The Moral of B&b Hardware: Companies Need to Be Strategic in Trademark Actions Before the Ttab

• Citation: Vol. 40 No. 2
• Publication year: 2015
• Author: DOUGLAS MASTERS Loeb & Loeb

The Moral of B&B Hardware: Companies Need to Be Strategic in Trademark Actions Before the TTAB

DOUGLAS MASTERS Loeb & Loeb

In its second trademark law decision of the term, the U.S. Supreme Court considered a core trademark issue: how the "likelihood of confusion" analysis in registration proceedings fits into the broader trademark protection landscape. The specific issue before the Court in B&B Hardware v. Hargis Industries¹ was whether decisions made by the Trademark Trial and Appeal Board (TTAB) in trademark registration procedures can bind federal courts in subsequent Lanham Act infringement cases under the concept of issue preclusion, otherwise known as collateral estoppel. The Court, ruling 7-2, rejected the Eighth Circuit's categorical rule against issue preclusion, instead holding that TTAB rulings can indeed be binding—but only when all of the usual issue preclusion principles are satisfied.

As both the protracted litigation history of this case and the Supreme Court's decision evidence, corporate counsel should expect to devote more attention—and, probably, more resources—to registration proceedings. First, the possibility that issue preclusion can apply to trademark oppositions and cancellations means that companies will be more strategic in framing their trademark applications. Counsel are also likely to see the costs of registration proceedings increase as the stakes of litigation in that forum takes on greater impact.

The B&B Hardware case reached the Supreme Court after more than two decades of battles in the courts and before the TTAB between the parties, two manufacturers of industrial fasteners. B&B Hardware makes a fastener product for the aerospace industry under the name SEALTIGHT, while Hargis makes screws for the construction industry under the SEALTITE mark (which facts prompted Justice Alito to note, somewhat dryly, in his majority opinion, that while the companies cater to different industries, "both B&B and Hargis want their wares associated with tight seals."²).

By the time the Lanham Act case underlying the Supreme Court's decision was initiated by B&B, the parties had already litigated one trademark infringement action brought by B&B against Hargis, which resulted in a jury finding that B&B Hardware's mark was invalid because it was descriptive and lacked secondary meaning but did not result in the cancellation of B&B's mark because of Hargis's failure to counterclaim for cancellation in the suit.³ The parties also engaged in a TTAB cancellation proceeding, in which the Board concluded that Hargis could not seek cancellation of B&B's registration because the mark had been registered for more than five years.⁴ In the interim, Hargis applied to register the SEALTITE mark and when the application for registration was published (more than a decade after it was originally filed), B&B objected to the registration, arguing that it was too similar to B&B's existing SEALTIGHT trademark.⁵ The TTAB agreed that the marks were likely to cause confusion and denied Hargis's application for registration—noting that the case presented an unusual situation in which, based on the previous litigation and TTAB proceedings, B&B could not secure an injunction preventing Hargis from using its mark, but it could block the company's registration.

B&B brought a...