Last week the U.S. Supreme Court issued it’s decision in B&B Hardware, Inc. v. Hargis Industries, Inc. The case involved a dispute between two manufacturers of sealing fasteners. B&B owned the registered mark “SEALTIGHT” and Hargis wanted to register the new mark “SEALTITE” for a similar product that moves in different channels of trade. The parties had taken their dispute to the Trademark Trial and Appeal Board (TTAB), which declined to register Hargis’s new mark, finding it was “likely to cause confusion.”
While the TTAB proceeding was still ongoing, B&B also filed suit in federal court for trademark infringement. Later, B&B argued that the TTAB’s ruling on the likelihood of confusion should preclude the court from ruling otherwise. But the court disagreed and eventually ruled against B&B (and contrary to the TTAB), finding Hargis’s new mark was not “likely to cause confusion.”
The Eighth Circuit Court of Appeals affirmed the district court’s ruling—including the district court's rejection of B&B’s argument that the TTAB’s ruling should have preclusive effect. So B&B took its case to the Supreme Court.
As predicted, the Supreme Court (7-2) reversed the Eighth Circuit and held that, where the district court is deciding the same issue decided by the TTAB, the TTAB’s decision will have preclusive effect—meaning the TTAB's decision precludes the district court from deciding that issue differently.
The Supreme Court’s decision is narrow, limiting the preclusive effect of TTAB decisions to those situations where the TTAB has considered the same factors that the court is considering. This means there will be many cases in which a prior TTAB decision does not preclude the district court from deciding the question differently. But, of course, this also means many trademark infringement cases will now include an argument over whether prior TTAB rulings have any preclusive effect.
Most reactions to the B&B Hardware decision have been favorable, recognizing that the TTAB has more expertise and experience regarding trademark issues than district courts. But some have expressed concern that B&B Hardware will complicate trademark disputes and put pressure on parties to either invest more in TTAB proceedings or to avoid them altogether—depending on which way the TTAB is likely to decide the matter. For all these reasons, B&B Hardware will likely have a significant impact on trademark litigation.
One interesting question that was not raised or resolved in B&B Hardware is whether the Supreme Court’s preclusion rule violates the Seventh Amendment right to a jury trial. Some believe that the right to a jury trial includes the right to a trial over intellectual property issues, and that this right is infringed when administrative decisions prevent a trial court from deciding the matter. Notably, Justices Thomas and Scalia dissented from the decision in B&B Hardware, on the ground that the preclusion rule trespasses on the primacy of Article III courts.But the Seventh Amendment question is left for another day.