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Trending Trademarks

Comments and analysis on trademark issues affecting the fashion, high-tech, multimedia and consumer products industries

Graffiti Litigation Update: Settlements and Procedural Wrangling

Posted in Copyright, Litigation, Trademark

Back in October, we surveyed some developments in lawsuits over public art and protection available under copyright law in graffiti art.  There has been some movement, and other developments, in these cases.

In a Chicago lawsuit, director and Monty Python alumnus Terry Giliam faces an injunction request over his new film Zero Theorem, which the plaintiffs allege infringed on street art in a mural in Buenos Aires (here again is a comparison set out in that Complaint).

Several defendants’ first response to the Complaint was to request that the case be transferred to federal court in Los Angeles.  Their primary argument is that Illinois has no relationship to the filming or production of the movie, or to the defendants.  Such motions carry a relatively high burden; so long as a court has jurisdiction, courts will defer to the plaintiff’s choice of forum, for the most part.  And, many of the defendants’ arguments refer to the foreign components of the case (filming in Romania, production in London).  Candidly, transfer to Los Angeles makes those witnesses no more accessible than from Chicago.  The plaintiffs have since responded forcefully, point out as well that one of the defendants has pursued infringement claims before in Chicago, undermining that defendant’s claim of inconvenience.

Elsewhere, the lawsuit against American Eagle in New York by David Anasagasti (better known as “Ahol Sniffs Glue”) over his mural “Ocean Grown” has been settled, without any details available.  The lawsuit has been dismissed with prejudice by stipulation, meaning it cannot be brought again.  Similar infringement claims against Sara Bareilles and Wal-Mart have also been resolved, according to Law360.

In California, clothing designer Robert Cavalli has taken the merits of the claim head on.  “In response to the recent lawsuit brought forward by artists Jason ‘Revok’ Williams, Victor ‘Reyes’ Chapa, and Jeffrey ‘Steel’ Rubin, the Roberto Cavalli company would like to state that no official notice of such suit has been received,” a spokesperson for the label was quoted in Vogue as having told New York Magazine.  The company has not yet formally appeared in the action, however, but yesterday several other defendants moved to dismiss the claims against them that were added in an Amended Complaint filed after the initial pleading arising out of: (1) the Digital Milennium Copyright Act (DMCA), 17 U.S.C. §1202 et seq.; (2) the Lanham Act (15 U.S.C. § 1125(a), governing trademarks); (3) an unfair competition claim under California Business and Professions Code § 17200; and (4) a claim for California common law unfair competition.

Staff USA Inc., Nordstrom, Inc., Amazon.com, Inc., and Zappos.com, Inc. are all accused in some respect of contributory infringement, that is, that they are selling the items made by Cavalli that the plaintiffs allege infringe on their street art.  In this motion, these defendants argue first that the DMCA does not apply because their alleged wrongdoing has no Internet component, that is, even if they sold the items over the Internet, the DMCA speaks only to actual electronic manipulation and infringement by those defendants themselves.  Since there is no allegation they they altered or copied the graffiti electronically, they argue, they cannot be liable under the DMCA.  The Lanham (trademark) argument is that to the extent that the plaintiffs accuse these defendants of a copyright violation, that is the sole remedy under federal law.  Likewise, the state law claims (unfair competition and California Business and Professions Code) are preempted by federal copyright law, they argue.

If successful, the motion would not resolve the entire case as to these defendants (the underlying copyright infringement claim would remain to be litigated), but it is clear that these defendants intent to defend themselves actively.

 

This post originally appeared in The Art Law Report blog.

Is it or isn’t it? An app to discern whether your bag’s the real thing.

Posted in Consumer Products, Fashion, Infringement, Technology, Trademark

Recently, Japanese IT company NEC Corp. announced that it is developing an app with image recognition technology that allows its users to determine, in real time, whether or not that long sought-after Hermès Birkin bag is a knock-off or notOnce a target of aggressive piracy itself, NEC created the app in response to the increasing importance of managing the mass production and distribution of products internationally.

