Supreme Court Holds TTAB Decision Can Have Issue Preclusion Effect

The Supreme Court on March 24, 2015, held that a Trademark Trial and Appeal Board (TTAB) decision should be given issue preclusion effect when the usages it adjudicated are materially the same as those before a district court. B&B Hardware, Inc. v. Hargis Industries, Inc., U.S., No. 13-352, 3/24/2015.

Reversing an Eighth Circuit decision, the Court found no categorical reason why issue preclusion can never apply. The same likelihood of confusion standard applies for both registration and infringement, Justice Alito explained, even if the TTAB and the district court do not always consider the same usages. A concurring opinion was filed by Justice Ginsburg, who stressed that preclusion will not apply for a great many TTAB decisions. Justice Thomas (joined by Justice Scalia) dissented, objecting to the presumption of preclusion for adjudicating agencies. The Court’s decision is consistent with the position taken in an AIPLA amicus brief filed in this case.

Background

This litigation concerns alleged infringement of B&B’s registered mark “Sealtight” for fastener products largely used in the aerospace industry. Hargis attempted to register its “Sealtite” mark for fasteners used in the construction trade, but its application was refused based on the B&B registration, which Hargis then attempted to cancel. The TTAB refused to cancel the registration, finding B&B’s registration incontestable, and it subsequently sustained B&B’s opposition to Hargis’s attempted registration of “Sealtite.”

In a district court action, however, a jury found the B&B mark to be merely descriptive, and the district court refused to defer to the TTAB decision.

The Eighth Circuit affirmed the district court decision. The simple fact that both the TTAB’s registration decision and the district court’s infringement decision addressed the concept of “likelihood of confusion” does not mean they addressed the same issue, according to the court.

Administrative Preclusion

Writing for the Supreme Court majority, Justice Alito first made clear that issue preclusion is not limited to situations where the same issue is before two courts, pointing out that preclusion also often applies where a single issue is before a court and an administrative agency. He quoted Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U. S. 104 (1991), that “courts may take it as given that Congress has legislated with the expectation that the principle [of issue preclusion] will apply except when a statutory purpose to the contrary is evident.” The Court said a presumption of administrative preclusion is also supported by United States v. Utah Constr. & Mining Co., 384 U. S. 394 (1966), and by the Restatement (Second) of Judgments.

Constitutional Issues

The Court was not persuaded that TTAB preclusion raised concerns over the Seventh Amendment right to a jury trial and the separation of executive and judicial powers. The jury issue was not raised below, and the constitutionality of TTAB preclusion is not before the Court, Justice Alito observed.

Specifically, the Court stated that, under Parklane Hosiery Co. v. Shore, 439 U. S. 322 (1979), the right to a jury trial does not negate issue preclusion, even if the judgment in question was entered by a juryless tribunal. Moreover, in 1791, a party had no right to a jury determination of issues previously adjudicated by a chancellor in equity, Justice Alito added.

Congressional Intent

The Court also found no “evident” reason why Congress would object to giving preclusive effect to TTAB decisions. Neither the text nor the structure of the Lanham Act forbids issue preclusion, and nothing can be inferred about Congressional intent from the availability of de novo district court review of TTAB decisions, Justice Alito wrote. If a party to a court proceeding fails to challenge an adverse decision, that decision can have preclusive effect in other cases, even if it would have been reviewed de novo, he explained.

While the Astoria decision found no issue preclusion, Justice Alito pointed out that this case is different in that Astoria involved a plaintiff that exhausted administrative remedies and sued in court about the same alleged conduct. The concern there was that issue preclusion could render the judicial action “strictly pro forma.” By contrast, the party here in district court was not seeking review of the TTAB registration decision, and the TTAB proceeding was not a prerequisite to the infringement action.

No Categorical Reason Against TTAB Preclusion

Finally, the Court was unable to find a categorical reason why TTAB registration decisions can never meet the ordinary elements of issue preclusion. Even if the TTAB and district courts consider different factors, the same likelihood-of-confusion standard applies to both registration and infringement. Justice Alito explained as follows:

To begin with, it does not matter that registration and infringement are governed by different statutory provisions. Often a single standard is placed in different statutes; that does not foreclose issue preclusion. * * * Neither does it matter that the TTAB and the Eighth Circuit use different factors to assess likelihood of confusion. For one thing, the factors are not fundamentally different, and “[m]inor variations in the application of what is in essence the same legal standard do not defeat preclusion.” * * * More important, if federal law provides a single standard, parties cannot escape preclusion simply by litigating anew in tribunals that apply that one standard differently. A contrary rule would encourage the very evils that issue preclusion helps to prevent.

The real question, therefore, is whether 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. First, the operative language is essentially the same; the fact that the registration provision separates “likely” from “to cause confusion, or to cause mistake, or to deceive” does not change that reality. * * * Second, the likelihood-of-confusion language that Congress used in these Lanham Act provisions has been central to trademark registration since at least 1881. * * * That could hardly have been by accident. And third, district courts can cancel registrations during infringement litigation, just as they can adjudicate infringement in suits seeking judicial review of registration decisions. * * * There is no reason to think that the same district judge in the same case should apply two separate standards of likelihood of confusion.

The Court conceded that the TTAB is concerned with whether marks “resemble” each other, and that infringement is concerned with “use in commerce.” However, to give a categorical effect to this difference would mistake a “reason not to apply issue preclusion” with a “reason never to apply issue preclusion.” Justice Alito wrote the following:

Just because the TTAB does not always consider the same usages as a district court does, it does not follow that the Board applies a different standard to the usages it does consider. If a mark owner uses its mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a district court in infringement litigation. By contrast, if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding the same issue. Thus, if the TTAB does not consider the marketplace usage of the parties’ marks, the TTAB’s decision should “have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.” 6 McCarthy §32:101, at 32-246.

Materiality is an essential consideration, the Court continued, since trivial variations between usages cannot create different issues. It is of no consequence that the TTAB may place more weight on certain factors than it should, Justice Alito said, since that that is an occasion for judicial review.

Finally, the Court concluded that procedural differences in TTAB and district courts (such as the absence of live witnesses and limitations on discovery at the TTAB) by themselves do not defeat preclusion. The correct inquiry for issue preclusion is whether the first proceeding was poor, cursory or unfair, Justice Alito observed, and no one has given a “categorical reason” to doubt the quality, extensiveness or fairness of the TTAB proceedings.

The Eighth Circuit decision was reversed and remanded.

Concurring and Dissenting Opinions

In her concurring opinion, Justice Ginsburg said the Court rightly recognizes that issue preclusion will not apply for a great many registration decisions.

In his dissenting opinion, Justice Thomas (joined by Justice Scalia) objected to the majority’s application of a presumption of administrative preclusion in this case. He contended that the presumption is based solely on dictum in Astoria where preclusion was denied, and that history undercuts the suggestion that administrative preclusion was widely accepted at common law.

To read the opinions in this case, click here.