B&B Hardware, Inc. v. Hargis Industries, Inc.

Brief Fact Summary.

Plaintiff filed suit in federal district court against Defendant for trademark infringement. While the action was pending in district court, the Trademark Trial and Appeal Board held for Plaintiff. However at the federal district court trial, a jury held for Defendant. Plaintiff appealed.

Synopsis of Rule of Law.

The doctrine of collateral estoppel applies to judicial-related decisions of an administrative agency so long as the facts before the agency and a federal court are materially the same and the other requirements of issue preclusion are satisfied.

Facts.

Defendant manufactured fasteners for use in the construction industry under the trade name “SEALTITE.” Plaintiff manufactured fasteners for use in the aerospace industry under the trade name “SEALTIGHT.” Defendant sought to register its trade name pursuant to the Lanham Act, 15 U.S.C. § 1051, through a United States Patent and Trademark Office (PTO) administrative process. Plaintiff opposed the registration in a proceeding before the Trademark Trial and Appeal Board (TTAB). Thereafter, Plaintiff filed suit in federal district court against Defendant for trademark infringement. While the action was pending in district court, the TTAB held for Plaintiff, concluding that Defendant’s mark could not be registered because it too closely resembled Plaintiff’s mark and could cause confusion. Plaintiff argued in district court that Defendant could not contest the likelihood of confusion due to the preclusive effect of the TTAB’s decision. The district court disagreed, reasoning that the TTAB was not an Article III court. After a trial, a jury held for Defendant. Plaintiff appealed. The court of appeals affirmed because (1) the TTAB used different factors to evaluate likelihood of confusion, (2) the TTAB placed too much emphasis on the appearances and sounds of the two marks, and (3) Defendant had the burden of persuasion before the TTAB while Plaintiff had the burden of persuasion before the district court. The United States Supreme Court granted certiorari to review.

Issue.

Does the doctrine of collateral estoppel apply to judicial-related decisions of an administrative agency so long as the facts before the agency and a federal court are materially the same and the other requirements of issue preclusion are satisfied?

Held.

Yes. The court held that so long as the other ordinary elements of issue preclusion are met, issue preclusion would apply when the usages adjudicated by the TTAB are materially the same as those before the district court.

Dissent.

Justice Thomas, Scalia

The dissent challenged the court’s presumption that Congress intended agency decisions to have preclusive effect in this context.

Discussion.

The doctrine of collateral estoppel applies to judicial-related decisions of an administrative agency so long as the facts before the agency and a federal court are materially the same and the other requirements of issue preclusion are satisfied. Generally, after a court has decided an issue, the matter is settled as between the parties. There is no valid rationale as to why the same conclusion should not extend to administrative agencies. Additionally, there is nothing in the Lanham Act to bar the application of issue preclusion when its ordinary elements are met. Registration is not a prerequisite to a trademark-infringement action, but is a separate proceeding to decide separate rights. To prevail in a trademark-infringement suit, a plaintiff must establish that it has a protectable ownership interest in the mark and that the defendant’s use of the mark is likely to cause consumer confusion.

Here, it did not matter that the TTAB and the district court used different factors to assess the likelihood of consumer confusion, especially when the factors used by both tribunals were not fundamentally different. In addition, parties could not avoid issue preclusion simply by litigating matters before different tribunals, hoping that one court will apply a different standard than another court. Because collateral estoppel applied to the likelihood-of-confusion question resolved by the TTAB, the issue was settled and could not be argued before the district court. Therefore, the judgment of the court of appeals is reversed, and the matter is remanded.