The app – due to be released in 2016 – lets its users compare their photos of leather goods, such as handbags and wallets, to data stored on the app’s cloud-based database.  Extending existing biometric technology, NEC’s app can recognize “object fingerprints” (similar to human fingerprints, and also undetectable by the human eye), capturing details of fine patterns on leather, metal or plastic surfaces.  By comparing object fingerprints in user photos against images stored in the app’s database with impressive accuracy (an error rate of one in one million), the app helps users determine authenticity immediately.

Currently, there is nothing quite comparable available in the marketplace to help consumers identify counterfeit products.  While there exist various markers that brands will use to designate the authenticity of their goods (for instance, integrated circuit chips, hologram stickers, barcodes or other identification tags), these means can be both impractical to customers – not all leather goods bear one of these authenticating markers – and costly to the manufacturer.  Further, accurate identification can often require either an expert’s evaluation or dedicated equipment.

In light of the significant cost of counterfeit products worldwide (most recently anticipated by the International Chamber of Commerce to exceed $1.7 trillion by 2015), NEC’s app is a potentially promising development in the battle against counterfeiters.  But will it be able to reduce the problem in any meaningful way? Certainly, the app can be very helpful for consumers who purchase at brick-and-mortar retail outlets and care about purchasing genuine products.  With the snap of a photo, any user can instantaneously determine whether an item advertised as “authentic” is what it claims to be.  The app’s impact, however, may end where the internet begins.  With e-retail on the rise, counterfeiters have become increasingly cunning, with legitimate-looking websites and price points, and photos of authentic products lifted from sites of authorized merchants.  An unwitting customer could easily end up with a much different product than what was depicted online; and while the app may be useful in identifying that newly-acquired knock-off, the customer will likely have very little success in returning the fake product to its seller for a refund.  What’s more, as the app is used only on a voluntary basis, consumers looking to purchase counterfeit products will not be deterred from doing so.  Nevertheless, the mere threat of having counterfeits more easily detected by customers may help deter some level of counterfeiting activity.

In Mile-High Trademark Infringement Fight, Hershey Bests Colorado Marijuana Edibles Company

Posted in Dilution, Food & Beverage, Litigation, Trade Dress

Just in time for Halloween, the Hershey Company has settled its trademark infringement lawsuit against a marijuana edibles company that sold candy closely resembling several of Hershey’s iconic brands.

The settlement follows Hershey’s June 2014 suit in which it alleged that TinctureBelle, LLC, a Colorado-based manufacturer of marijuana edibles, sold THC-laced knock-offs of Hershey’s famous Reese’s, Heath, Almond Joy, and York brands. As seen in the images below, TinctureBelle marketed its candy products under confusingly similar trademarks and trade dress as Hershey’s originals—it sold “Hashees” instead of Reese’s, and “Ganja Joy” in place of Almond Joy.

              

              

Hershey also claimed that TinctureBelle’s use of similar marks and packaging was likely to dilute the distinctive quality of Hershey’s famous marks and create in the minds of consumers an association between the two companies. According to Hershey’s complaint, “individuals and families the world over trust Hershey and its various brands as signifying safe and delicious treats for people of all ages.” By drawing an association with a marijuana edible company, Hershey alleged that TinctureBelle’s products would tarnish Hershey’s famous brands, reputation, and goodwill. Even though recreational marijuana is legal in Colorado, Hershey contended that its adult-oriented connotation would harm Hershey’s family-friendly brands.

As a result of the settlement, TinctureBelle agreed to destroy all remaining products that bear confusingly similar names and packaging to those made by Hershey.

This case is not the only time Hershey has sued a marijuana edibles company for trading on its brand names. Hershey filed a similar lawsuit in June 2014 against a Seattle, Washington medical marijuana dispensary, which, among other things, sold marijuana-infused peanut butter cups under the brand name “Reefer’s.” That case is still pending.

