The Court apparently designed its decision Tuesday in B&B Hardware v. Hargis Industries to answer as narrow a question as possible and I think most readers of this blog will come away convinced that the opinion was a success, at least by that measure. The case presents a question of issue preclusion – the relation between a contested registration proceeding before the Patent and Trademark Office’s Trademark Trial and Appeal Board (commonly called the TTAB) and an infringement proceeding in a federal district court.

This case involves a long-standing battle between Hargis’s “Sealtite” mark and B&B’s “Sealtight” mark. The TTAB barred Hargis from registering its “Sealtite” mark because of the likelihood of confusion with B&B’s previously registered “Sealtight” mark. The question in the case is whether the TTAB’s finding – that Hargis’s mark is confusingly similar to B&B’s mark – precludes a district court, in a later infringement case under the Lanham Act, from making a contrary finding – that use of Hargis’s mark is not likely to be confused with B&B’s mark. The Eighth Circuit ruled for Hargis, deciding that TTAB procedures are so different from Lanham Act court proceedings that no TTAB ruling ever precludes a subsequent district court in a Lanham Act case.

Not surprisingly, the Court firmly rejected the bright-line rule that categorically bars preclusion. Rather, Justice Samuel Alito explained for the Court, the preclusion question should be resolved under standard rules for preclusion, which turn on whether the TTAB decides an issue that is “materially similar” to the issue before the district court. The Court started from the premise that agency decisions can preclude later court proceedings, even though the agency is not an Article III court. It then applied a presumption in favor of treating the agency’s decision as preclusive if the ordinary elements of preclusion appear.

Once the Court adopted that lens, the remainder of the opinion followed easily. Whatever objection B&B (seeking to avoid preclusion) might interpose, the Court’s opinion could simply respond that the objection might be true sometimes, but not in all cases. So, for example, the Court recognized that the confusion problems that the TTAB considers often (if not routinely) differ from those that courts consider in Lanham Act proceedings; the Court’s answer was that preclusion applies only when the issues are similar. The Court recognized that the TTAB’s core question – whether marks “resemble” each other – often might involve different factual questions than the core Lanham Act question – whether uses in commerce are confusingly similar. The Court could repeat its mantra: preclusion applies only when the issues are similar. It might be that the stakes for registration can be much smaller than the stakes in infringement litigation: the Court’s opinion pointed to doctrine that limits the preclusive effect of low-stakes litigation.

The opinion well might find use in the law of preclusion; because it summarizes so many aspects of the doctrine that it provides a useful compendium of modern preclusion rules presented in a Supreme Court opinion as opposed to the Restatement of Judgments. Less happily, it well might be called on for support in trademark litigation. Although the Court tried to limit its holding as narrowly as possible, its discussion of the differences between TTAB processes and Lanham Act processes necessarily includes relatively detailed descriptions of how those processes are supposed to work. I for one will not be surprised if litigants find small phrases in that discussion with which they seek to force major changes in trademark law in the courts of appeals.

Surprisingly, the most interesting part of the discussion is an issue that the parties did not debate: whether courts should presume that agency proceedings are preclusive. The Court noted a 1991 precedent adopting that rule and applied it here as routine. Justice Clarence Thomas (joined by Antonin Scalia) filed a sharp dissent, challenging the correctness of that rule. In their view, a presumption of preclusion gives insufficient weight to the choices Congress makes when it places issues for disposition before an agency instead of a court. In the absence of a presumption, they saw no basis for finding the TTAB proceeding preclusive. Ironically, the sharp dissent underscoring the Court’s treatment of that question probably solidifies the finality of the Court’s analysis in this case.

PLAIN LANGUAGE: This case involves two procedures for trademarks. The first involves the Trademark Trial and Appeals Board, a federal agency that decides whether new trademarks can be registered. For example, if a new company proposed a Web site called ESPNSports.com, ESPN probably would oppose the registration of that trademark, and the TTAB would decide that ESPNSports.com could not be registered because it is too similar to the ESPN trademark. A separate procedure happens when a trademark holder sues another business claiming trademark infringement: ESPN could sue ESPNSports.com for trademark infringement; ESPN would get an order from the court preventing further use of the ESPNSports.com mark and it might recover damages. The question in this case is whether a TTAB decision deciding that two trademarks are (or are not) similar can ever bind a later court in a routine infringement proceeding. The court of appeals said the TTAB ruling never can bind the later court. The Supreme Court disagrees; it says that the TTAB ruling can bind the later court, at least some of the time.

 

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Posted in B&B Hardware v. Hargis Industries, Featured, Merits Cases

Recommended Citation: Ronald Mann, Opinion analysis: Justices unsettled in trademark preclusion dispute, SCOTUSblog (Mar. 25, 2015, 10:38 AM), http://www.scotusblog.com/2015/03/opinion-analysis-justices-unsettled-in-trademark-preclusion-dispute/