could have preclusive effect in later district court infringement proceedings. To understand why this question was still unsettled, one must understand the unique adjudicative features of the Trademark Act of 1946 (the Lanham Act ), 15 which created uncertainty as to the suitability of issue preclusion to TTAB decisions. The Lanham Act creates two main mechanisms by which a party can assert its trademark rights against another party: (1) an inter partes proceeding before the TTAB; and/or (2) a trademark infringement action in court. 16 If a party believes that he would be damaged by the registration of a trademark with the USPTO, that party may file an opposition with the TTAB. 17 Similarly, if a party believes he is damaged by an existing registration, he may petition the TTAB to cancel the registration. 18 In either case, the TTAB will initiate an inter partes proceeding that is in many ways similar to a civil action in a federal district court. 19 The Lanham Act also provides that an individual may sue for trademark infringement in federal court, assuming that the allegedly infringing trademark is used in commerce. 20 There are distinct differences in TTAB and court procedures, and in the scope of the TTAB s inquiry and decision as compared with a court s. In terms of procedural distinctions, the most preclusion would be appropriate) with TBMP (2014) ( An inter partes proceeding before the Board is similar to a civil action in a federal district court. There are pleadings...; a wide range of possible motions; conferencing; disclosures; discovery; trial; briefs; and, if requested, an oral hearing, followed by a decision on the case. ); 15 U.S.C (permitting any party who is dissatisfied with the decision of the Director or Trademark Trial and Appeal Board to appeal to the United States Court of Appeals for the Federal Circuit or to seek review by filing a civil action in district court); 37 C.F.R (a)(1) (adopting the majority of Fed. R. Civ. P. 26 relating to discovery procedures); 37 C.F.R (a) ( The rules of evidence for proceedings before the Trademark Trial and Appeal Board are the Federal Rules of Evidence ); Trademark Trial and Appeal Board Manual of Procedure 114 (June 2014) (hereinafter TBMP ) (allowing and encouraging parties to engage legal counsel to represent them before the TTAB). 15. Trade-Mark Act of July 5, 1946, ch. 540, 1-45, 60 Stat , as amended, 15 U.S.C et seq. (1970). 16. There are also several other enforcement mechanisms by which a party can assert its trademark rights against another that are not relevant here. See, e.g., 15 U.S.C (forbidding goods bearing infringing marks from being admitted to entry at any customhouse of the United States and permitting the owner of a registered trademark to record its trademark with Customs and Border Patrol in order to assist in the identification and seizure of infringing goods at customs); 19 U.S.C (forbidding, among other things, the importation into the United States...of articles that infringe a valid and enforceable United States trademark registered under the Trademark Act of 1946 and permitting aggrieved trademark owners to bring an action before the International Trade Commission) U.S.C U.S.C TBMP (June 2014) U.S.C (a); 15 U.S.C (a), (c).

6 Vol. 105 TMR 871 notable differences between the TTAB and a district court proceeding include narrower discovery procedures 21 and the lack of live testimony before the TTAB. 22 Although the parties may engage in examination and cross-examination of witnesses through depositions, TTAB determinations are made only on the written record with no live testimony or videotaped depositions. 23 In addition, the statutory inquiry the TTAB undertakes, 24 as well as the jurisdiction of the TTAB, differs from federal court. In an inter partes proceeding, the TTAB is asked to determine whether the mark identified in the application or registration so resembles another mark as to be likely, when used on or in connection with the goods in the application (or registration) to cause confusion. 25 In contrast, a federal court in a trademark infringement proceeding must determine whether the use[] in commerce of a mark is likely to cause confusion. 26 Furthermore, while the TTAB can determine whether a mark should be 21. TBMP ( The scope of discovery in Board proceedings, though, is generally narrower than in court proceedings, especially those involving infringement and/or where both parties have made extensive use of the marks. ); see also Frito-Lay North Am. Inc. v. Princeton Vanguard LLC, 100 U.S.P.Q.2d 1904, 1907 (T.T.A.B. 2011) ( In view of our limited jurisdiction, the narrowness of the issues to be decided by the Board, and the concerns expressed by the Federal Circuit, the burden and expense of e-discovery will weigh heavily against requiring production in most cases. ); but see Thomas Y. Allman, The 2015 Civil Rules Package As Approved by the Judicial Conference 8-11 (Mar. 11, 2015), at ritten_materials/5_1_2015_summary_of_rule_package.authcheckdam.pdf (reflecting concern that pending amendments to Federal Rule of Civil Procedure 26, which emphasize the proportionality of discovery, will narrow the scope of discovery in federal court). 