As Halloween approaches, these cases have given parents a whole new type of “sugar high” to worry about. Not only have marijuana edibles companies faced lawsuits from candy makers, but they have also raised the ire of law enforcement and parents groups that fear children will mistake the marijuana edibles for familiar, name-brand candy. As this public service announcement from the Denver Police Department shows, marijuana-infused candy frequently is indistinguishable from traditional Halloween fare:

The case is Hershey Co. v. TinctureBelle, LLC, case number 14-cv-01564-WYD, in the U.S. District Court for the District of Colorado.

Better Late Than Never – 20+ Years After the Popularization of the Worldwide Web, a Court Finally Recognizes Trade Dress Rights in Website Design

Posted in Internet, Litigation, Trade Dress

A website’s distinctive appearance, layout, and design qualities—its “look and feel”—are often the most important and effective tools with which a company can make a first impression on consumers and market its brand. Now, according to one federal court, companies can use trademark law to protect their unique website designs from imitators.

On October 1, 2014, in Ingrid & Isabel, Inc. v. Baby Be Mine, LLC, the U.S. District Court for the Northern District of California ruled that the look and feel of a website used to market and sell products and services can constitute protectable trade dress under the Lanham Act. Here, the plaintiff, Ingrid & Isabel, Inc. (“I&I”), and the defendant, Baby Be Mine, LLC (“Baby”), were both online retailers of maternity clothing. I&I alleged that Baby had intentionally copied, in an attempt to imitate I&I, many specific characteristics of I&I’s website. These included: (i) the use of a logo in a “feminine script in pastel pink-orange hue”; (ii) photographs of models posed in similar positions, “featured from head to mid-thigh, wearing white tanks with jeans, with long naturally wavy hair”; and (iii) the colors, patterns, fonts, and wallpaper used throughout the website. The court held that Baby’s arrangement of similar, non-functional design choices on its website was, in part, sufficient to create a triable issue of fact as to the elements of I&I’s trade dress claim, and denied Baby’s motion for summary judgment.

This ruling represents a significant step forward for companies looking to protect their brand’s goodwill online. For the first time, a court has recognized that a website’s design can serve an important brand-identifying purpose worthy of trademark protection even though the website is not the product itself, but rather a marketplace in which products and services are sold. Previous case law suggested that a website could constitute protectable trade dress only if the website itself was the product. Courts had called the idea of protecting the trade dress of other websites a “novel theory,” but had not ruled on the issue.

With the Ingrid & Isabel ruling, the law seems to have caught up with the times, giving the trade dress of online stores the same protection as that for physical stores. In the same way the distinctive décor of a Mexican restaurant or the layout of a physical wine store can be protectable trade dress, the court recognized that the look and feel of a website—a virtual store—can be a protectable form of intellectual property. This is particularly important in today’s economy, as this year sales in U.S. online stores are expected to top $300 billion.

As we have stated before on Trending Trademarks, a “trademarked look” is not just a popular saying. By creating and consistently using a distinctive look and feel for its website to distinguish itself from competitors, a company may be able to protect its deliberate design choices from copycats. Still, it is yet to be seen whether other courts across the country will adopt this standard. Stay tuned to Trending Trademarks for future updates as the law develops.

The case is Ingrid & Isabel, LLC v. Baby Be Mine, LLC, case number 13-cv-01806-JCS, in the U.S. District Court for the Northern District of California.

No, Your Musical Cat and Artistic Dog Aren’t Going to Make You Rich

Posted in Copyright, Internet, Multimedia

The plight of David Slater, a British nature photographer, has recently been in the news.  Mr. Slater travelled to Indonesia in 2011 in order to photograph the crested black macaque.  During the shoot, one of the animals “stole” Slater’s Nikon camera and started playing with it.  Remarkably, the monkey ended up taking several “selfies,” one of which turned out strikingly clear.  Because of what happened subsequently we feel like we’re on safe ground in reproducing the photo here:

Once the photo was published and its origin became known, the Wikimedia Foundation elected to include it in its online collection of public domain images.  Slater objected on grounds that he had spent the time and money to purchase the equipment and travel to Indonesia for the photo shoot and, therefore, was the owner of the copyright in the shot.  Wikimedia countered that the “photographer” was the macaque and that works of art created by non-humans were not copyrightable and, therefore, properly belonged in the public domain.

