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IP Frontiers: Maybe don’t make a federal case out of it

On March 24, the U.S. Supreme Court issued a decision in B&B Hardware, Inc. v. Hargis Industries, Inc., a trademark battle royale of sorts (the Supreme Court called it “labyrinthine”) between two manufacturers of two different types of metal fasteners. pearlman-rachel-l-150x200

The case, in some form, had starting making rounds in the both the U.S. Patent and Trademark Office and the courts arguably in the 1990s. In deciding the case, the Supreme Court held, “So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the [Trademark Trial and Appeal Board] are materially the same as those before the district court, issue preclusion should apply.”

For the sake of this specific case, the Supreme Court decided that because the TTAB (an administrative court of the USPTO) had refused to grant a federal trademark registration to Hargis’ SEALTITE mark because the TTAB found SEALTITE confusingly similar to B&B’s SEALTIGHT mark, any district court deciding whether Hargis, in using its SEALTITE trademark, had infringed B&B’s SEALTIGHT trademark, was precluded from evaluating whether there was a likelihood of confusion between the marks and must accept the TTAB’s decision on the matter as final.

Based on this Supreme Court decision, a determination by the TTAB, an administrative agency, can now preclude a court of the federal judiciary (Article III) from rendering a decision on an issue. The Supreme Court decision was characterized by dissenting Justices Scalia and Thomas as “sap[ping] the power as it exists under the Federal Constitution . . . to establish a government of a bureaucratic character alien to our own system.” Meanwhile, Justice Ginsburg, insisted, in a concurring opinion, that issue preclusion would not actually apply in most cases because the issues considered by the TTAB and the court would not be identical.

Future cases will show who is right about the ultimate impact of the holding, but the possibility alone that a decision by the TTAB will foreclose arguments on an issue, like likelihood of confusion, which is central to many trademark infringement actions, in court, is something that trademark owners should consider when deciding how to defend their trademark rights and how to pursue infringers.

A product or service with a similar name can be an impediment to the business success of a registered trademark owner who wants to build a brand, or has already devoted considerable resources to build her brand. In this scenario, the registered trademark owner is rightly concerned that the similarity between the marks will confuse the consumer as to the source of the goods or services being offered.

When faced with this problem, a desirable outcome for the trademark owner would be to persuade (whether using a carrot of a stick), the individual or company using the similar mark (i.e., the offender) to cease and desist using it. One approach to resolving this situation is to have an attorney pen a cease and desist letter and send the letter to the offender. Sometimes, just receiving a cease and desist letter from an attorney (or more than one cease and desist letter, or letters, followed by negotiations) is enough to persuade the offender to, in actuality, cease and desist use of the arguably confusingly similar name.

But when this approach fails to produce the desired result, a registered trademark owner is faced with the decision of whether to take the offender to court for trademark infringement. The federal registration of the mark in this scenario is the trademark owner’s ticket to federal court, but going to court is expensive and proceedings can last for years. There is a reason that the expression, “Don’t make a federal case out of it!” exists. A federal case is a commitment.

In limited situations, a registered trademark owner can turn to the USPTO and the TTAB, for relief. In different circumstances, the trademark owner can bring an opposition proceeding or a cancellation proceeding against the offender. Though monetary damages are off the table in these types of proceedings, the result of a successful proceeding is that the offender is either prevented from getting a federal registration for her similar mark (opposition), or the existing registration for the similar mark is cancelled (cancellation). In contrast, a loss means that the offender’s mark is registered (opposition) or remains registered (cancellation).

Instituting an opposition based on consumer confusion is appropriate when an offender has applied for federal registration of the similar mark and the USPTO has published this mark for opposition (publication for opposition occurs when the examining attorney at the USPTO has no objections to registering the mark and a mark will be registered if the application for registration is not successfully opposed by a third party).

At this time, the registered trademark owner can oppose the registration of the similar mark and the matter will then be adjudicated by the TTAB. Instituting a cancellation based on consumer confusion is appropriate when the offender’s mark is already a registered trademark but does not have priority over the trademark owner’s own registered mark and the offender’s mark is not incontestable (5 years after registration a mark owner can petition the USPTO for this status). If either of these proceedings is appropriate, the trademark owner can place the issue of confusion in front of the TTAB and a decision on this issue by the TTAB can preclude a court from subsequently deciding this issue.

A reason a trademark owner may want to have confusion adjudicated by the TTAB is that a TTAB proceeding has the potential to be less timely and less expensive than a federal district court proceeding. TTAB proceedings are generally conducted on a more aggressive schedule than proceedings in front of a district court and they can be more convenient, schedule-wise, because TTAB proceedings are conducted entirely in writing.

However, the TTAB allows litigants to submit transcribed testimony taken under oath and subject to cross examination and to request oral argument. Another advantage is that the decision-makers at the TTAB have specific expertise in trademark law, which is not always the case with district court judges and juries in district court. TTAB decisions are rendered by a panel that consists of administrative judges and high-ranking USPTO officials.

Once a trademark owner has a determination from the TTAB that the offender’s mark is confusingly similar, the trademark owner can bring an action for infringement, arguably leaving damages as the main issue for the court to adjudicate. Of course, an adverse decision from the TTAB regarding confusion can be fatal to a contemplated infringement action in federal court.

If confusion is the grounds for the allegation of infringement and there is no confusion between the marks, as determined definitively, there is infringement.

A loser at the TTAB is not necessarily stuck with an adverse decision. The non-prevailing party does have the opportunity to seek reconsideration of any adverse decision, either by seeking review from the United States Court of Appeals for the Federal Circuit, or by filing a new action in district court.

In B&B v. Hargis, the Supreme Court made specific mention that Hargis failed to take that avenue when it was refused registration by the TTAB for its SEALTITE mark (based on likelihood of confusion) and could not now seek a more favorable decision elsewhere when the matter had already been decided.

Whether or not seeking administrative relief for trademark infringement is possible or advisable (the wisdom of a given litigation tactic is often defined by the specific circumstances of the situation), it is useful at least to go into a trademark dispute understanding that the decision of an administrative agency may now be a more powerful weapon in an infringement fight.

Rachel L. Pearlman is an associate with Heslin Rothenberg Farley & Mesiti PC, practicing copyright, computer science and information technology law. She can be reached at; or (518) 452-5600.