Brand owners often instruct the filing or defence of oppositions and cancellations at the US Trademark Trial and Appeal Board (TTAB) without really understanding what is involved. Unlike at the OHIM or many national offices in Europe, the US Trademark Office requires the parties to fully litigate the case, with written discovery, motions, depositions, possible summary judgment motions, and a trial with witnesses, done by deposition. To take a case all the way can cost well over $100,000.
As such, many companies, if they cannot settle favourably, will tire of the expense and effort of a TTAB case and drop the case or take a default judgment. In our experience, most cases, say 99%, do not go all the way to trial. Or, the parties may put a half-hearted effort, take no discovery, show up at the trial phase with one witness, and take their chances on a ruling. After all, the TTAB only has jurisdiction over whether you can register your mark, not whether you can use it.
Nevertheless, if there really is an infringement problem, you can always go to federal court and get an injunction and damages, because TTAB rulings are not binding on federal court, so you get another bite.
But perhaps not any more. On 24th March, the US Supreme Court handed down its ruling in B&B Hardware v Hargis Industries, holding that the TTAB findings, such as on whether marks are confusingly similar, can be preclusive in later federal proceedings as long as “the ordinary elements of issue preclusion are met”.
SEALTIGHT v SEALTITE
The parties were involved in an opposition and parallel federal court litigation over whether SEALTIGHT and SEALTITE were confusingly similar. The TTAB ruled in favour of the B&B, the opposer, but the federal jury ruled in favour of the applicant, Hargis.
B&B had argued that the Court should defer to the finding of the TTAB, but the court refused, applying what we had all understood to be the case: that the TTAB, which is a “court” run out of an administrative agency, whose judges are employees of the executive branch, and not part of the judicial branch of government, are not approved by the Senate, and do not serve for life, cannot bind a real federal judge. The Court of Appeals agreed with the trial court. B&B asked the Supreme Court to hear the case. The Court takes about one trade mark case very two years.
A limited holding
The Court opened the door to TTAB rulings having preclusive effect, but was careful to limit its holding to only a small set of cases where an issue proves “materially the same” as that considered by the TTAB, and where the issue was “fully litigated” and not the result of a default judgment. Also, the Court remained vague regarding when this standard can be met; declining to define when issues are “materially the same”.
Nevertheless, brand owners in Europe should keep this case in mind, and watch how it is further interpreted by federal courts, as they budget and plan for oppositions and litigations in the USA.
Janet Satterthwaite is a partner of Venable in Washington, DC, a member of the Marques IP Outer Borders Team and US newsletter correspondent for HouseMARQUES.