Fast forward to last week, when the United States Copyright Office released a public draft of the Third Edition of the Compendium of U.S. Copyright Office Practices.  The Compendium is the administrative manual of the Register of Copyrights concerning the mandate and statutory duties of the Copyright Office under Title 17 of the United States Code. See 37 C.F.R. § 201.2(b)(7).  The new draft states:

The copyright law only protects “the fruits of intellectual labor” that “are founded in the creative powers of the mind.” Trade-Mark Cases, 100 U.S. 82, 94 (1879). Because copyright law is limited to “original intellectual conceptions of the author,” the Office will refuse to register a claim if it determines that a human being did not create the work.  Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 58 (1884).

As examples of non-copyrightable works, the draft Compendium cites:

• A photograph taken by a monkey.

• A mural painted by an elephant.

• A claim based on the appearance of actual animal skin.

• A claim based on driftwood that has been shaped and smoothed by the ocean.

• A claim based on cut marks, defects, and other qualities found in natural stone.

Sadly, you can add “music composed by a cat” and “soft sculpture created by a dog” to that list as well.  If you want to capitalize on your pet’s talents then you’ll have to stick to time-tested strategies like joining the circus or auditioning for a role on TV or in the movies.

IP Traps in Crowdfunding Proposals

Posted in Internet, Licensing, Registrations, Technology

The 2012 Jumpstart Our Business Startups Act (JOBS Act) opened the door to widespread use of crowdfunding for financing new projects and ideas. As a result of the JOBS Act, the use of crowdfunding platforms has increased exponentially. If you are considering a crowdfunding platform for your new venture, or if you are contemplating investing in a crowd-funded project, attention to intellectual property protection is critical. Here are a few simple ideas to keep in mind:

1.  Patents—Disclosing the details of an invention before filing a patent application may bar patent protection. For example, Kickstarter.com requires projects that involve the manufacture and distribution of “gadgets” to “show as much as they can about how they’re going to make their project, including things like a production plan, an estimated schedule, and any details you can provide for backers.” https://www.kickstarter.com/rules/prototypes. Also, with the passage of the America Invents Act, the U.S. is now a “first to file” country instead of a “first to invent.” To preserve rights, patent applications should be filed as early as possible. By filing a patent application prior to disclosing a project, the inventor can preserve patent rights and potentially avoid problems with both the statutory bar and potential conflicting applications. While U.S. patent law gives the inventor a year after disclosure in which to file, the same is not true in most of the rest of the world where a prefiling disclosure bars patent protection. Keep this in mind for projects that will rely on foreign marketing and revenue for their success.

2.  Trademarks—Use of a trademark on a business plan or project description is not “trademark use” for purposes of establishing a date of first use. Thus, posting a project with a proposed trademark could serves as an open invitation for trademark pirates in the U.S. and abroad to file for registration first. The same is true with respect to domain name registration. Consider filing a U.S. trademark application based on “intent to use” prior to making a public disclosure of your project. The ITU filing also gives you a six month priority period during which you can file for foreign protection and still obtain the benefit of your U.S. filing date. After these six months pass registration becomes largely a “first come, first served” proposition in most of the rest of the world where rights are based on who files first and not on who is the first to use a mark. For a painful example of what can go wrong, see our post on “Perfect Your Foreign Trademark Rights Early or Risk Losing Them Forever.”

3.  Copyrights—Copyright commences once a work is fixed in a tangible medium of expression. Registration is not necessary for protection, although it is a prerequisite for a domestic copyright owner who wishes to file suit for infringement in the U.S. If you are going to post copyrighted works in connection with your project disclosure or business plan, and if those works represent at least some of the value proposition for the project or business, consider filing for copyright registration. If you plan to use images, music, or other content from third-party sources in your proposal, be sure to obtain appropriate licensing/permission prior to posting such works publicly. Absent such licensing or permission there is a good chance that you are committing copyright infringement since your use of those works is obviously commercial in nature.

