Janet Alexander Cosmetics v. L’Oreal USA, Inc.

Brief Fact Summary.

In 1988, L’Oreal began using a trademark with the letters “EQ.” In 1990, JAC began using a mark that also had the letters “EQ.” JAC registered its mark in 1993. In 1996, L’Oreal’s request to register a modernized version of its mark was denied. L’Oreal subsequently filed a petition to cancel JAC’s mark because of the likelihood of confusion between the companies’ marks. In connection with that petition, which was denied, the TTAB also found no likelihood of confusion between any of the marks. L’Oreal’s subsequent request to register its modernized trademark was granted, with L’Oreal relying on the earlier finding of no likelihood of confusion of the marks. JAC opposed the registration; both the TTAB and the district court determined that JAC was precluded from litigating the likelihood of confusion issue.

Synopsis of Rule of Law.

The doctrine of issue preclusion (collateral estoppel) applies to a court’s alternative findings sufficient to serve as a basis for the judgment.

Facts.

JAC and L’Oreal both had trademarks for cosmetic products that used the letters “EQ.” L’Oreal began using one such mark in 1988; JAC began using its mark in 1990 and registered it in 1993.  In 1996, L’Oreal attempted to register a modernized version of its mark, which it had been using since 1992. The TTAB denied registration of L’Oreal’s modernized mark. L’Oreal filed a petition to cancel JAC’s mark because of the likelihood of confusion between the companies’ marks. In connection with that petition, which was denied, the TTAB also found no likelihood of confusion between JAC’s mark and L’Oreal’s original or modernized version of its mark. A subsequent request by L’Oreal to register its modernized trademark was granted, with L’Oreal relying on the TTAB‘s earlier finding of no likelihood of confusion of the marks. JAC opposed the registration; both the TTAB and the district court determined that JAC was precluded from litigating the likelihood of confusion issue.

Issue.

Is a finding that is an alternate but independently sufficient basis for a judgment “necessary” to a decision for purposes of collateral estoppel?

Held.

Yes. Alternative findings that serve as a sufficient basis for a judgment should be given preclusive effect.

Discussion.

For purposes of application of collateral estoppel, the issue was whether the likelihood of confusion issue was necessary to the TTAB‘s decision, such that it should be given preclusive effect.