Argument analysis: Justices unsettled in trademark preclusion dispute
on Dec 3, 2014 at 10:55 am
For the first time in more than a decade, the Justices heard oral argument yesterday in a trademark case, B&B Hardware v. Hargis Industries. The question presented seems technical at first glance. The PTO’s Trademark Trial and Appeal Board (commonly called the TTAB) held that Hargis could not register 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, from making a contrary finding – that the use of Hargis’s mark is not likely to be confused with B&B’s mark. But in fact the question raises issues at the heart of trademark law, about the types of confusion that matter at various points in the process.
Three separate strains of thought dominated the argument. The first was the idea, pressed by Justice Ruth Bader Ginsburg (among others) from the first moments of discussion, that the stakes are so much lower in the TTAB registration proceeding that it makes no sense for that proceeding to preclude full litigation in a subsequent judicial infringement proceeding. Fresh back on the bench from last week’s successful heart procedure, she suggested early on to William Jay, appearing for petitioner B&B, that “it’s one thing to say that we won’t register your mark and another to say you can’t use the mark.” Pretty clearly stating her view rather than asking a question, Justice Ginsburg pressed the view that the TTAB proceeding is too summary to preclude a later judicial inquiry.
The topic resurfaced repeatedly, not only in Jay’s presentation, but also in the two subsequent presentations. So, when Assistant to the Solicitor John Bash appeared on behalf of the federal government, in support of B&B, Justice Ginsburg restated her “expeditiousness” question. Bash seemed to overstate his case when he suggested that the rule in question did not apply here because the TTAB proceeding is “just like a civil proceeding.” That comment drew sharp retorts from both Justice Ginsburg and Justice Elena Kagan. Justice Ginsburg wryly noted that “[t]here are some differences. There’s no live testimony, right?” And Justice Kagan asked about the point, made by amici, that the TTAB proceedings are much less expensive, costing perhaps ten percent as much as full-blown litigation over infringement.
Similarly, Neal Katyal (appearing on behalf of Hargis) got an opportunity during his presentation to emphasize the objective basis for the concerns Justices Ginsburg and Kagan had raised earlier. During a colloquy with Justice Sonia Sotomayor, he managed to free up a few moments to underscore the stark differences between the TTAB proceedings in this case and the infringement litigation in federal court: the TTAB process included only four depositions, no live testimony, and no discovery at all; the district court proceeding, by contrast, involved fourteen live witness and 4,000 pages of discovery, presented during a seven-day trial.
The second topic of import to the Justices was the question whether Hargis could have presented to the TTAB all the evidence that it presented to the district court. As Justice Sotomayor suggested to Jay, this seemed important to the Justices because of the connection to Kappos v. Hyatt, in which the Court held that a district court considering patentability could consider new evidence not presented to the PTO before issuance of the patent. To Justice Sotomayor at least, B&B’s position that the TTAB proceeding precluded litigation of confusion in the infringement proceeding was in stark tension with the Court’s holding in Kappos v. Hyatt.
Conversely, Justices Sotomayor and Antonin Scalia pressed Katyal hard on the question whether Hargis in fact could have presented all of the infringement evidence to the TTAB. As he continuously emphasized the differences between what in fact was presented in the two proceedings, the Justices seemed concerned that he was trying to paper over Hargis’s failure to present the relevant evidence to the TTAB. Eventually, however, they gave him free rein to explain Hargis’s view that the evidence that was most crucial for resolution of the infringement litigation – the differences between the customers of B&B and Hargis that made consumer confusion unlikely in fact – was in fact legally inadmissible before the TTAB under applicable Federal Circuit precedent. Surely the most remarkable portion of the argument came near the end when Justice Kagan expressly asked Katyal to explain which Federal Circuit cases established that rule and then the whole Court allowed him to read from those cases at length. The silence of the Court during that presentation suggested that some of the Justices at least were accepting the accuracy of his presentation.
