Trademarks

An eighteen-year dispute between B&B Hardware Inc. (B&B) and Hargis Industries Inc. (Hargis) has culminated in the first substantive trademark case[1] to be heard by the United States Supreme Court in a decade.[2] At issue is the relationship between the dual authorities of the trademark world: the Trademark Trial and Appeal Board (TTAB) and federal courts.

The TTAB and federal courts both employ a likelihood of confusion analysis to determine whether similarities between marks are strong enough to cause confusion. The TTAB’s likelihood of confusion analysis takes place at the inception of a mark’s federal recognition – it’s a necessary part of deciding whether to issue federal registration for a contested mark.[3] A federal court’s likelihood of confusion analysis takes place when a mark in real use has been jeopardized – it’s a necessary part of deciding whether a mark has been infringed.[4] Although the timing of the analyses is different, widespread disagreement exists about whether the content of the analyses is the same.[5] Whether and to what degree the likelihood of confusion tests employed by the TTAB and federal courts are similar impacts the key issue in B&B Hardware Inc. v. Hargis Industries Inc.: whether TTAB likelihood of confusion findings should be given preclusive effect in federal district court.

Hargis uses the mark SEALTITE to market self-drilling construction screws.[6]  Its 1996 attempt to register the mark was opposed by B&B, which uses the earlier-registered mark SEALTIGHT to market an aerospace-suitable fastener product.[7]  A 2003 attempt by Hargis to register the mark met with opposition by B&B on the ground that SEALTITE was likely to be confused with SEALTIGHT.  In a subsequent opposition proceeding the TTAB determined that a likelihood of confusion exists between the marks, and denied Hargis’ application.[8]

In 2006, B&B sued Hargis in federal district court for infringement of its SEALTIGHT trademark.  B&B argued that the TTAB’s likelihood of confusion finding has a preclusive effect upon consideration of the issue at the district court level, and alternatively, that the TTAB’s finding should be given deference and  submitted into evidence for consideration by the jury.[9]  The federal district court disagreed with both arguments raised by B&B, determining that the TTAB’s likelihood of confusion findings do not have preclusive effect because the TTAB is not an Article III court, declining to give the TTAB decision deference, and refusing to admit the TTAB decision into evidence.[10]  The jury found in favor of Hargis.[11]

B&B appealed the trial court’s holding to the U.S. Court of Appeals for the Eighth Circuit, raising three questions on appeal: 1) whether the TTAB likelihood of confusion finding was entitled to preclusive effect, 2) whether the TTAB likelihood of confusion finding was entitled to deference by the district court, and 3) whether the district court erred in refusing to admit the TTAB likelihood of confusion finding into evidence.[12]

The Eighth Circuit held that the district court erred in its determination that TTAB likelihood of confusion findings have no preclusive effect.[13]  Although the TTAB is not an Article III court, the Eighth Circuit pointed to Supreme Court precedent to support its statement that decisions of administrative agencies are entitled to preclusive effect when the agency is acting in a judicial capacity, further noting that the TTAB acts in a judicial capacity in opposition proceedings.[14]  However, the Eighth Circuit also specified that the issues sought to be precluded in a lawsuit must be the same issues involved in the original agency determination in order for the decision of an administrative agency to be given preclusive effect.[15]  The circuit court subsequently determined that the same issues were not decided in the TTAB decision and in the district court case, because the two adjudicative bodies employ different likelihood of confusion analyses that consider distinct factors and resolve different issues.[16]  The Eighth Circuit further determined that TTAB decisions are not entitled to deference on the issue of trademark infringement, and held the district court did not err in refusing to admit the TTAB likelihood of confusion finding into evidence, as the differences between the TTAB and Eighth Circuit likelihood of confusion tests could confuse or mislead the jury.[17]  B&B subsequently appealed the circuit court decision to the Supreme Court.

At oral argument before the Supreme Court on December 2, 2014, Hargis espoused the reasoning employed by the Eighth Circuit.[18] On the issue of preclusive effect, Hargis argued that the same issues were not decided in the TTAB determination and district court case, noting that the TTAB’s likelihood of confusion test is simple, streamlined, and narrowly tailored to determine whether the resemblance between two marks is so strong as to be confusing.[19] Federal courts employ a different test, argued Hargis, one that considers the dense, nuanced, fact-intensive question of whether actual use of a mark will confuse consumers in the marketplace.[20] Hargis argued that different legal standards are employed to analyze different issues in different tribunals, and that the issues sought to be precluded in a district court case would not be the same issues involved in the TTAB opposition proceeding.[21]  Hargis further argued that the very nature of the tribunals – one an Article III court, and the other an administrative agency – makes it inappropriate for a federal court to defer to the findings of the TTAB.[22]

Justice Elena Kagan was skeptical of Hargis’ claim that the likelihood of confusion analyses employed by the TTAB and by federal courts are distinct: “I’m…looking here at the TTAB’s analysis [of this case] and it seems to me it’s loaded with stuff about use.”[23]  B&B underscored the Justice’s statement by arguing that the Lanham Act envisions one likelihood of confusion standard, that the TTAB and federal courts analyze identical factors, and that TTAB decisions are preclusive because both analyses are designed to decide the same issue.[24]  The nature of the tribunal – an expert forum – counsels in favor of deferring to TTAB findings, B&B argued, further arguing that relieving parties of the requirement to re-try likelihood of confusion before a federal court promotes judicial economy.[25]

Yet a number of Supreme Court Justices seemed wary of altering the current dynamic between federal courts and the TTAB.[26]  Chief Justice Roberts and Justice Breyer both toyed with the idea of adopting a moderate approach in which TTAB likelihood of confusion findings can have preclusive effect, but only when the issues considered by the TTAB and a district court are identical.[27]  Other Justices, such as Justice Ginsberg, demonstrated a strong preference for leaving the current dynamic unchanged, and opined that the TTAB and federal court analyses are different because one is designed to resolve issues in registration and the other is designed to resolve issues in use.[28]

Does the Lanham Act envision one likelihood of confusion standard, or two?  To what extent do TTAB likelihood of confusion findings have preclusive effect in federal court?  The Supreme Court’s answer to these questions is forthcoming, and for the time being, both questions remain unresolved.  What is certain is that an intricate, nuanced relationship exists between the TTAB and federal courts, and that the distinctions, or lack thereof, between the TTAB and federal court likelihood of confusion tests can create complex problems in otherwise straightforward trademark cases.  If you need assistance in navigating the complexities of federal registration, trademark infringement matters, or trademark litigation generally, contact us. — Mary Witzel