22. TBMP (June 2014) ( The principal difference is that proceedings before the Board are conducted in writing, and the Board s actions in a particular case are based upon the written record therein. ) 23. TBMP (a) ( A testimony deposition is a device used by a party to a Board inter partes proceeding to present evidence in support of its case. Testimony is taken out of the presence of the Board... and the written transcripts thereof, together with any exhibits thereto, are then submitted to the Board. ). The Board does not even accept videotaped depositions into evidence, see 37 C.F.R (g) and 37 C.F.R , which means that the Board does have any oral or visual means by which to judge the credibility of a witness. 24. Although the Supreme Court held that the differences in the statutory language between 15 U.S.C. 1052(d) and 15 U.S.C (a), (c) did not indicate necessarily that the TTAB and the district court were considering different issues, this was up for debate prior to B & B Hardware. See B & B Hardware, Inc. v. Hargis Indus., 135 S. Ct. 1293, 1307 ( The real question, therefore, is whether the likelihood of confusion for purposes of registration is the same standard as likelihood of confusion for purposes of infringement. We conclude it is, for at least three reasons. ) U.S.C. 1052(d). No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration... unless it consists of or comprises a mark which so resembles a mark registered in the United States Patent and Trademark Office, or a mark... previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion U.S.C (a); 15 U.S.C (a), (c).

7 872 Vol. 105 TMR registered with the USPTO, it does not have the authority to enjoin the use of a mark. 27 If the federal court, on the other hand, determines that confusion is likely, the court has the power not only to cancel or modify the registration of the mark, but also to enjoin all use of the mark in commerce and award damages and attorneys fees. 28 The TTAB s focus on registration instead of use dictates that the TTAB will often disregard evidence that would be critical in a district court infringement proceeding. In particular, because the TTAB is tasked only with determining whether the mark, when used on the goods listed in the application, is likely to cause confusion with another mark, the TTAB ordinarily limits its inquiry to the specific mark and the goods and services as depicted in the application. 29 In other words, regardless of whether the applicant s actual use of the mark in commerce, or the context of the use, differs in any way from that shown within the four corners of the application, the Board considers only the mark and goods as described in the application. 30 Elements like packaging, the incorporation of house marks, logos, and color schemes, as well as evidence about the actual nature of the goods, trade channels, or classes of purchasers are often disregarded. 31 Thus, even though the parties may present marks in the marketplace in many different ways not apparent on the face of the application which could heighten or lessen the likelihood of confusion, these elements are generally not considered by the TTAB. This limited inquiry differs from federal courts, whose authority and procedures necessarily lead to more extensive inquiries regarding whether the actual use of a mark in the marketplace would be likely to cause confusion U.S.C (setting forth the actions the Board may take); see also TBMP (June 2014) ( The Board is empowered to determine only the right to register.... The Board is not authorized to determine the right to use, nor may it decide broader questions of infringement or unfair competition. ) U.S.C Toro Co. v. Harding Indus., 549 F.2d 785, 790 (C.C.P.A. 1977) ( Here, appellant seeks to register the word MONOPOLY as its mark without any restrictions reflecting the facts in its actual use which it argues on this appeal prevent likelihood of confusion. We cannot take such facts into consideration unless set forth in its application. ). 30. Octocom Sys., Inc. v. Houston Computer Servs., Inc., 918 F.2d 937, 942 (Fed. Cir. 1990) ( The authority is legion that the question of registrability must be decided on the registration submissions regardless of what the record may reveal as to the particular nature of an applicant s goods, the particular channels of trade, or the class of purchasers to which sales of the goods are directed. ). 31. See Brief for Respondent at 10, B & B Hardware, Inc. v. Hargis Indus., 135 S. Ct (2015) (citing Adam L. Brookman, Trademark Law: Protection, Enforcement, and Licensing 6.04[B][1][e] (2d ed. 2014); 3 J. Thomas McCarthy, McCarthy on Trademarks 20:15 (4th ed. 2010); INTA Amicus Brief at 16-17; B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct (2015)).

