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

FBBC Victory at Trademark Trial and Appeal Board is Focal Point of First Trademark Case in 10 years to be Decided by U.S. Supreme Court

On December 2, 2014, the United States Supreme Court (“SCOTUS”) heard oral arguments in B&B Hardware, Inc. v. Hargis Industries, Inc., et al. The case is the first trademark case in 10 years to be decided by the U.S. Supreme Court.

FBBC was hired by B&B Hardware, Inc. (“B&B”) after a jury found against B&B on its trademark infringement claims against Hargis Industries, Inc. (“Hargis”), another fastener manufacturer. Specifically, the jury found that B&B’s trademark “Sealtight” was merely descriptive and had no secondary meaning. Thereafter, Hargis sought to parlay its victory at trial and aggressively extend its rights, including an application to register its own trademark “Sealtite.” If successful, this registration would have been devastating to B&B’s business. On the eve of the close of the opposition proceeding period at the Trademark Trial and Appeal Board, B&B retained FBBC to challenge Hargis’ attempted registration. After a hotly contested trial before the Trademark Trial and Appeal Board, FBBC successfully proved that Hargis’ “Sealtite” mark was likely to be confused with B&B’s “Sealtight” mark. This resulted in the Trademark Trial and Appeal Board’s refusal to register Hargis’ claimed mark. FBBC thereafter secured “incontestable” status for B&B’s mark. Having already proved that Hargis’ claimed mark was likely to cause confusion, FBBC then filed a new trademark infringement action against Hargis in Federal District Court. The Federal District Court initially dismissed the action, claiming that B&B already had its day in court years earlier. However, based on FBBC’s earlier proof of liability (likelihood of confusion), the 8th Circuit Court of Appeal reversed the dismissal. This reversal was based both on FBBC’s successful proof of likelihood of confusion at the Trademark Trial and Appeal Board, and also its securing of incontestable status for B&B mark, which meant that the mark could no longer be challenged for mere descriptiveness. FBBC’s theory was that B&B should not be required to prove likelihood of confusion twice. Having established likelihood of confusion during the trial before the Trademark Trial and Appeals Board, B&B only needed to prove its damages in the subsequently filed infringement action before the Federal District Court.

On March 24, 2015, the U.S. Supreme Court issued its opinion on B&B Hardware, Inc. v. Hargis Industries, Inc., and held that decisions of the Trademark Trial and Appeals Board (TTAB) can have preclusive effect in subsequent litigation, if certain requirements are met. In short, the Court adopted FBBC’s view that certain proceedings before the TTAB, where the usages it adjudicates are “materially the same” as those before the district court, warrant application of issue preclusion in subsequent trademark infringement litigation (provided the ordinary elements of issue preclusion are met). For instance, proving likelihood of confusion in a TTAB opposition proceeding may obviate the need to re-prove that same issue in later litigation. Notably, however, the Court made clear that not all TTAB proceedings will qualify for issue preclusion under this standard. One size does not fit all. Indeed, district courts will have discretion to evaluate issue preclusion on a case-by-case basis. But, significantly, this decision will (or should) change the way practitioners handle TTAB proceedings. No longer can they be viewed as insignificant administrative matters, affecting only issues of registration. Rather, TTAB proceedings now have the potential of significantly affecting subsequent trademark litigation, including the all-important likelihood of confusion element. As for B&B Hardware, the decision places the company in a much better position. As a result of FBBC’s successful proof of liability against Hargis at the TTAB, B&B Hardware is now poised to return to the trial court having only to prove its damages.

The Supreme Court’s Slip Opinion can be read here