The third theme of the argument was the question – which Katyal pressed unceasingly during his presentation – whether the issues at stake in the TTAB registration proceedings differed in an important way from the issues at stake in a district court infringement proceeding. Katyal tried several different formulations, but encountered varying levels of resistance throughout his presentation. One issue was the analytical distinction between Hargis’s view – that the issues were substantively different – and the favorable point Justice Ginsburg repeatedly pressed – that the relevant difference was the formality of the proceedings. But a more central problem was the apparent reluctance of the Justices to buy into his view of the legal issues at stake in the two proceedings.
So, for example, early in his argument, Katyal tried to argue that the TTAB proceeding involved confusing marks, while infringement litigation involved confusing uses. Justice Scalia, however, was not prepared to accept any meaningful distinction between a resemblance of marks likely to cause confusion (the TTAB registration question) and a likelihood that use of the marks will confuse consumers (the infringement question): “But, but, but but. The Board has to decide whether the trademark as applied to particular goods is confusing. Once you say it’s as applied to particular goods in a particular area of commerce, isn’t that the same as saying ‘as used’ whether it causes confusion?”
Katyal seemed to make more headway on the point in a lengthy colloquy with Justice Stephen Breyer, when he managed to explain without interruption that in the PTO proceeding the issue is the goods themselves, “but not how the goods are used, the advertising, the marketing, the sales.” As mentioned above, the Justices allowed him to articulate at length Hargis’s view that Federal Circuit cases in fact prevented the TTAB from giving weight to much of the evidence most directly relevant in the judicial infringement litigation.
This is a hard case to read. Several of the Justices seemed quite unsettled. The Justices gave both sides every opportunity to address the most problematic aspects of their positions. But it was evident that several of them were searching for a middle ground. Justice Samuel Alito, for example, asked Jay for what he seemed to regard as an easy concession, whether Jay “would agree that if we accept your argument the number of cases in which the elements of issue preclusion will be met by the [PTO] proceeding will be relatively rare.” Jay resisted, however, sticking with the view that preclusion would be appropriate in most cases in which the dispute involved marks already in use. Bash pressed an apparently identical view, which clearly surprised the Justices who (like me) had read the Solicitor General’s brief as articulating a more ambivalent position.
In the same vein, Chief Justice John Roberts, thinking himself persuaded by Katyal’s argument that the infringement litigation differed from the TTAB procedures because of its emphasis on the details of actual use, sought to confirm that Hargis would be satisfied with a doctrinal compromise: “So why isn’t it enough to say that as a general matter, the TTAB proceedings are preclusive, but if you are showing a difference in use or a more specialized use or something other than what the TTAB would have been looking at, preclusion doesn’t apply?” Indeed, the Chief Justice went so far as to suggest what seemed to him a straightforward rule that favored Hargis: “It seems to me that you could prevail on the idea that when the uses are actually different it’s not precluded, but when they are the same, it is. That’s the basic preclusion rule.”
Like Jay before him, though, Katyal was reluctant to accept such a compromise, sticking with his basic position that the proceedings are so different in focus that it would rarely if ever make sense for the truncated TTAB proceeding to preclude subsequent infringement litigation. In an argument in which the Justices were reaching out to counsel for advice, it should be no surprise that the Justices let Katyal expound at length on the likelihood that a rule of preclusion would lead trademark owners to press registration litigation aggressively lest it preclude later infringement litigation, even in cases (like this one) in which the question of registration raised stakes much smaller than the question of infringement.
I have to admit that I have no strong intuition about how the Justices will decide this case. As my preview indicated, I thought Hargis had much the better of the briefs. But the strong resistance of several of the Justices to Katyal’s presentation on behalf of Hargis suggests that the Justices will regard the case as a close one. If I can predict anything, it is that the final opinions will reveal this as a case won at the argument. The problem is that, until we can read the final opinions, we can’t be sure which party managed to win over the unsettled Justices to its side. I suppose we’ll know more by April or May.