Articles Posted in Trademark Court Decisions

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As most people know Swatch AG is a Swiss corporation that sells watches, clocks and jewelry. It owns three United States registrations for the trademark SWATCH. It filed a Notice of Opposition against Beehive Wholesale, L.L.C. Beehive is in the wholesale and retail business, selling multiple goods, including watches and watch parts. It sells these watch parts and products under the trademark SWAP. Beehive’s watch line includes interchangeable components, hence the mark SWAP. Swatch AG opposed Beehive’s application on the grounds of mere descriptiveness, likelihood of confusion, and dilution. The Trademark Trial and Appeal Board (“TTAB”) dismissed the opposition on all counts.

-watch-Swatch dissatisfied with the Board’s finding, sued in District Court in Virginia. See Swatch, S.A. v. Beehive Wholesale, L.L.C., Civil Action Number 1:11-cv-434 (E.D. Va. August 16, 2012). Swatch filed this civil action pursuant to §1071(b) of Title 15 of the United States Code.  This section allows a trademark litigant to file a civil action instead of filing an appeal of the TTAB decision with the Federal Circuit. In this type of action, the District Court reviews the matter de novo.

Swatch brought causes of action for trademark infringement and unfair competition under federal and state statutes and also a federal cause of action for dilution. The District Court of Virginia held that the TTAB’s decision was supported by substantial evidence and found no likelihood of confusion or dilution. The TTAB and the District Court held that the marks SWATCH and SWAP were dissimilar in sight, sound and meaning and this was supported by substantial evidence. The evidence relied on were the trademarks, as well as definitions from the dictionary. Swatch argued that the District Court did not give enough weight to the “SWA” portion of the mark. However, this was not a persuasive argument because the analysis requires the fact finder to compare whole words not parts of words. Lastly, The TTAB, as well as the District Court found that there were significant differences in trade channels for the two marks.  Beehive directed its advertising to wholesale customers through magazines and trade show appearances, while Swatch utilized television, social media and billboards primarily to conduct advertising. Swatch was unable to produce a single incident of actual consumer confusion about the origin of the parties. The absence of actual confusion creates an inference that there is no likelihood of confusion between the marks.

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One unusual aspect of trademark law is the existence of a dual legal system to resolve disputes.  Litigants can choose to resolve their disputes through the United States Patent & Trademark Office’s Trademark Trial and Appeal Board (TTAB) or initiate an action in the Federal court system.  The TTAB is an administrative court that makes determinations regarding registrations, while the Federal Courts rule over issues concerning infringement and rights to use trademarks. The results of the two systems can sometimes be inconsistent.  However, this landscape could change soon because the U.S. Supreme Court has been asked to provide guidance on the issue, should Federal Courts be bound by TTAB rulings related to likelihood of confusion issues?

In a recently filed petition, B&B Hardware, Inc. claims that the lower district court and the Eighth Circuit did not defer to the TTAB holding that there was a likelihood of confusion between its registered mark SEALTIGHT and another  similar mark (SEALTITE) for related goods. The district court did not even allow the TTAB decision into evidence for fear it would prejudice the jury. The Eighth Circuit also rejected the TTAB’s decision.  See B&B Hardware, Inc., v. Hargis Industries, Inc., Appeal No. 11-1247 (8th Cir. May 1, 2013).  In its petition to the U.S. Supreme Court, B&B Hardware, Inc. argues that the Eighth Circuit’s rejection of the TTAB findings bolsters the circuit split. B&B Hardware, Inc. further argues that the TTAB finding on likelihood of confusion should have been given preclusive effect.

If you have not been following this case, a brief overview of the facts follows: the prior user of the trademark SEALTIGHT, for fasteners in the aerospace industry (B&B Hardware, Inc.), argues that Hargis Industries’ mark SEALTITE for self drilling screws in the the construction industry causes a likelihood of confusion in the marketplace. The TTAB agrees with B&B Hardware, Inc. and rules that Hargis Industries can not register SEALTITE for self drilling screws. In the end, the current circuit split on the issue, should federal courts be bound by TTAB rulings related to likelihood of confusion, makes it ripe for supreme court adjudication. See B&B Hardware, Inc., v. Hargis Industries, Inc., Case No. 13-352 in the U.S. Supreme Court.

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