Alert January 23, 2015

Supreme Court Hears Trademark Cases on the Preclusive Effect of TTAB Decisions and the Tacking Doctrine

Summary

In its October 2014 term, the U.S. Supreme Court heard oral argument in two trademark cases. Both cases have practical significance for trademark litigants because they have the potential to change the way parties approach litigation strategy in the Trademark Trial and Appeal Board and district court.

Two trademark cases the U.S. Supreme Court heard in its October 2014 term could change how parties approach litigation strategy in the Trademark Trial and Appeal Board (TTAB) and district court.

The first case, B&B Hardware, Inc. v. Hargis Industries, Inc., was argued on December 2, 2014 by Goodwin Procter (which represents petitioner B&B Hardware) and presents the issue of whether the TTAB’s finding of a likelihood of confusion between two trademarks precludes the parties from relitigating that issue later in infringement litigation in U.S. District Court. The Court is likely to issue an opinion in B&B by the spring.

The second case, Hana Financial, Inc. v. Hana Bank, was argued on December 3, 2014. The Court issued a unanimous decision in Hana on January 21, 2015, holding that the question of “commercial impression,” which determines whether the trademark doctrine of tacking should apply, is an issue of fact to be decided by a jury.

B&B Hardware

B&B involves two different types of fasteners: SEALTIGHT and SEALTITE. The first fastener, branded SEALTIGHT, is a high-end self-sealing fastener manufactured by Arkansas-based B&B Hardware, Inc. and marketed to the aerospace industry. The second type of fastener, branded SEALTITE, is a low-end self-sealing fastener manufactured by Texas-based Hargis Industries, Inc. and marketed to the construction industry.

When Hargis applied to the Patent & Trademark Office (PTO) for registration of the mark SEALTITE, B&B opposed. (The PTO permits an interested party to oppose the registration of another mark if the interested party believes the mark is likely to cause confusion with its own mark.) The two parties conducted discovery, took depositions, and submitted argument to a three-panel board of administrative law judges on the TTAB. The TTAB determined that the two marks were likely to confuse the public even though they served different industries and were marketed to different customers.

Hargis continued to use the SEALTITE mark, and B&B filed a district court action seeking to enjoin Hargis’s use of the SEALTITE mark and to recover damages resulting from customer confusion. B&B argued that the TTAB’s determination of likelihood of confusion should preclude the district court from deciding the likelihood of confusion issue, and that the district court action should be limited to issues that were not already determined by the TTAB. The district court, however, held that TTAB determinations of likelihood of confusion are not binding on federal courts, and refused to admit the TTAB decision as evidence to the jury. The case was submitted to the jury, which found that the marks were not likely to cause confusion. The Eighth Circuit affirmed the district court, and B&B appealed to the Supreme Court.

The primary issue before the Court is whether the TTAB’s finding of a likelihood of confusion between two trademarks should have precluded the relitigation of the issue in a later action in the district court.

Goodwin Procter partners William M. JayIra J. Levy and Robert D. Carroll represented B&B before the Supreme Court. Mr. Jay argued the case before the Supreme Court.

Hana

Hana involves the trademark doctrine of tacking. The doctrine allows a trademark holder to extend the priority date of a trademark back to the earlier priority date of a related, but different trademark. When tacking occurs, it allows a senior mark holder to use the priority date of its original mark for both the original mark and the revised mark. The test that permits tacking is whether the senior user’s original and revised marks create the same “commercial impression” to customers.

In Hana, defendant Hana Bank presented evidence in district court of its earlier use of the mark HANA OVERSEAS KOREAN CLUB, which later evolved to HANA WORLD CENTER and ultimately HANA BANK. The plaintiff, Hana Financial, Inc., argued that it used its mark HANA FINANCIAL before Hana Bank began using the mark HANA BANK, and that the “commercial impression” question should be an issue of law decided by a judge, not a jury. The district court and the Ninth Circuit both held that the issue of tacking is a question of fact to be decided by a jury.

The Court issued an opinion on January 21, 2015, in which it resolved a split of authority in the Courts of Appeals, and held that the “commercial impression” test to determine whether trademarks may be tacked is a question of fact that generally should be decided by a jury. The Court held that “[a]pplication of a test that relies upon an ordinary consumer’s understanding of the impression that a mark conveys falls comfortably within the ken of a jury.” 574 U.S. ____ (2015) (slip op. at 4).

Both the tacking issue in Hana and the likelihood-of-confusion issue in B&B will affect the strategy and presentation of trademark cases for practitioners across the country.