Recently, the US Supreme Court granted certiorari to hear a case that will determine what level of deference courts will give to Trademark Trial and Appeal Board (“TTAB”) decisions on the likelihood of confusion between trademarks. B&B Hardware, Inc. v. Hargis Industries, Inc., 716 F.3d 1020 (8th Cir. 2013), cert. granted, 2014 US LEXIS 4681, 2014 WL 2931843 (US July 1, 2014) (No. 13-352). This case gives the Supreme Court the opportunity to clarify the law in this area and resolve an issue that the circuits have been struggling with.
In May of this year, US Solicitor General Donald B. Verrilli Jr. filed an amicus brief with the Supreme Court asking that the justices grant B&B Hardware, Inc.’s (“B&B”) petition for certiorari challenging an Eighth Circuit opinion in which a divided court decided that the TTAB’s past decision on the similarity of the trademarks of B&B and rival Hargis Industries Inc. should not be given preclusive effect or even any level of deference.
8th Circuit Decision
In B&B Hardware Inc. v. Hargis Industries, the Eighth Circuit affirmed the Arkansas district court’s decision that the TTAB’s prior ruling that there is a likelihood of confusion between the marks of the two parties should not be given preclusive effect. B&B Hardware, Inc. v. Hargis Indus., 716 F.3d 1020 (8th Cir. 2013).
However, the Eighth Circuit rejected the district court’s reasoning that preclusive effect was inappropriate because the TTAB is an administrative body, not an Article III court. Instead, the court said that the principles of administrative law indicate that it may be appropriate to give preclusive effect to the decisions of administrative agencies when they are acting in a judicial capacity (citing Univ. of Tenn. V. Elliott, 478 US 788, 791, 106 S. Ct. 3220, 92 L. Ed. 2d 635 (1986)). Nevertheless, the court said that even if the TTAB decision was entitled to preclusive effect, it would be inappropriate in this case because the same likelihood of confusion issues litigated here were not decided by the TTAB.
In making the determination of issue preclusion, the Eighth Circuit stated five factors that it considers:
- the party sought to be precluded in the second suit must have been a party, or in privity with a party to the original law suit;
- the issue sought to be precluded must be the same as the issue involved in the prior action;
- the issue sought to be precluded must have been actually litigated in the prior action;
- the issue sought to be precluded must have been determined by a valid and final judgment; and
- the determination in the prior action must have been essential to the prior judgment.
B&B Hardware, Inc. v. Hargis Indus., 716 F.3d 1020, 1024 (8th Cir. 2013) (citing Robinette v. Jones, 476 F.3d 585, 589 (8th Cir. 2007)).
The issue in this case related to the second element – whether the issue of likelihood of confusion is the same as the issue involved in the prior TTAB action. The court decided that it was not, because the factors that the TTAB used to determine whether there is a likelihood of confusion between the marks for registration purposes are similar but not the same as the factors that court uses to determine infringement.
The court’s determination requires an analysis of the entire marketplace context of the use of the marks, which was given less weight in the TTAB determination. The court said that this analysis of marketplace usage of the marks and products is a critical determination for trademark infringement, and the lack of emphasis placed on it by the TTAB shows that the two approaches to determining whether there is a likelihood of confusion are not the same.
There is currently a circuit split on the issue of the preclusive effect of TTAB rulings, that a US Supreme Court ruling will help resolve. In deciding that the TTAB’s rulings should not be given preclusive effect in this case, the Eighth Circuit joins the Second Circuit which also has similarly refused preclusive effect to TTAB decisions, because the TTAB uses different standards and factors in making its determination than those used in infringement cases in the federal courts. Jim Beam Brands Co. v. Beamish & Crawford Ltd., 937 F.2d 729, 734 (2d Cir. 1991). In addition, the Fifth and Eleventh Circuits have held that TTAB decisions never have issue-preclusive effect in subsequent infringement actions. See Freedom Sav. & Loan Ass’n v. Way, 757 F.2d 1176, 1180 (11th Cir.), cert. denied, 474 US 845 (1985); American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 9-10 (5th Cir. 1974).
On the other hand, the Third Circuit and the Seventh Circuit have given TTAB decisions preclusive effect. The Seventh Circuit stated in EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc. that although the TTAB is an administrative agency, it should be given preclusive effect when acting in a judicial capacity. EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 746 F.2d 375, 277-78 (7th Cir. 1984).
As these varied decisions show, there is disagreement amongst the circuits regarding how much deference, if any, courts should give to the rulings of the TTAB. The ruling by the US Supreme Court regarding this issue, regardless of how it holds, will likely have an effect on how businesses and other trademark owners make strategic decisions about how and where to police their marks in the future. We will continue to monitor and report on this case, and provide further analysis, depending on the outcome.
This article was prepared by Timothy Kenny (firstname.lastname@example.org / +1 612 321 2805) and Shelby Bruce (email@example.com / +1 612 321 2207), lawyers in Norton Rose Fulbright’s Minneapolis intellectual property practice.
*With special thanks to Mayura Iyer, Norton Rose Fulbright summer associate.