Depending on the project, the IP issues could be substantially more complex. Potential investors’ due diligence should include an analysis of the IP risk and/or exposure presented by the public proposal as the success or failure of the idea may well hinge on the strength and protection of those IP rights. Our attorneys are available to help with an analysis of potential IP risk and to create and implement a strategy to effectively and economically manage that risk. For more information, please contact the authors.

Trademarks, The UK, and The Rule of Threes

Posted in Dilution, Fashion, Litigation

A couple of weeks ago we wrote about recent European administrative and court cases that ended in bad news for U.S. trademark owners (Perfect Your Foreign Trademark Rights Early or Risk Losing Them Forever). Proving that bad things can happen in threes, UK Judge Colin Birss ruled last week that Victoria’s Secret’s “Pink” brand of lingerie infringes the trademark of Thomas Pink Ltd., a high-end clothier whose flagship store is located in London.

The parties had coexisted peacefully since VS introduced its “Pink” line in 2004, but Thomas Pink used VS’s opening of its first retail outlet in the UK in 2012 as justification to file suit.

Judge Birss held that VS’s use of the word “Pink” as its trademark would cause consumers to associate the two companies’ products to the detriment of the reputation of Thomas Pink. Rather than focusing on any likelihood of confusion, the judge’s reasoning was more along the lines that a U.S. court might employ in deciding a dilution case. Specifically, the court held that consumers might associate the high-end shirt maker and clothier with mass-market  underwear, all to the detriment of the reputation and cache of the THOMAS PINK brand. Similar to the court in the Glee case, this court also employed a line of reasoning similar to the U.S. doctrine of reverse confusion in finding that VS is a huge business that is likely to saturate the market with its advertising, leading to circumstances where customers might enter a THOMAS PINK store looking to purchase lingerie and to be disappointed upon discovering their mistake.

Unlike the trademark owners in the GLEE and PINTEREST cases, it is unlikely that VS could have anticipated such a dispute, especially in light of nearly a decade of concurrent use.  Nevertheless, the case once again highlights the importance of trademark due diligence prior to introducing a brand into a new geographic market.

Perfect Your Foreign Trademark Rights Early or Risk Losing Them Forever

Posted in Infringement, Litigation, Multimedia, Registrations

On July 18th a U.K. judge ruled that Twentieth Century Fox Films must change the name of its television show, “Glee”, because it infringes the name of a chain of British comedy clubs named “The Glee Club.”  The judge ruled in favor of the clubs on the theory of “wrong way round” confusion, which is known as “reverse confusion” in U.S. jurisprudence.  Traditionally, courts address likelihood of confusion in trademark cases by determining whether customers mistake the junior user’s products as coming from the same source as those of the senior user.  Reverse confusion, on the other hand, arises when the junior user so saturates the market with advertising and other promotion of its mark that the consuming public comes to believe that the senior user’s products come from the same source as those of the junior user.  Fox’s promotion and broadcast of “Glee” in the UK market was apparently so overwhelming that the judge believed that consumers were likely to believe that the comedy clubs were also Fox businesses.

The “Glee” case follows a January decision by the Opposition Division of the Office for Harmonization in the Internal Market (OHIM), the entity that administers the European Community Trademark (CTM), rejecting an opposition filed by the popular American website, Pinterest, against the UK company Premium Interest Ltd.’s application to register the trademark PINTEREST in the EU.  Premium Interest applied to register PINTEREST in the EU after Pinterest had commenced business and applied to register its mark in the U.S., but before Pinterest applied for registration in the EU.  Pinterest was unable to prove to OHIM’s satisfaction that its PINTEREST mark had sufficient “local significance” in the UK, so OHIM refused to recognize any unregistered rights in the PINTEREST mark in Europe.  The decision cast a serious cloud over Pinterest’s right to use its mark in Europe.

These cases are stark reminders of two very important strategic considerations:

  1. U.S. trademark owners should conduct trademark searches both domestic and international markets that are of potential significance, even if the foreign search is merely a “knock-out” search for identical marks; and
  2. U.S. trademark owners should develop and implement strategies for global trademark protection sooner, rather than later, in order to avoid ending up in the same position as Pintrest in the EU and, perhaps, elsewhere.

