The Effect of TTAB Proceedings on Federal Court Litigation

The U.S. Supreme Court’s recent trademark decision in B&B Hardware v. Hargis Industries (March 25, 2015) has generated a substantial amount of concern. According to some lawyers, there has been a sea change in the law. They say the Supreme Court’s decision means that, once the Trademark Trial and Appeal Board (“TTAB”) (the judicial arm of the PTO) decides whether there is a conflict between two trademarks, the same issue can never be decided by the federal courts. They say this increases the importance of TTAB decisions, and hence the amount of money that litigants will spend on TTAB actions. Time will tell if B&B has a major effect on trademark law, but for the time being, there is no reason to expect that the Supreme Court’s decision will have a substantial impact on TTAB actions or will significantly increase their cost.

The precise question in B&B was whether a “likelihood of confusion” decision by the TTAB can be binding on federal courts under the doctrine of “issue preclusion” (i.e., the doctrine that earlier decisions trump later ones if the parties and the issues are the same). Some say this should never be the case because the TTAB’s likelihood-of-confusion decisions are fundamentally different from federal courts’ likelihood-of-confusion decisions. The TTAB decides whether a mark is entitled to registration over another mark based on a comparison of the marks as shown in the parties’ trademark applications or registrations, whereas federal courts decide whether a mark infringes another mark, based on a comparison of the marks as used in the marketplace. In other words, both the TTAB and federal courts decide likelihood of confusion issues, but they are looking at different things. The TTAB focuses on the parties’ applications and registrations, whereas the federal courts focus on what happens in the real world. This is the primary reason why some commentators believe that TTAB decisions can never be binding on federal courts.

However, B&B dispels this misconception and clarifies that TTAB decisions can be binding on federal courts in certain limited circumstances. What if the marks considered by the TTAB (the marks as they appear in the parties’ applications and registrations) are essentially the same as the marks considered by a federal court (the marks as they are used in the marketplace)? In those limited circumstances, and only in those limited circumstances, the TTAB and the federal courts are looking at the same things, and there is no reason why the decisions of the TTAB should not be binding on federal courts. Conversely, when the marks considered by the TTAB and the federal court are different, the TTAB’s decision will not be binding. This is exactly what the Supreme Court held.

According to the B&B decision:

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.”(Citation omitted.)

Thus, B&B is an important clarifying decision, but it does not signal a major shift it trademark law.  In fact, B&B will probably not apply in the majority of cases. B&B will only apply when the marks considered by the TTAB and federal courts are essentially the same, without the addition or subtraction of any, words, letters, numbers, designs, or trade dress having trademark significance, and without any significant differences in the parties’ goods, customers, channels of trade, etc. Even the Supreme Court notes that B&B will not apply in most cases. According to the court:

[A]s explained [in this decision], for a great many registration decisions issue preclusion obviously will not apply because the ordinary elements [most importantly, the element that the issues must be the same in the two proceedings] will not be met. For those registrations, nothing we say today is relevant.

Further, while B&B may prompt some litigants to spend more money on TTAB actions, there is no reason why they should adopt such a strategy, unless the proceedings involve the parties’ marks as used in the marketplace (which is often not the case in TTAB actions), and unless the TTAB discusses such uses (which, again, is often not the case in TTAB actions).

None of this is to say that B&B is irrelevant.  While B&B may not have created a tidal wave, it has certainly created waves, and trademark owners will need to take account of its implications in the future.