Supreme Court Changes the Stakes in Trademark Office ProceedingsPDF
The federal trademark law, known as the Lanham Act, authorizes the U.S. Patent and Trademark Office (“USPTO”) to refuse registration of a mark if use of the applied-for mark would be likely to cause confusion with a prior mark. Identification of potentially conflicting marks is not left solely to the PTO; owners of other marks who believe they would be harmed by the applied-for mark are authorized by the Lanham Act to challenge an application to register--or to seek to cancel a registration already granted—by alleging that use of an applied-for mark would cause confusion with their senior mark. These proceedings, called oppositions and cancellations, take place in the Trademark Trial and Appeal Board (“TTAB”), which is essentially an administrative court within the USPTO. To adjudicate the issues, the TTAB conducts a trial under a set of rules that largely incorporate the Federal Rules of Civil Procedure, which are the rules used in ordinary federal court trials. Although no hearings with live witnesses are held, the parties may engage in discovery, conduct depositions, and submit evidence in written form, on the basis of which the TTAB renders a decision either upholding or rejecting the challenged mark.
Until the U.S. Supreme Court’s decision in March in B&B Hardware, Inc. v. Hargis Industries, Inc., trademark lawyers could usually advise their clients that decisions by the TTAB regarding the right to register a trademark would probably not have implications beyond whether the registration in question would be approved or maintained. Of particular concern was whether the TTAB’s decision on the “likelihood of confusion question” would be binding in trademark infringement litigation between the same parties in federal court. “Likelihood of confusion” is the test in both contexts. That is, a mark whose use is likely to give rise to confusion with use of a prior mark will be denied registration by the USPTO. But the right to register is not the same as the right to use the mark: even though a mark owner is denied registration, it may still use its mark unless stopped from doing so in a trademark infringement suit in court. In an infringement suit, the plaintiff alleges that use of the challenged mark is likely to cause confusion with the plaintiff’s mark and therefore the owner of the challenged mark must be stopped from continued use. Before the recent B & B Hardware decision, most courts ruled that decisions of the TTAB on the likelihood of confusion issue would not be binding in subsequent infringement litigation, because the issues were resolved differently, the TTAB was not a “real” court, and the stakes were lower in the TTAB, where only registration, and not use, is in issue. However, in B & B Hardware, the Supreme Court upended that general approach and ruled that, unless there is reason not to, the decision by the TTAB on the likelihood of confusion will be binding in subsequent trademark infringement litigation between the same parties. In other words, courts deciding infringement cases will more often have to follow the TTAB’s ruling on likelihood of confusion.
Whether the TTAB’s decision on likelihood of confusion will be deemed binding on the court in a particular infringement case will depend on a comparison of the TTAB decision and the issue before the court in the infringement suit. The TTAB generally assesses the likelihood of confusion between marks based on analysis of the uses of the marks as described in the competing applications and registrations and not as the parties actually use the marks. If, for instance, a previously registered mark and a very similar applied-for mark both identify the services with which they are used as “retail sales of the goods of others”, the TTAB would find the marks to be conflicting and refuse registration of the applied-for mark. But a court deciding a subsequent infringement case would focus on actual use. If, in actual use, one mark is used on a hardware store and the other is used on a clothing store, the likelihood of confusion analysis would be very different from the one conducted by the TTAB. In the subsequent infringement case, there would be good reason to require a fresh determination of whether use of the marks gave rise to a likelihood of confusion. Therefore, the TTAB’s finding on the confusion question would not be binding on the court in the infringement suit. But if the situation were different, and if, in the Supreme Court’s words, “a mark owner uses its mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue” and the TTAB’s decision on the issue would be binding in the infringement suit. Because it is common for the goods and services as described in a registration or application to accurately describe the actual use of the mark by the parties, the practical effect of the Court’s ruling in B&B Hardware is that the TTAB’s decision will often be binding in later infringement cases.
The Court’s ruling has meaningful practical implications in trademark litigation, and potentially in other contexts in which administrative agency rulings could be material to private party litigation. In the trademark context, the Court’s ruling “ups the ante” in matters before the TTAB. A party believing itself to be a prior (or “senior”) user who is or would be harmed by registration of another’s mark, and who also believes itself harmed by the applicant’s actual use of the mark being applied for, must more carefully weigh the merits of first pursuing an opposition or cancellation proceeding in the TTAB versus going straight to federal court, because a decision in the TTAB is much more likely to be deemed binding in a later infringement case. Whether this will tilt a prospective plaintiff towards or away from seeking a ruling from the TTAB will depend on a range of factors pertaining to the particular case. These factors include the likelihood of ultimately pursuing an infringement action, the likelihood of the TTAB decision being binding in an infringement suit under the B&B Hardware ruling, the strength of the case, and the suitability of the TTAB forum for trial of the issues. The prospective plaintiff will also need to give consideration to the greater likelihood that a defendant who loses in the TTAB will seek a retrial of the case in the federal court, as section 21 of the Lanham Act permits—formerly, such trials “de novo” were rare but after B&B Hardware could be more common.
The B&B Hardware decision will also alter the calculus for parties in TTAB proceedings concerning whether they ask the TTAB to consider evidence of the actual uses of their marks. Notwithstanding that the TTAB is primarily focused on the goods and services solely as described in the application and registration documents, actual uses may be considered for purposes of clarifying the nature of the goods and services, the ways in which the marks are used on such goods and services, and factors such as any actual confusion that has resulted. The more that such evidence is considered by the TTAB, the likelier it is the TTAB decision will be binding in a subsequent infringement suit.
In sum, the effects of the B&B Hardware decision will only be known over time, as parties incorporate the ruling into their strategic decision-making, and as lower courts apply the new rule. Whether the Supreme Court’s ruling will require giving binding effect to a TTAB decision will rarely be black and white in a particular case, and therefore the effects of the decision will be significantly affected by whether the lower courts tend to give it an expansive or more constrictive interpretation. Similarly, the effects of the decision in other areas of the law, such as patent, in which federal administrative decisions resolve issues material in private-party litigation, will only gradually be apparent as it is applied in those various contexts. But the overall point is clear: going to the TTAB is a more significant decision than it used to be, and that decision should not be made without full consideration of all the possible consequences.