8 Vol. 105 TMR 873 These procedural and substantive differences between the TTAB and the federal courts likelihood-of-confusion determinations suggest two reasons why courts previously struggled with the question of issue preclusion in the trademark context. Issue preclusion requires that the issue in the two proceedings be identical, and it requires a full and fair opportunity to litigate the issue in the first proceeding. In the trademark context, courts struggled with these elements of preclusion, as it was not immediately clear whether (1) the likelihood-of-confusion issue decided in TTAB proceedings is actually the same issue that courts decide in infringement proceedings given the differences between registration and use of a mark; and (2) TTAB procedures provide the parties with a full and fair opportunity to litigate the issues given the narrower discovery and use of only a written record. The answer to these questions varied by circuit. The Second, 32 Third, 33 Seventh, 34 and (pre-b & B Hardware) Eighth 35 Circuits were willing to grant TTAB likelihood-of-confusion determinations preclusive effect in certain circumstances (which varied by circuit), while the Fifth 36 and Eleventh 37 Circuits, and arguably the D.C. Circuit, 38 determined that TTAB decisions could never preclude litigation of the issues in later infringement proceedings in district courts. The Third Circuit afforded issue-preclusive effect to TTAB decisions with very little discussion of the two questions above, instead focusing on whether the likelihood-of-confusion determination by the TTAB was necessary to the TTAB s decision. 39 In light of the facts of the case, it is unsurprising that 32. Jim Beam Brands Co. v. Beamish & Crawford Ltd., 937 F.2d 729 (2d Cir. 1991); Levy v. Kosher Overseers Ass n of Am., Inc., 104 F.3d 38 (2d Cir. 1997). 33. Jean Alexander Cosmetics, Inc. v. L Oréal USA, Inc. 458 F.3d 244 (3d Cir. 2006) F.2d 375 (7th Cir. 1984). 35. Flavor Corp. of Am. v. Kemin Indus., Inc., 493 F.3d 275, (8th Cir. 1974) (holding that where the CCPA has found a likelihood of confusion between two similar marks in a cancellation proceeding, that fact is precluded from relitigation in a subsequent infringement action between the same parties.... ). 36. Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3 (5th Cir. 1974). 37. Freedom Savings & Loan Ass n v. Way, 757 F.2d 1176 (11th Cir. 1985) (citing Fifth Circuit precedent for the proposition that TTAB decisions did not preclude later court proceedings); see also Bonner v. City of Prichard, 661 F.2d 1206, 1207 ( We hold that the decisions of the United States Court of Appeals for the Fifth Circuit... as that court existed on September 30, 1981, handed down by that court prior to the close of business on that date, shall be binding as precedent in the Eleventh Circuit.... ). 38. Although the case does not explicitly address issue preclusion, Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc. suggests that the D.C. Circuit, like the Fifth and Eleventh Circuits, would defer to factual findings by the TTAB, but not give them preclusive effect. 525 F.3d 8, (D.C. Cir. 2008). 39. Jean Alexander Cosmetics, 458 F.3d at , 256 n.5 (focusing on the question of whether the likelihood-of-confusion finding by the Board was necessary to the final decision,

9 874 Vol. 105 TMR the Third Circuit s decision focused almost exclusively on whether the likelihood-of-confusion determination was necessary to the decision. At issue was the fact that the TTAB, wary that a reviewing court might reverse its decision regarding the question of priority between the parties, also decided the question of likelihood of confusion between the parties even though it was unnecessary to do so. 40 When Jean Alexander later sued alleging a likelihood of confusion between the parties marks, L Oreal argued that the TTAB s likelihood-of-confusion determination, although unnecessary, should still preclude relitigation of the issue. 41 The Third Circuit held that even though the TTAB s likelihood-ofconfusion determination was unnecessary to the resolution of the proceeding, the determination was preclusive. 42 Interestingly enough, in its discussion, the Third Circuit seemed to assume without question that TTAB decisions were eligible for issue preclusion. 43 In contrast, the Seventh Circuit in EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc. addressed both the limited jurisdiction and the limited procedural opportunities of the TTAB before determining that a TTAB decision affirmed by the Federal Circuit could be preclusive on a later federal court action. 44 Although the Seventh Circuit noted that other courts had given preclusive effect to TTAB decisions affirmed by the Federal Circuit, it recognized that the Federal Circuit was dependent upon the record developed before the T.T.A.B. 45 Accordingly, in order to determine whether preclusion was appropriate, the Seventh Circuit had to address whether the underlying proceedings in the TTAB afforded a full and fair opportunity to litigate. 46 While acknowledging the procedural differences such as the lack of live testimony, the court determined that the party had not established how it was disadvantaged by the procedural limitations of the TTAB and dismissing arguments that there was not a full and fair opportunity to litigate in a footnote). 40. Id. at 246 ( However, solely for the sake of completeness, the TTAB also considered the likelihood of confusion between the EQ System mark and the modernized Shades EQ mark. ). 41. Id. at Id. at 255; see also id. at 250 ( There is no question that likelihood of confusion was a central issue in the cancellation proceedings. It was the focus of the parties pleadings and had been litigated extensively over the course of four years. ) 43. See id. at (failing to even discuss the possibility that TTAB decisions might not be eligible for preclusion). 44. EZ Loader, 746 F.2d at Id. at Id.