While international searching and registration are costly, the cost to either defend an infringement suit or change branding in an entire geographic region can be exponentially more.  With some forethought it is possible to spread the costs of searching and registration over several months or years.  Sullivan & Worcester’s Intellectual Property Group provides tailored, strategic advice regarding domestic and international trademark portfolio development.  For more information contact the author.

Las Vegas Sands Goes “All In” Against Online Trademark Infringement

Posted in Internet, Litigation, Multimedia

Las Vegas Sands Corp. (“Sands”), the international casino and hotel giant, is one of the most famous gaming brands in the world. To protect its famous mark from infringing uses, Sands recently left the casino and took to the internet.

On June 27, 2014, Sands filed suit in the U.S. District Court for the District of Nevada against the unknown registrants of thirty-five internet domain names who were allegedly using the Sands trademark, its Chinese equivalent (“Jinsha” characters, which translate to “golden sands”), and Sands’ Venetian Resort design trademark on websites “to falsely affiliate” with Sands. Sands’ complaint included claims of trademark infringement, false designation of origin, trademark dilution, and unfair competition.

In its complaint, Sands alleged that the defendants operate “a network” of Chinese-language websites that direct users to overseas online casinos not affiliated with or licensed by Sands. Each website prominently features Sands’ registered trademarks. Additionally, some of these websites also display photos and graphics of Sands hotels and casinos, such as the iconic Marina Bay Sands Hotel in Singapore. Screenshots of several of these websites are included as an exhibit to Sands’ complaint (available here). Sands argued that the defendants’ unauthorized use of its marks for commercial purposes diluted Sands famous brand and detracted from the “substantial goodwill and excellent reputation” the marks have come to represent.

The defendants registered their allegedly infringing websites through the domain name registrars eNom, Inc., Name.com, Inc., and GoDaddy.com, Inc. According to Sands, the defendants concealed their identities by using privacy protection services, such as Whois Privacy Protection Service, Inc. and DomainsByProxy, LLC, which are offered directly by the domain name registrars. These services allowed the defendants to register domain names using proxy data, instead of using their true names and contact information.

Three days after Sands filed its complaint, the district court issued a temporary restraining order requiring the domain name registrars to remove or disable the websites in question pending trial. The court also permitted Sands to subpoena the privacy protection services for the purpose of identifying the unknown defendants. In its order, the court stated that Sands would “suffer irreparable injury to its valuable trademarks” unless these domains were temporarily restrained. Moreover, the court reasoned that its order was justified because Sands “is likely to succeed on the merits” of its trademark infringement and false designation of origin claims if the case proceeds to trial.

Despite this order, Sands still faces the constant threat posed by infringing online content. This is particularly true because of the ease with which individuals can anonymously register websites that display infringing content and falsely associate with the Sands brand. The threat of trademark infringement is heightened online because users from all over the world—including countries like China, India, and Russia where intellectual property protections are weak or not enforced—can easily target their content to consumers in the United States. Due to the anonymity of the infringing parties and the variances in foreign legal systems, U.S. trademark owners may find it more difficult to procure enforceable judgments to prevent this activity. As a result, these infringing websites can dilute and tarnish the Sands brand, and allow their unknown registrants to free ride on the strength of Sands’ marks and divert consumers for commercial gain.

Nevertheless, by policing and pursuing known instances of infringing use, Sands has helped protect itself from a future defense of trademark abandonment. It has also successfully removed at least some infringing uses of its trademarks from the marketplace, which will help reduce consumer confusion and protect the Sands brand. The fact remains, however, that even with the protections and remedies afforded under U.S. law, the burden of enforcement for civil matters remains squarely on the shoulders of the trademark owner, whose ability to protect its rights in practice may be limited by its financial resources and its success in locating infringing parties.

The case is Las Vegas Sands Corp. v. Unknown Registrants of WWW.368.COM, case number 2:14-cv-01049, in the U.S. District Court for the District of Nevada.

