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An opposition challenging the registration of a trademark at the Patent and Trademark Office is broader in scope than a Lanham Act trademark infringement action, and thus a final disposition in the latter does not have preclusive effect in the former, the U.S. Court of Appeals for the Federal Circuit ruled June 18 (Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., Fed. Cir., No. 2012-1495, 6/18/13).
The court reversed a Trademark Trial and Appeal Board decision that had dismissed on issue preclusion grounds Levi Strauss & Co.'s opposition to Abercrombie & Fitch Trading Co.'s application to register a stitching design for jean pockets. The opposition, the board reasoned, was barred by a district court's 2009 determination that the design did not infringe on Levi's own stitching design.
The appeals court, however, noted that the district court only considered whether the one product on which Abercrombie was applying the mark infringed Levi's marks. But an opposition proceeding at the Patent and Trademark Office, the court noted, requires analysis of not only existing products but also a determination of whether any products for which the registration is sought may result in confusion. The PTO action is therefore much broader in scope, and a district court's finding of noninfringement may not necessarily bar a later PTO action on either issue preclusion or claim preclusion grounds, the court said.
Levi is a famous jean-maker which holds a federally registered trademark on its “Arcuate” design--a stitching on the back pocket with two connecting arches that meet in the center of the pocket.
In 2006, Abercrombie began using a stitching design on the back pocket of its Ruehl jeans, which Levi suggested incorporated the arcing elements of the Arcuate trademark. Abercrombie sought to register the design, which it calls a “mirror image stitching design,” with the Patent and Trademark Office.
Levi sued Abercrombie for trademark infringement, unfair competition, and trademark dilution under both federal and California state law. It subsequently dropped its state-law dilution claim and withdrew its claim for monetary relief on the federal dilution claim. Levi also filed an opposition to Abercrombie's registration, and a cancellation aimed at Abercrombie's supplemental registration of the mark. Levi argued that Abercrombie's marks were likely to cause confusion with Levi's Arcuate design. The PTO proceedings were suspended pending the outcome of the district court case.
In the district court action, a jury trial was held and the jury returned a verdict in favor of Abercrombie with respect to the infringement claim. The jury also provided an advisory ruling in which it found--although it later determined that the Arcuate trademark was famous and distinctive--that the marks were not identical or nearly identical and that the Arcuate mark was not likely to be diluted by the Ruehl design.
In 2009, Judge Jeffrey S. White of the U.S. District Court for the Northern District of California entered judgment in favor of Abercrombie on Levi's infringement and federal dilution claims.
The district court first reviewed the elements of a claim under the Trademark Dilution Revision Act of 2006, 15 U.S.C. § 1125(c), noting the advisory ruling had not found that Ruehl and Arcuate were identical or nearly identical, a standard that required that the two marks be similar enough that a significant segment of the target group of customers sees the two marks as essentially the same. The court observed that, although the evidence showed that Levi had expended significant amounts of money advertising the Arcuate mark, this was not a case where the two marks at issue involve only minor differences.
Levi appealed the dilution ruling to the U.S. Court of Appeals for the Ninth Circuit. Levi did not, however, appeal the infringement ruling.
The Ninth Circuit reversed, determining that the district court applied the incorrect dilution standard. 633 F.3d 1158, 97 U.S.P.Q.2d 1947 (9th Cir. 2011)(30 PTD, 2/14/11). Under the TDRA, a party asserting trademark dilution no longer needs to demonstrate that the two marks are identical or nearly identical, the appeals court held.
After the Ninth Circuit's ruling, Abercrombie announced that it was discontinuing its Ruehl line of jeans. In its place, Abercrombie said it would be selling a line of jeans under the Gilley Hicks brand. Around this time, Abercrombie also filed with the PTO an application to register the mirror image design for use on the Gilley Hicks line.
Levi sought Abercrombie's permission to amend the pleadings to cover the Gilley Hicks line. Abercrombie refused, and Levi then sought leave from the court for permission to amend its complaint. The district court denied Levi's request without explanation. Levi then moved to voluntarily dismiss its dilution claim. The district court granted Levi's request and judgment was entered against Levi on the dilution claim on May 31, 2011.
The proceedings in front of the PTO then resumed. Abercrombie moved for summary judgment on the grounds of issue preclusion and claim preclusion. The TTAB determined that claim preclusion did not apply due to the “significant differences” between the “transactional facts required to establish infringement in a district court, and cancellation of a registration at the Board.”