10 Vol. 105 TMR 875 proceeding. 47 Furthermore, the limited remedial authority of the TTAB was not in and of itself an argument against preclusion, because many administrative determinations by agencies with more limited authority had been given preclusive effect in the past. 48 The court also dismissed the argument that preclusion was inappropriate because the TTAB focused only on a naked comparison of the trademarks without regard to marketplace usage. 49 In this case, the [TTAB] examined not only the marks in isolation, but also the manner in which they were affixed to the trailers, their use in sales and advertising brochures, and the channels through which the products were marketed. 50 While the Seventh Circuit noted that the TTAB s decisions could have issuepreclusive effect when the issues were the same and the proceedings were fair, the court was careful to note that a TTAB decision does not always preclude subsequent litigation of the issues. 51 Rather, the court cautioned that the facts and proceedings underlying the court s decision must, of course, be scrutinized to determine that the issue upon which preclusion is sought was before the court. 52 Although the fact that the TTAB s determination in EZ Loader had been affirmed by the Federal Circuit was not overly emphasized in the EZ Loader decision itself, the Seventh Circuit later clarified that only TTAB decisions that had been reviewed by a federal court would preclude a later federal court action on the same issue. 53 In Dunn v. Gull, the Seventh Circuit noted that EZ Loader stood for the proposition that an agency determination may have weight in a district court decision of a trademark right, but such a determination without further review [by a federal court] may not bind the court. 54 Accordingly, the Seventh Circuit refused to give preclusive effect to a decision by the USPTO that had not been reviewed by a federal court. 55 While the Second Circuit also acknowledged that TTAB decisions can have issue-preclusive effect, the court warned against simply assuming that the likelihood-of-confusion issues 47. Id. ( EZ fails to disclose how its case was affected in any way by the Board s reliance on deposition testimony submitted by the parties, much less how it was disadvantaged by that method. ) 48. Id. at ( Courts have long held that where an agency acts in a judicial capacity and resolves disputes properly before it, the agency s findings may be given preclusive effect... ). 49. Id. at Id. at Id. at Id. 53. Dunn v. Gull, 990 F.2d 348, 352 (7th Cir. 1993). 54. Id. 55. Id.

