Applying B&B Hardware v Hargis, district court finds issue preclusion based on prior opposition decision

In Ashe v PNC Financial Services Group Inc (Case No PWG-15-144, November 17 2015), the US District Court for the District of Maryland has found that a prior decision by the US Trademark Trial and Appeal Board (TTAB) met the elements required for issue preclusion under the Supreme Court’s decision in B&B Hardware v Hargis Industries.  

Both Keith Ashe and PNC Financial Services Group Inc claimed exclusive rights in the trademark SPENDOLOGY for an online money management tool. In an earlier opposition proceeding, each party claimed priority of use and asserted a likelihood of confusion between their respective marks. The TTAB determined that PNC had established priority of use and granted PNC’s motion for summary judgement.

Ashe subsequently filed suit for trademark infringement in the Maryland court. PNC moved to dismiss for failure to state a claim, based on the preclusive effect of the TTAB’s finding of PNC’s priority of use in the opposition proceeding. Looking to Fourth Circuit law, the district court applied a five-factor test to preclude relitigation of the priority issue under the “ordinary elements of issue preclusion” in accordance with B&B Hardware; namely, whether:

“(1) the issue or fact is identical to the one previously limited; (2) the issue or fact was actually resolved in the prior proceeding; (3) the issue or fact was critical and necessary to the judgment in the prior proceeding; (4) the judgment in the prior proceeding is final and valid; and (5) the party to be foreclosed by the prior resolution of the issue or fact had a full and fair opportunity to litigate the issue or fact in the prior proceeding.”

The Maryland court easily found that elements (2) through (4) were met since priority of use was the only issue in the earlier opposition proceeding, and Ashe had not appealed the TTAB’s summary judgement decision in favour of PNC. The district court further found that element (5) was met since the procedures used in the opposition proceeding were not “fundamentally poor, cursory or unfair”. With respect to element one – the key issue – the Maryland court found the issues identical because they were grounded in the factual issue of which party first used the mark. The court determined that the Supreme Court’s specific holding in B&B Hardware that issue preclusion was inapplicable to likelihood of confusion issues (due to stated dissimilarities) did not apply because the issue in this case at bar was priority of use, not likelihood of confusion.

Yet, the Supreme Court’s decision in B&B Hardware may not be so limited. The Supreme Court did not expressly limit its holding to likelihood of confusion issues and noted that “if a mark owner uses its mark in ways that are materially unlike the usages in its application, the [TTAB] is not deciding the same issue [as a court would]”. Although somewhat muddled due to his pro se representation, Ashe may have been able to establish priority outside of the limited services description in his trademark application. Had he done so, the Maryland court would not have been limited to analysing priority of use within the context of an application's services description, and the case would have been more similar to the differing considerations of marketplace usage in B&B Hardware. Ashe may have missed an opportunity to present issues to the Maryland court that were arguably not identical to the opposition proceeding and issue preclusion may not have applied. 

Lisa C Pavento and Stephen M Schaetzel, Meunier Carlin & Curfman LLC, Atlanta