Eighth Circuit considers preclusive effect of TTAB decisions

On appeal before the US Court of Appeals for the Eighth Circuit following a prior remand, in B&B Hardware Inc v Hargis Industries Inc, a majority has affirmed a district court’s ruling rejecting B&B Hardware Inc’s claims that its SEALTIGHT mark was infringed by Hargis Industries Inc’s SEALTITE mark, and instead found in favour of Hargis on its counterclaims of false advertising and false designation of origin. Regarding the lower court’s award of attorney fees and costs to Hargis under the Lanham Act, the Court of Appeals remanded the decision for recalculation of those fees.

The opinion initially addressed whether the district court had erred in failing to instruct the jury to give preclusive effect to the Trademark Trial and Appeals Board’s (TTAB) decision that there was a likelihood of confusion between the two marks. Relying on the holding in Flavor Corp of America v Kemin Indus Inc (493 F2d 275 (8th Cir 1974)), B&B argued that the TTAB’s likelihood of confusion determination collaterally estopped Hargis from subsequently challenging this determination in the trademark infringement action brought by B&B. 

The Eighth Circuit disagreed. According to the precedent set by Flavor Corp, collateral estoppel cannot be applied before confirming that the disputed issue between the parties has been finally determined by a “court of competent jurisdiction”. Critical to this determination is whether the judicial body in question is an Article III court - the Eighth Circuit held that the TTAB was not. Thus, B&B’s argument that the TTAB’s holding was entitled to preclusive effect failed.

Moreover, B&B could not successfully argue that the TTAB’s decision should be afforded preclusive effect under principles of administrative law because, as explained by the court, the same 'likelihood of confusion' issues were not decided by both the TTAB and the district court. Specifically, the Eighth Circuit found that the TTAB’s analysis of likelihood of confusion regarding Hargis’s attempt to register its SEALTITE mark did not equate to the district court’s analysis of likelihood of confusion regarding the alleged trademark infringement of B&B’s SEALTIGHT mark. Since the 'likelihood of confusion' issues before the TTAB were not the same as those raised in the infringement dispute, the district court’s refusal to apply collateral estoppel to the TTAB decision was affirmed.

B&B also argued that an earlier district court case, Noah’s Inc v Nark Inc (560 F Supp 1253 (ED Mo 1983), was controlling as to whether the TTAB decision was entitled to deference in the later infringement action. The court found, however, that the fact-specific nature of Noah’s Inc was inapposite to the present case (Noah’s Inc involved a party bringing an action under 15 USC § 1071(b) contesting the TTAB’s decision on registration of a mark).  

The appeals court also considered whether the district court’s refusal to admit the TTAB’s decision into evidence was an abuse of discretion. The opinion noted that the Federal Rules allow a district court to exclude relevant evidence if its probative value is substantially outweighed by the risk of misleading a jury. The appeals court therefore concluded that the district court had employed sound judgment in excluding the TTAB’s decision, since the jury and the TTAB do not use identical factors, nor do they apply these factors in the same way, when determining likelihood of confusion. 

Finally, the court held that B&B’s efforts to manufacture evidence in support of its claims indicated that the present case, but not the prior appeal, was “groundless and unreasonable” under the Lanham Act. Hargis was thus entitled to attorney fees for the instant case only.

As illustrated by this case, trademark registrants and challengers alike should be aware that decisions by the TTAB may not be the final word on likelihood of confusion. It is therefore worthwhile to understand the different factors used by both the TTAB and federal courts when making such determinations in their respective proceedings.

Brooke Hazan and Howard J Shire, Kenyon & Kenyon LLP, New York