11 876 Vol. 105 TMR decided by the TTAB were the same as those decided in federal court. 56 Unlike the Third and Seventh Circuits, which appeared to assume that the likelihood-of-confusion issues presented in each forum were the same, the Second Circuit extensively detailed the ways in which TTAB proceedings often vary from federal court proceedings. 57 In particular, the court noted that the TTAB often determines likelihood of confusion regardless of the reality of actual usage. 58 In cases in which the TTAB fails to consider the entire marketplace context, the issues in the two proceedings are not identical, and issue preclusion cannot apply. 59 Applying these principles to the cases at hand, the Second Circuit found that preclusion did not apply because the TTAB, which failed to consider the labels, consumers, or trade channels of the goods and services, was not deciding the same issue as the federal court. 60 In contrast to the Second, Third, and Seventh Circuits holdings that TTAB decisions could be afforded preclusive effect, the Fifth and Eleventh Circuits held that TTAB decisions never preclude future litigation regarding the likelihood of confusion between the marks. 61 Rather than addressing whether the individual elements of issue preclusion were met, the Fifth and Eleventh Circuits considered whether Congress had intended TTAB decisions to have preclusive effect. 62 In the courts view, the fact that the Lanham Act includes a provision by which a federal court can look beneath and beyond the record before the PTO through de novo review of the TTAB decision 63 indicates a 56. Jim Beam Brands Co. v. Beamish & Crawford Ltd., 937 F.2d 729, 734 (2d Cir. 1991) ( Though worded similarly, the issue of likelihood of confusion in a [TTAB] proceeding may be different from the issue of likelihood of confusion in an action for infringement. ). 57. Id. 58. Id.; see also Levy v. Kosher Overseers Ass n of Am., Inc., 104 F.3d 38, 41 (2d Cir. 1997) ( In a proceeding seeking the cancellation of a trademark or opposing an application for registration, likelihood of confusion is determined only as to the registrability of the applicant s mark exactly as shown in the application and only as to the goods listed, regardless of actual usage. (citations omitted)). 59. Id. at Jim Beam Brands Co., 937 F.2d at 735 (finding no preclusion because the TTAB and Federal Circuit discussions made no mention of the actual use or appearance of those marks.... ); Levy, 104 F.3d at 43 (holding that the Board s passing references to consumers was simply not enough to show that the TTAB examined the entire marketplace context of the marks such that preclusion would be appropriate). 61. Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 9-10 (5th Cir. 1974) ([T]he findings do not merit application of the doctrine of collateral estoppel.... ); Freedom Sav. & Loan Ass n v. Way, 757 F.2d 1176, 1180 (11th Cir. 1985) ( In this Circuit, a court hearing on an infringement claim is not legally and conclusively bound by a prior decision of the TTAB regarding the same trademark dispute. ). 62. Id. 63. Am. Heritage Life Ins. Co., 494 F.2d at 10; see 15 U.S.C. 1071(b); Kappos v. Hyatt, 132 S. Ct. 1690, 1694 (2012) ( [W]e hold that the district court must make a de novo finding when new evidence is presented on a disputed question of fact. ); see also infra note 190 and accompanying text.

12 Vol. 105 TMR 877 congressional intent not to invoke the immunizing doctrines of res judicata or collateral estoppel in connection with PTO proceedings. 64 However, both the Fifth and the Eleventh Circuits agreed that TTAB findings as to confusing similarity of marks must be accepted as controlling unless the contrary is established by evidence which in character and amount carries through conviction Thus, although TTAB findings were not preclusive in subsequent court litigation, the findings were entitled to great deference in these circuits. Although not every circuit had weighed in on the question of whether TTAB decisions could have preclusive effect on later trademark litigation, those circuits that had addressed the issue came to differing conclusions. However, given that the Supreme Court rarely addresses trademark issues, it is rather surprising that it stepped in to address the circuit split. It may be that the procedural history of the case swayed the Court to address this circuit split over others that were presented to it. If ever a case cried out for repose, it would certainly be B & B Hardware, Inc. v. Hargis Industries, Inc. III. B & B HARDWARE, INC. v. HARGIS INDUSTRIES, INC. A. Procedural History As the Supreme Court correctly noted, the full story of the litigation between B & B Hardware, Inc. and Hargis Industries, Inc. could fill a long, unhappy book. 66 The case has spanned over almost twenty years and involved two district court actions and jury trials, two inter partes proceedings before the Trademark Trial and Appeal Board, and three appeals to the Eighth Circuit. At alternate points in the proceedings, both parties argued for issue preclusion. In fact, the issue-preclusive effect of prior litigation was decided three separate times before the case reached the Supreme Court. The history of this case is complicated, but worth exploring as it sheds light on why the Court was willing to accept the case and decide it as it did. The long and labyrinthine 67 history of this dispute began in 1990, when B & B applied to register the mark SEALTIGHT for threaded or unthreaded metal fasteners and other related hardware; namely, self-sealing nuts, bolts, screws, rivets and washers, all having a captive O-ring, for use in the aerospace 64. Am. Heritage Life Ins. Co., 494 F.2d at Id. at 10 (internal quotations omitted). 66. B & B Hardware, 135 S. Ct. at Id.

