Three strikes at secondary meaning... and you’re out

In Robin Singh Educational Services Inc v Excel Test Prep Inc (Case 06-20915, April 16 2008), in what was the third attempt by Robin Singh Educational Services Inc to raise the issue of trademark infringement with respect to the mark TESTMASTERS, the US Court of Appeals for the Fifth Circuit has affirmed the district court's conclusion that collateral estoppel precluded the case from going forward.
Robin Singh carried on business under the name and registered trademark TESTMASTERS, offering test preparation services. Robin Singh operated out of California and, until 1996, offered courses only in California. In 1991 Haku Israni established the Test Masters Educations Services Inc (TES), which operated out of Houston and taught courses only in Texas.
In 1999 Robin Singh decided to create its own website, but discovered that TES had the rights to the domain name ''. Robin Singh sued TES for trademark infringement. The jury found that TESTMASTERS was a descriptive mark that had a secondary meaning, which was sufficient to constitute a legally protected trademark. The jury also found that TES had infringed the mark but was immune, because it was a prior innocent user. The district court ordered that:
  • the US Patent and Trademark Office modify the trademark registration to permit TES to use the mark in Texas; and
  • TES transfer its rights to the domain name to Robin Singh. 
Both sides appealed.
On appeal (Test Masters I), the Fifth Circuit concluded that Robin Singh had presented “little or no evidence regarding secondary meaning”. Therefore, it invalidated Robin Singh’s trademark registration and vacated the district court’s order.
Subsequently, Robin Singh applied again to register the TESTMASTERS mark. TES sought and obtained a district court injunction barring Robin Singh from registering the trademark and infringing upon TES’s use of the mark in Texas. No appeals were brought. Shortly prior to the issuance of the injunction, Robin Singh filed another lawsuit against TES, this time in California, alleging that TES was misusing the TESTMASTERS trademark in California to mislead consumers into thinking that TES was affiliated with Robin Singh. The California court transferred the action back to the Texas court, which dismissed the case with prejudice. The court concluded that res judicata barred the new action because the action presented the same operative set of facts as those of Test Masters I. The district court also rejected Robin Singh’s contention that the secondary meaning of the trademark should be re-litigated 16 months after the Test Masters I decision. Both parties appealed.
In that appeal (Test Masters II), the Fifth Circuit concluded that while 'true' res judicata did not bar Robin Singh from pursuing its claims, collateral estoppel did since the issue presented (ie, the existence of secondary meaning) “was incontrovertibly identical to the issue already decided”. The court concluded that in order to re-litigate, Robin Singh had to “allege a significant intervening factual change”, which it failed to do.
While the Test Masters II appeal was pending, Robin Singh sued Excel Test Prep Inc in California, alleging that Excel was using the TESTMASTERS mark in violation of its trademark rights and was advertising itself as an affiliate of TES (the founder of TES is a co-founder of Excel).
The California district court transferred the case to Texas, and the Texas court again dismissed Robin Singh’s case on collateral estoppel grounds. Once again, Robin Singh appealed.
The Fifth Circuit again affirmed, explaining that the dispositive issue was whether collateral estoppel barred the present trademark infringement action. As the court noted, a descriptive mark (such as TESTMASTERS) can become distinctive if, over time:
 “it has developed secondary meaning, which occurs when, in the minds of the public, the primary significance of a mark is to identify the source of the product rather than the product itself.” 
Therefore, the question presented to the Fifth Circuit was as follows: when does a prior final judicial decision collaterally estop a renewed attempt to re-allege establishment of secondary meaning?
The court explained that complete identity of parties is not required to raise a collateral defence so long as:
 “in the initial litigation, the issue at stake in the pending litigation is the same, the issue was actually litigated and the determination of the issue in the initial litigation was a necessary part of the judgment.”  
Rather, the court instructed that collateral estoppel, in the form of issue preclusion, may be invoked by a non-party against a party to the prior suit. The court stated that:
defensive use of collateral estoppel occurs when a defendant seeks to prevent a plaintiff from re-litigating an issue the plaintiff has previously litigated unsuccessfully in another action against the same or a different party.”
The court concluded that for “the same reasons as in Test Masters II, this case is collaterally estopped”. Therefore, it dismissed Robin Singh’s argument that the different geographic region at issue was sufficient to affect the analysis, and concluded that there had not been sufficient factual changes affecting the secondary meaning analysis to justify re-litigation.
Paul Devinsky, McDermott Will & Emery, Washington

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