B&B Ruling Finding Preclusion Could Be Bad; Finding of Deference Could Be Worse

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By Tamlin Bason

Feb. 4 — Trademark practitioners, academics and even a sitting federal district court judge on Feb. 4 continued to argue that Trademark Trial and Appeal Board rulings on likelihood of confusion made during registration proceedings should generally have no preclusive effect with respect to a district court proceeding regarding a claim of infringement of the same trademark.

During a webinar discussion hosted by the American Intellectual Property Law Association, the panelists for the most part reiterated what has been the trademark bar's position on a case that the Supreme Court heard in December, B&B Hardware, Inc. v. Hargis Indus., Inc.

That position is that the administrative registration proceeding is so fundamentally different in purpose and procedural scope from a trademark infringement action that issue preclusion should not usually apply.

There is some concern, however, that Hargis—the party opposing preclusion—may have gone astray by arguing that there is a textual difference in the relevant statutes governing each proceeding.

There is also concern that the Supreme Court will determine that TTAB rulings are entitled to, if not preclusion, then some ambiguous level of deference. Determining the amount of deference to give a TTAB ruling would be hard for a court, and nearly impossible for a jury, the panelists said.

“Without a very clear definition of what deference should be given, then I worry that it is going to be almost meaningless to a jury, or that it's going to mean too much,” Judge Marvin J. Garbis of the U.S. District Court for the District of Maryland said during the discussion.

Deference Harder Than Preclusion

A decision in B&B Hardware, No. 13-352 (U.S. argued Dec. 2, 2014) is expected shortly, and the title of the AIPLA discussion was “Beyond B&B: A New Regime for Litigation Strategy?”

While some of the discussion indeed focused on potential litigation adjustments that may be ushered in, depending on how the court rules, much of the talk focused on preclusion, deference and the arguments for—but mostly against—their application in trademark cases.

In addition to Garbis, the panel consisted of Nancy J. Mertzel of Schoeman Updike Kaufman & Stern LLP, New York; David S. Welkowitz of Whittier Law School, Costa Mesa, Calif.; and Kenneth L. Wilton of Seyfarth Shaw LLP, Los Angeles.

Administrative Trademark Judge Lorelei Ritchie of the TTAB moderated the discussion.

All panelists agreed that deference, which was raised by a few of justices during the oral argument, would be problematic to implement.

“For me, deference feels very strange,” Mertzel said. “If you are not going to give preclusion, then why give deference?”

“Deference is extremely complicated, particularly when you have a jury,” Welkowitz said. “It is almost impossible to know how to instruct a jury on deference.”

Garbis, who would be responsible for instructing the jury, was the most concerned. He said that it already feels like “gibberish” when instructing a jury on the applicable likelihood of confusion factors, while at the same time cautioning them that most of those factors will not apply in a particular case.

“If we say that here is how the TTAB ruled on these factors, and you [the jury] have to give those rulings some uncertain level of deference, then you will have made the gibberish even more nonsensical,” Garbis said.

Ritchie asked if preclusion would be easier to apply than deference. Without question it would, Garbis said.

“Preclusion is extremely easy to apply,” he said. “The simplest rule of law [that could come out of B&B] would be to give every TTAB ruling preclusion,” he said. However, that would also be the rule that would be the most disruptive to practitioners, the TTAB and district court judges.

Textual Argument Not Persuasive

“What we are seeing a lot of is that practitioners do not want preclusion,” Mertzel said. “People are very concerned that it will change life as we know it as trademark practitioners. And our clients don't want it.”

Mertzel, however, said she was concerned that in its briefing and at oral argument Hargis “made a very textual” argument about why the two controlling statutes—15 U.S.C. §1052(d) for registration proceedings and 15 U.S.C. §1114(1)(a) for infringement actions in district court—were too different for preclusion to apply.

“I was not persuaded by that argument and I don’t think the court was persuaded by that argument,” she said.

The key to showcasing the differences between board and district court litigation, Mertzel said, is by broadly noting that the former governs the right to register the mark and the latter governs the right to use the mark. Mertzel, however, said practitioners should not necessarily expect the court to single out trademark law as being entitled to different rules on preclusion.

“The court is not interested in favoring on area or law over others,” she said. “We saw it in eBay [with patents] and we saw it in Petrella [with copyrights], and so I think the court is going to be firm on having one law of preclusion. Hopefully they will reach a result that it doesn't normally apply.”

Wilton agreed that it was unlikely that the court would “carve out some exception particular to trademark or patent cases.” However, he also said that it was unlikely that there would be “a bright line rule.”

Keeping Evidence Out

“I would not be surprised if it comes out with a ruling that gives a district court discretion to determine when preclusion will and will not apply,” Wilton said.

The concern is that preclusion would be found to apply when the board, in a registration proceeding, considered how the applicant was actually using the mark in commerce, rather than just looking at how the mark was displayed on the specimen.

Ritchie noted that while the board does not often see evidence of that nature, “sometimes we are presented with evidence that asks us to look at market place realities.”

“A takeaway from this entire litigation could be that parties at the TTAB try to keep out evidence of what the applicant is doing in the marketplace to mitigate the risk of a potential finding of preclusion,” Mertzel said.

To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Tom P. Taylor at ttaylor@bna.com


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