13 878 Vol. 105 TMR industry. 68 In 1996, three years after B & B s registration of SEALTIGHT issued, Hargis applied to register the mark SEALTITE for self-piercing and self-drilling metal screws for use in the manufacture of metal and post-frame buildings. 69 After the USPTO initially refused to register Hargis s SEALTITE mark because of a likelihood of confusion with B & B s registered trademark SEALTIGHT, Hargis petitioned to cancel B & B s registration. 70 In response, B & B filed suit in the Eastern District of Arkansas alleging multiple causes of action, including trademark infringement under the Lanham Act. 71 In a decision that was affirmed on appeal, the jury found that B & B s trademark SEALTIGHT was a merely descriptive term that had not acquired secondary meaning. 72 On these grounds, the USPTO cancelled B & B s registration in 2002, but subsequently reinstated the registration after B & B pointed out that the registration, which was more than five years old, could no longer be cancelled on grounds of mere descriptiveness. 73 In the meantime, Hargis s application to register SEALTITE was published in the Official Gazette of the USPTO, and B & B opposed the application. 74 The TTAB rejected Hargis s argument that the Arkansas jury verdict should preclude the opposition proceeding, noting that the jury had not decided the issue of likelihood of confusion. 75 As this opposition proceeding continued, B & B filed an affidavit of incontestability with the USPTO in June 2006, and subsequently filed a second district court action against Hargis alleging trademark infringement. 76 While the case proceeded in the district court, the TTAB sustained B & B s opposition and denied Hargis s application to register the mark SEALTITE on the grounds that the mark would be likely to cause confusion with B & B s mark SEALTIGHT SEALTIGHT, Registration No. 1,797, Id.; SEALTITE, U.S. Trademark Application Serial No. 75/129,229 (filed July 2, 1996). 70. Cancellation Proceeding (filed Mar. 5, 1997). 71. B & B Hardware, Inc. v. Hargis Indus., Inc. No. 4:98CV00372 (JWC). 72. B & B Hardware, Inc. v. Hargis Indus., Inc., 252 F.3d 1010, (8th Cir. 2001). 73. Cancellation Proceeding No (filed Mar. 5, 1997). 74. Off. Gaz. Pat & Trademark Office TM345 (Nov. 5, 2002); Opposition Proceeding No (filed Feb. 28, 2003). 75. Id. 76. SEALTIGHT, Registration No. 1,797,509; B & B Hardware, Inc. v. Hargis Indus., Inc., No. 4:06CV01654 SWW, 2007 WL (E.D. Ark. Sep. 13, 2007). 77. B & B Hardware, Inc. v. Sealtite Building Fasteners, Opposition No (T.T.A.B. Aug. 28, 2007) (nonprecedential).

14 Vol. 105 TMR 879 The Board held that the high degree of similarity between the marks SEALTIGHT and SEALTITE, 78 as well as the related (although not identical) nature of the goods and services listed in the application and registration, 79 made confusion likely. 80 In doing so, the Board reasoned that the differences in trade channels (which were explicitly claimed in each parties application/registration) 81 were not enough to outweigh the similarity of the marks. 82 Moreover, some limited evidence of actual confusion supported a finding of likely confusion. 83 Although the Board engaged in a brief discussion of consumer sophistication, it held that the parties had not presented enough evidence for the Board to make a finding with regard to the consumer sophistication factor. 84 Thus, more so than in typical opposition proceedings, the Board considered some marketplace factors, such as the differences between the trade channels, in making its decision. Notably, however, the Board did not consider whether the fact that Hargis always presented the mark as Sealtite Building Fasteners in the marketplace would affect the likelihood-of- 78. Id. at As discussed previously, both B & B and Hargis included trade channel limitations in the registration and application. See SEALTIGHT, Registration No. 1,797,509; SEALTITE, U.S. Trademark Application Serial No. 75/129,229 (filed July 2, 1996). Despite the fact that B & B s registration was limited to fasteners used in the aerospace industry, at the trial stage, B & B attempted to rely on its common-law rights in the mark SEALTIGHT used in connection with a full range of fasteners. B & B Hardware, Inc. v. Sealtite Building Fasteners, Opposition No , at 6-7 (T.T.A.B. Aug. 28, 2007) (nonprecedential). Although B & B failed to allege these common-law rights in the Notice of Opposition, the Board held that Hargis had tried the issue by consent. See id. Despite this, the Board still refused to consider B & B s common-law rights because the prior jury decision finding SEALTIGHT descriptive and lacking in secondary meaning precluded B & B s reliance on its common-law rights in the mark. See id. at Id. at 18-23, 32-33; see also id. at 32 ( In the case sub judice, the most critical factors in our likelihood-of-confusion analysis are the similarities of the marks and the similarity of the goods. The marks are substantially identical and they are used on closely related products. ). 81. The Board generally only considers evidence of different trade channels when these trade channels are explicitly claimed in the application, as they were in this case. 82. Id. at Id. at 32 ( [T]he anecdotal evidence of actual confusion lends support to our finding that when the fasteners of the parties are marketed under similar marks, consumers will mistakenly believe that they emanate from the same source. ); but see B & B Hardware, Inc. v. Hargis Indus., Inc., No. 4:06-V SWW, 2010 WL (E.D. Ark. Nov. 10, 2010) ( The evidence is overwhelming that B & B engaged in efforts to manufacture the appearance of confusion.... ). 84. B & B Hardware, Inc. v. Sealtite Building Fasteners, Opposition No (T.T.A.B. Aug. 28, 2007) (nonprecedential) (finding the evidence of consumer sophistication was simply not developed in sufficient detail to permit us to draw any conclusions regarding the degree of consumer care. ); but see B & B Hardware, Inc. v. Hargis Industries, Inc., 736 F. Supp. 2d 1212, 1222 (E.D. Ark. 2010) (noting that Hargis presented extensive evidence at trial regarding the high degree of care exercised by its customers or potential customers.... ).

