Should Federal Courts Be Bound by TTAB Rulings?

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.

The following are examples of the circuits’ positions on this issue.  In the Eighth Circuit TTAB holdings are afforded no weight in federal litigation. In contrast, in the Eleventh Circuit, TTAB findings are afforded “great weight”. In the Fifth Circuit TTAB decisions are “controlling unless the contrary is established”. While in the Fourth Circuit, TTAB findings are considered to be “powerful evidence”. On the other end of the spectrum, the Third and Seventh Circuits give preclusive effect to TTAB findings. Lastly, another approach can be seen in the Second Circuit. This Circuit carefully examines the TTAB decision to determine what the Board decided and what was the evidentiary basis for the decision, before giving preclusive effect. The Second Circuit approach is most practical because in many cases it is often unclear whether the TTAB decided the issue of likelihood of confusion under the same legal standard that the court would utilize under like circumstances.

Another important factor for the courts to keep in mind is that the TTAB is guided by a factor based test, similar to the variations used by the different circuits, however the TTAB can only consider the marks as presented and the goods and services as identified in the trademark application or registration at issue. Often, the TTAB is criticized for not being able to consider real world factors, that the courts can consider when rendering decisions. Therefore, courts may possibly come to different conclusions, and hence the inherent problem in the dual legal system in trademark law.

We will have to wait and see if B&B Hardware, Inc.’s petition is granted, and if so, federal courts may be prevented from relitigating likelihood of confusion issues already decided by the TTAB. In the end, this could foster judicial economy. However, it may not have much of an impact on the federal court dockets, because there may be less cases filed wherein issues would be relitigated, but more cases filed once a party receives a favorable decision from the TTAB. Once a litigant possesses confidence that it has a strong case on the merits, the litigant is more likely to file an infringement claim, looking to receive damages, or file a declaratory judgment action.