Yesterday, the U.S. Supreme Court held that federal district courts considering trademark infringement claims may find issue preclusion based upon a prior decision of the Trademark Trial and Appeal Board (TTAB) with regard to the likelihood of confusion between two trademarks.1 See B&B Hardware, Inc. v. Hargis Indus., Inc., No. 13-352, 575 U.S. __ (March 24, 2015), available here. This is an important development in administrative practice before the TTAB and may encourage parties to invest greater resources into TTAB proceedings or influence parties to take these disputes from the TTAB to federal court to avoid a binding administrative decision on the likelihood of confusion issue.2

B&B Hardware forces trademark owners and practitioners to carefully consider what tribunal they want to make the likelihood of confusion analysis and in what setting they want that decision made. Litigating the issue of likelihood of confusion usually comes up in two contexts—inter partes proceedings at the TTAB or infringement suits in federal court. The Lanham Act allows a trademark owner to register its mark with the U.S. Patent & Trademark Office (USPTO) and gives the owner certain benefits for registration. If a third party believes that the applicant is not entitled to register the mark, the third party may commence an opposition or cancellation proceeding before the TTAB. The opposer may raise a number of arguments against registration, most commonly asserting that the applicant or registrant’s mark is confusingly similar to the opposer’s own more senior trademark. If the TTAB agrees that the marks are likely to be confused with one another, the registration will not issue or an existing registration will be cancelled. At the end of a TTAB proceeding, the losing party may seek de novo review before a federal district court.

Because the TTAB can only address the registrability of a trademark, litigants concerned about seeking injunctive relief or damages for trademark infringement have to seek redress in federal court. In a trademark infringement case, the key issue is whether there is a “likelihood of confusion” between the two trademarks. If the federal district court infringement proceeding is commenced after a TTAB proceeding on the same issues between the same parties, yesterday’s ruling in B&B Hardware can lead to a situation where the TTAB’s finding as to likelihood of confusion is binding on the litigation in federal court.

Writing for the majority in the B&B Hardware case, Justice Alito relied heavily upon Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U.S. 104, 107 (1991) for the proposition that “in those situations in which Congress has authorized agencies to resolve disputes, ‘courts may take it as a 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.'” Finding no such contrary statutory purpose in the Lanham Act, Justice Alito concluded that “[s]o long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.”

The “ordinary elements of issue preclusion” include whether an issue of fact or law was actually litigated and decided in an earlier proceeding, whether the determination was essential to the judgment, and whether the subsequent action involves the same parties. Importantly, Justice Alito’s majority opinion recognized that many TTAB proceedings would not satisfy all elements of issue preclusion when applied to subsequent infringement litigation. Justice Ginsburg concurred, writing separately to highlight her strong agreement with Justice Alito’s statement that “for a great many registration decisions issue preclusion obviously will not apply.” Meanwhile, Justice Thomas wrote a dissent in which Justice Scalia joined, asserting that the majority misapplied Astoria and the predominant view at common law was that issue preclusion did not apply to administrative decisions. Justice Thomas also highlighted potential Constitutional problems with applying issue preclusion to TTAB decisions.

In practice, the TTAB normally makes its likelihood of confusion analysis in the context of the definition of goods and services set out in the parties’ trademark applications or registrations, based only on a paper record. Federal courts, however, often have a wider purview when making this analysis, considering live testimony and evidence of how the marks are actually used in the real world. Consequently, the possibility of issue preclusion from a TTAB decision can be a dangerous prospect for the litigant who might want to put on more wide-ranging evidence in a later federal court infringement case. Although this example may well avoid issue preclusion based on differences in the issues of fact and law presented, it will be difficult for trademark owners and practitioners to predict how broadly any particular federal district court will apply issue preclusion to TTAB decisions in the wake of B&B Hardware.

In the end, trademark litigants must consider the possibility that the TTAB’s decision on likelihood of confusion (and other important legal and factual issues) may subsequently bind a federal district court. Accordingly, parties to TTAB proceedings would be well-advised to consult with litigation counsel and consider overall litigation strategy, including whether federal district court may be a more advantageous forum, in the context of inter partes proceedings given the particular facts of the dispute.

Our Intellectual Property & Technology attorneys have substantial experience in all forms of administrative and judicial proceedings before the USPTO, the TTAB, the PTAB, the ITC, federal district courts and the U.S. Court of Appeals for the Federal Circuit. Should you have any questions about the content of this Alert, please contact one of the authors listed above or any member of our Intellectual Property & Technology team.

While B&B Hardware is theoretically limited to findings of likelihood of confusion by the TTAB, there is no reason why the same logic would not apply regarding TTAB findings on other important issues like descriptiveness, genericness, priority, secondary meaning, and the like.

It is also quite possible that this could have a spillover effect on patent disputes. Based on the Court’s reasoning and analysis in B&B Hardware, there is a good argument that issue preclusion should apply in the same manner to determinations by the Patent Trial and Appeal Board (PTAB) or the International Trade Commission (ITC).