15 880 Vol. 105 TMR confusion analysis. 85 Hargis chose not to appeal the Board s decision of likely confusion, but continued to vigorously defend the infringement proceeding in the district court. B & B s success before the TTAB did not continue in the district court. Instead, the district court dismissed the second complaint on claim and issue preclusion grounds based upon the previous Arkansas jury verdict in On appeal, the Eighth Circuit held that the first jury had not decided the issue of likely confusion, and that the change in [the] mark s validity from contestable to incontestable between the first district court proceeding and the second constituted a significant intervening factual change that made the application of issue preclusion inappropriate. 87 The court declined to consider whether the TTAB s likelihood-of-confusion decision (which occurred one month before the district court s dismissal of the complaint) would have any preclusive effect on the district court proceeding. 88 When the proceeding resumed in the district court following the Eighth Circuit s reversal and remand, it was B & B that was now arguing for issue preclusion. B & B argued that the TTAB had already decided that confusion was likely between the marks, and Hargis should be precluded from re-litigating the issue. 89 The district court held that because the decision had not been affirmed by an Article III court, preclusion was inappropriate. 90 The district court also refused to introduce the TTAB decision into evidence, and instructed the jury that the TTAB proceeding had nothing to do with the decision before it. 91 A jury once again found for Hargis, this time on the ground that there was no likelihood of confusion This is understandable, as Hargis s application was for the mark SEALTITE alone. See SEALTITE, U.S. Trademark Application Serial No. 75/129,229 (filed Jul. 2, 1996); see B & B Hardware, Inc. v. Sealtite Building Fasteners, Opposition No (T.T.A.B. Aug. 28, 2007) (nonprecedential) (making no mention of the fact that Hargis always presented the mark as SEALTITE BUILDING FASTENERS); see also ( [T]he evidence revealed that Hargis always uses the term Sealtite in the context of Sealtite Building Fasteners. ). 86. B & B Hardware, Inc. v. Hargis Indus., Inc., No. 4:06CV01654 SWW, 2007 WL , at *13 (E.D. Ark. Sep. 13, 2007). 87. B & B Hardware, Inc. v. Hargis Industries, Inc., 569 F.3d 383, 388 (8th Cir. 2009). 88. Id. at 390 ( [I]n light of our decision to reverse the district court, we decline to address B & B s argument that the district court should have given preclusive effect to the decisions of the TTAB. ). 89. B & B Hardware, Inc. v. Hargis Industries, Inc., 736 F. Supp. 2d 1212, (E.D. Ark. 2010) (denying B & B s renewed motion for judgment as a matter of law, or in the alternative, for a new trial). 90. Id. 91. Id. 92. Id. at 1214 ( The jury returned verdicts against B & B on all its claims and for Hargis on all its claims. ); see also id. at 1220 (upholding the jury s verdict that confusion was unlikely, and noting that the only SquirtCo factor that supported likelihood of confusion was the similarity of the marks).

