B & B Hardware, Inc. v. Hargis Industries, Inc.
135 S. Ct. 1293 (2015)
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Rule of Law:
A decision by the Trademark Trial and Appeal Board (TTAB) on the issue of likelihood of confusion can have preclusive effect in a subsequent federal trademark infringement lawsuit, provided the ordinary elements of issue preclusion are met and the usages of the marks adjudicated by the TTAB are materially the same as those at issue in the district court.
Facts:
- B & B Hardware, Inc. (B & B) manufactures metal fasteners for the aerospace industry under the trademark SEALTIGHT, which it registered in 1993.
- Hargis Industries, Inc. (Hargis) manufactures metal fasteners for the construction industry.
- In 1996, Hargis sought to register the trademark SEALTITE for its self-drilling metal screws.
- B & B believed that Hargis's SEALTITE mark was confusingly similar to its own SEALTIGHT mark.
- Both companies had an online presence, their products were sold by the same major distributor, and there was evidence of customers contacting the wrong company to place orders.
Procedural Posture:
- B & B Hardware, Inc. filed an opposition to Hargis Industries, Inc.'s trademark application with the Trademark Trial and Appeal Board (TTAB), an administrative body.
- After discovery and briefing, the TTAB found a likelihood of confusion and sustained B & B's opposition, denying registration to Hargis's mark.
- Hargis did not appeal the TTAB's decision.
- Concurrently, B & B sued Hargis in the U.S. District Court for the Eastern District of Arkansas for trademark infringement.
- B & B argued the TTAB's decision on likelihood of confusion should preclude Hargis from relitigating the issue, but the District Court disagreed.
- A jury trial was held, and the jury found in favor of Hargis, concluding there was no likelihood of confusion.
- B & B appealed to the U.S. Court of Appeals for the Eighth Circuit.
- The Eighth Circuit affirmed the district court's judgment, holding that issue preclusion did not apply to the TTAB's decision.
- The U.S. Supreme Court granted certiorari.
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Issue:
Does a finding of a likelihood of confusion by the Trademark Trial and Appeal Board (TTAB) in a registration proceeding preclude a party from relitigating that same issue in a subsequent trademark infringement action in federal district court, provided the ordinary elements of issue preclusion are met?
Opinions:
Majority - Justice Alito
Yes. A court should give preclusive effect to a TTAB decision on the issue of likelihood of confusion if the ordinary elements of issue preclusion are met. The common law doctrine of issue preclusion, which prevents the relitigation of issues already decided, applies to decisions of administrative agencies when they act in a judicial capacity. There is no evidence in the Lanham Act that Congress intended to create an exception for TTAB decisions. The likelihood-of-confusion standard is the same for both registration proceedings before the TTAB and infringement actions in district court. For preclusion to apply, the issues must be identical; therefore, if the marketplace usage of the marks in the infringement case is materially different from the usage considered by the TTAB in the registration proceeding, issue preclusion is inappropriate. A case-by-case analysis is required to determine if the elements of preclusion are met.
Concurring - Justice Ginsburg
Yes. The Court's opinion is correct with the understanding that for a great many registration decisions, issue preclusion will not apply. This is because the TTAB often decides the issue by comparing the marks in the abstract, separate from their actual marketplace usage. In such cases, the issue decided by the TTAB is not identical to the issue of likelihood of confusion in an infringement suit, and therefore preclusion would be improper.
Dissenting - Justice Thomas
No. The TTAB's trademark-registration decisions should not be entitled to preclusive effect in a subsequent infringement suit. The presumption in favor of administrative preclusion rests on weak historical precedent and should not apply to the Lanham Act, which was passed in 1946 before this presumption was firmly established. The structure of the Lanham Act, particularly the limited authority of the TTAB and the availability of de novo review in district court, indicates Congress did not intend for TTAB decisions to be preclusive. Furthermore, giving an executive agency's factual findings binding effect in a private rights dispute, such as a trademark infringement claim, raises serious constitutional concerns under Article III and the separation of powers.
Analysis:
This decision significantly raises the stakes of litigating before the Trademark Trial and Appeal Board (TTAB). By confirming that TTAB findings on likelihood of confusion can be binding in federal court, the ruling discourages parties from treating TTAB proceedings as a preliminary, low-stakes skirmish. It will likely lead parties to invest more resources and litigate more aggressively at the administrative level, as an adverse ruling could preclude a core issue in a subsequent, and more costly, infringement lawsuit. The decision reinforces the principle of administrative preclusion but tempers its application with a critical, case-by-case analysis of whether the issues are truly identical, focusing on the material similarity of the marks' usage in both proceedings.
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