In a decision with wide-ranging implications to trademark owners everywhere, the U.S. Supreme Court has just ruled that in certain cases, brand owners may be precluded from bringing claims or defenses based on trademark infringement in U.S. District Court if the issue of likelihood of confusion was previously adjudicated in a trademark opposition proceeding before the U.S. Trademark Trial and Appeal Board.

In the case, B & B Hardware Inc. v. Hargis Industries, Inc., Hargis sought to register its trademark SEALTITE with the U.S. Patent and Trademark Office.  B&B Hardware opposed the trademark application on the grounds that it was confusingly similar to its own SEALTIGHT trademark.  The Trademark Trial and Appeal Board (TTAB) ruled in favor of B & B Hardware, thereby refusing Hargis’s right to register its mark. However, since the TTAB’s jurisdiction is limited to precluding a party from registering a trademark, not using a trademark in commerce, B&B subsequently filed a complaint for trademark infringement in U.S. District Court.

In the District Court case, B&B argued that Hargis was precluded from contesting the TTAB’s earlier finding of a likelihood of confusion.  The District Court disagreed with B&B’s position, and the Eighth Circuit affirmed the district court’s decision, stating that issue preclusion was improper as the TTAB and district court used different standards to determine a likelihood of confusion.  The Supreme Court in reversing the Eighth Circuit, held that when the uses adjudicated by the TTAB are “materially the same” as the district court, then issue preclusion may apply.

What the Supreme Court holding may mean for trademark owners

• Trademark Oppositions may now carry greater weight.  Until now, even if a trademark opposer prevailed in a trademark opposition, it would not prevent a trademark applicant from arguing against likelihood of confusion in a district court proceeding for trademark infringement.  Now, the Supreme Court ruling may have the effect of having a TTAB’s refusal of registration of a trademark due to likelihood of confusion carry over to a district court’s finding.  What does this mean to a trademark applicant?  In all likelihood, the trademark applicant will find that not only will they be not able to register the trademark at issue, but also may be ordered to cease marketplace use in a subsequent district court proceeding.
• Filing a Trademark Opposition may create greater leverage.  Numerous trademark oppositions have historically resulted in an amicable settlement wherein the applicant agrees to withdraw its trademark application in consideration of the opposer not contesting the applicant’s continued right to continue to use its trademark in commerce.  With the Supreme Court’s ruling, companies that oppose another ‘s trademark in the TTAB and prevail on grounds of likelihood of confusion have a much greater chance of summarily running the table in a district court proceeding to enjoin the applicant’s marketplace use of the trademark.  The predicted result? Trademark opposers will have less of an incentive to amicably settle a trademark opposition and trademark applicants may have greater risk of losing the right to use their brand name in commerce.

Now, more than ever, trademark owners who believe that another party is infringing its trademark rights should consider commencing a trademark opposition proceeding by filing a notice of opposition with the U.S. Trademark Trial and Appeal Board.