16 Vol. 105 TMR 881 For the third time, B & B appealed the decision of the district court. The Eighth Circuit upheld the district court decision that the TTAB opinion was not entitled to preclusive effect, but did so on alternative grounds. 93 The Eighth Circuit dismissed the idea that TTAB decisions were not entitled to preclusive effect simply because the TTAB is not an Article III court, holding instead that [p]rinciples of administrative law suggest that application of collateral estoppel may be appropriate where administrative agencies are acting in a judicial capacity. 94 However, the Eighth Circuit held that preclusion was still inappropriate despite the fact that the TTAB was acting in a judicial capacity because the same likelihood-of-confusion issues were not decided by the TTAB as those brought in the action before the district court. 95 Although both determinations were labeled likelihood of confusion, the issues considered were, in fact, distinct. 96 Unlike trademark infringement in the district court, where the marketplace usage of the marks and products was the critical determination, the question of registration before the TTAB centered on the appearance and sound of the two marks. 97 In addition to holding that the forums considered different issues, the Eighth Circuit also noted the burden of persuasion was different between the forums. 98 Although Hargis had been unable to overcome B & B s challenge before the TTAB, that did not necessarily mean that B & B would be able to meet its burden of persuasion before the district court. 99 Finally, the Eighth Circuit held that the district court did not err in refusing to defer to the TTAB decision or admit the decision into evidence. 100 The Eighth Circuit decision was not, however, unanimous. Judge Colloton disagreed with the majority s conclusion that differences in the analytical approaches between the forums warranted dispensing with collateral estoppel, noting that modest differences in the applicable standards did not mean the forums were deciding a different issue. 101 The dissent found it unpersuasive that the TTAB weighed some factors differently than the Eighth Circuit would have, as [t]he doctrines of claim and 93. B & B Hardware, Inc. v. Hargis Indus., 716 F.3d 1020, 1024 (8th Cir. 2013). 94. Id. 95. Id. 96. See id. ( The simple fact that the TTAB addressed the concept of likelihood of confusion when dealing with Hargis s attempt to register its mark does not necessarily equate to a determination of likelihood of confusion for purposes of trademark infringement. ). 97. Id. at Id. at Id Id.at Id. at 1029 (Colloton, J., dissenting).

17 882 Vol. 105 TMR issue preclusion prevent relitigation of wrong decisions just as much as right ones. 102 After losing at the Eighth Circuit, the ever-determined B & B petitioned the Supreme Court for a writ of certiorari. B & B pointed to the circuit split regarding the issue-preclusive effect of TTAB decisions, and argued that this case, with its long and tortured history, was the appropriate vehicle for the Court to decide the issue. 103 After calling for the views of the Solicitor General, who recommended that the writ be granted, the Supreme Court granted certiorari. 104 B. The Supreme Court Speaks The Majority and Concurring Opinions The Supreme Court granted certiorari to answer two questions: (1) whether the TTAB s finding of a likelihood of confusion precludes Hargis from litigating likelihood of confusion in subsequent infringement litigation; and (2) whether, if issue preclusion does not apply, the district court should grant any deference to the TTAB s findings regarding a likelihood of confusion. 105 In addition to the positions of B & B and Hargis, the Supreme Court permitted the Solicitor General to present the United States Government s position in an amicus brief and at oral 102. Id. (quoting Clark v. Clark, 984 F.2d 272, 273 (8th Cir. 1993)) Petition For A Writ of Certiorari at 12, B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct (2015) Brief For the United States as Amicus Curiae at 1, B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct (2015) ( In the view of the United States, the petition for a writ of certiorari should be granted. ). Id Brief for Petitioner at i, B & B Hardware, Inc. v. Hargis Indus., 135 S. Ct (2015); The questions presented are as follows: 1. Whether the Board s finding of a likelihood of confusion precludes Hargis from relitigating that issue in infringement litigation, in which likelihood of confusion is an element. 2. Whether, if issue preclusion does not apply, the district court was obliged to defer to the Board s finding of a likelihood of confusion absent strong evidence to rebut it. See also Brief for Respondent at i, B & B Hardware, Inc. v. Hargis Indus., 135 S. Ct (2015). The questions presented are: 1. Whether the Board s finding in an administrative registration proceeding that a mark so resembles another as to be likely to cause confusion precludes litigation over whether the actual use of the mark in commerce is likely to cause confusion. 2. If not, whether a court in an infringement suit considering the actual use of a mark in commerce should give any weight to the Board s finding in a registration proceeding so that the mark so resembles another as to be likely to cause confusion.