However, the board determined that the doctrine of issue preclusion barred both the dilution and likelihood of confusion arguments proffered by Levi in both its opposition and its cancellation proceedings. The board accordingly granted Abercrombie summary judgment, prompting Levi's appeal to the Federal Circuit.
(1) identity of the issues in a prior proceeding;
(2) the issues were actually litigated;
(3) the determination of the issues was necessary to the resulting judgment; and
(4) the party defending against preclusion had a full and fair opportunity to litigate the issues.
“What is key here,” the court said, “is that, in order for issue preclusion to bar litigation of an issue raised in a second suit, there must be an earlier determination of that issue in a first suit and the earlier determination must have been necessary to the resulting judgment in that suit.”
The court noted that the Ninth Circuit's reversal of the district court's dilution finding means that the dilution ruling can have no preclusive effect. This is because, the court said, “a bedrock principle of preclusion law has been that a reversed judgment cannot support preclusion.”
Accordingly, the court said that only two rulings--the 2009 district court judgment on infringement and the 2011 judgment on dilution--could potentially support issue preclusion. But, the court noted that the district court's 2011 dilution ruling was in fact a voluntary dismissal. “That judgment, while constituting an adjudication on the merits for claim-preclusion purposes, has no issue-preclusive effect,” the court said.
The remainder of the court's issue preclusion analysis therefore focused on the district court's 2009 order entering judgment in Abercrombie's favor on the issue of trademark infringement. But even this judgment cannot preclude Levi's opposition at the PTO because, “The PTO proceedings involve a much broader set of issues than were presented to, or therefore adjudicated in, that court,” the Federal Circuit said.
The court noted that in the district court the issue was whether the Ruehl line of jeans was likely to cause confusion with Levi's Arcuate mark. The focus on a single product is common in district court proceedings, the court said. However, in TTAB proceedings the focus is expanded beyond a single product to encompass all products that an applicant could potentially use the mark on, the court said.
“Because Abercrombie seeks to register a broad class of goods--'clothing, namely, jeans, skirts, shorts, pants and jackets'--without providing further limitations, the scope of the registrations at issue exceeds what the parties litigated in the district court,” the appeals court said.
The court noted that it declined to apply the doctrine of issue preclusion for similar reasons in Mayer/Berkshire Corp. v. Berkshire Fashions Inc., 424 F.3d 1229, 76 U.S.P.Q.2d 1310 (Fed. Cir. 2005)(186 PTD, 9/27/05). Like in Mayer/Berkshire, the difference in the scope between the district court proceeding and the PTO proceeding means that Levi's opposition to Abercrombie's application “represents no improper second bite at the apple,” the court said. Accordingly, the board erred by ruling that Levi's challenges were barred on issue preclusion grounds, the court said.
The court turned to Abercrombie's argument that the TTAB's ruling could be upheld under a claim preclusion theory.
In both cases, this court addressed whether a claim for trademark infringement arises from the same transactional facts as proceedings before the Board, and in both it held that the “array of differences in transactional facts conclusively demonstrates that claim preclusion cannot serve to bar” such proceedings.
The court noted that neither Jet nor Mayer/Berkshire involved trademark dilution clams. “But the rationale of the court's decisions in those cases extends to this situation,” the court said.
The court then compared the transactional facts necessary for a trademark dilution claim under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(c), to the facts that would be at issue in Levi's PTO challenges. Under such an analysis, it is clear that the district court confined its dilution inquiry to whether Abercrombie's Ruehl line was likely to dilute Levi's Arcuate mark, the court said. Conversely, Levi's PTO challenge is likely to be much broader because it will focus on other potential uses of the Abercrombie mark that could dilute Levi's mark, the court said.
“For such reasons, the judgment on Levi Strauss's dilution claim in district court does not preclude the PTO challenges any more than the judgment on its infringement claim does,” the court said.
The court reversed and remanded the case back to the TTAB.
Judges Alan D. Lourie and Kathleen M. O'Malley joined the opinion.
Levi was represented by Gregory S. Gilchrist of Kilpatrick Townsend and Stockton, San Francisco. Abercrombie was represented by J. Michael Keyes of K&L Gates, Spokane, Wash.
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