Preclusive Effect of TTAB Likelihood of Confusion Rulings Up for Debate Before Supreme Court

Posted in Infringement, Litigation, TTAB Proceedings

In trademark infringement suits, how much weight, if any, should federal courts give to Trademark Trial and Appeal Board (“TTAB”) decisions on the likelihood of confusion between marks? Today, it depends—the circuits are split. That may soon change, however, as the U.S. Supreme Court last week agreed to take the issue under review.

Case Overview

On July 1, 2014, the Supreme Court granted certiorari review to B&B Hardware, Inc. v. Hargis Industries, Inc., a trademark infringement case from the U.S. Court of Appeals for the Eighth Circuit. In B&B Hardware, a divided panel of the Eighth Circuit ruled that the TTAB’s finding of a “likelihood of confusion” for purposes of trademark registration is a different issue than a federal court’s determination of a “likelihood of confusion” for purposes of trademark infringement. As a result, the Eighth Circuit ruled that the TTAB’s decisions should be given neither preclusive effect nor deference in infringement actions.

The appeal stems from a trademark dispute between B&B Hardware, Inc. (“B&B”) and Hargis Industries, Inc. (“Hargis”). B&B does business as Sealtight Technology, and sells self-sealing fasteners used in the aerospace industry under the mark “Sealtight.” Hargis does business as Sealtite Building Fasteners, and sells construction fasteners used in the metal construction industry under the mark “Sealtite.” B&B registered its mark with the U.S. Patent & Trademark Office, and, when Hargis subsequently applied to register “Sealtite,” filed an opposition with the TTAB.

The TTAB held for B&B. Applying the multifactor likelihood of confusion balancing test used by the Federal Circuit, the TTAB found that Hargis’s mark was likely to confuse consumers and denied registration. In light of its TTAB victory, B&B sued Hargis in federal district court, alleging trademark infringement and arguing that the TTAB’s likelihood of confusion finding should preclude the court from examining the issue. The district court disagreed and sent the issue to a jury, which ultimately found against B&B. B&B appealed based on issue preclusion, but the Eighth Circuit affirmed.

Circuit Split

As B&B noted in its petition for a writ of certiorari, circuits are split on whether TTAB decisions on the likelihood of confusion should be given preclusive effect or deference in trademark infringement actions in federal court. This split centers primarily on the TTAB’s analysis of the similarity of the trademarked products’ marketplace usage and channels of trade.

For example, the Eighth Circuit in B&B Hardware ruled that TTAB decisions should be accorded neither preclusive effect nor deference because the TTAB’s balancing test does not give sufficient weight to the trademarked products’ marketplace context. The Eighth Circuit reasoned that, in the trademark registration dispute, the TTAB did not decide “the same likelihood-of-confusion issues … as those brought in the [trademark infringement] action before the district court.” In particular, the Eighth Circuit noted that the TTAB largely “ignore[d] a critical determination of trademark infringement, that being the marketplace usage of the marks and products.” Indeed, when applying its multifactor test for likelihood of confusion, the TTAB determined that, based on the usage disclosed in B&B’s trademark registration, B&B’s “Sealtight” product moved in different channels of trade than Hargis’s “Sealtite” product, and that this factor weighed against B&B. Yet, the TTAB still found a likelihood of confusion and rejected Hargis’s application for registration based on the similarity of the marks and the underlying products. Ultimately, the Eighth Circuit concluded that, “While this approach may be appropriate when determining issues of registration,” for issue preclusion to apply in a federal trademark infringement action, the TTAB must have given the marketplace context greater weight.

Unlike the Eighth Circuit, every other circuit that has addressed this issue has concluded that TTAB decisions on the likelihood of confusion carry at least some weight in trademark infringement proceedings. For instance, the Third and Seventh Circuits have both given preclusive effect to such TTAB rulings in trademark infringement cases because the same issue—the likelihood of confusion—already had been “actually litigated.” Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 254 (3d Cir. 2006).

Similarly, the Second Circuit has also permitted issue preclusion, but has taken a more fact-specific approach to determining whether it applies. To receive preclusive effect, the TTAB’s analysis “must have taken into account, in a meaningful way, the context of the marketplace.” Levy v. Kosher Overseers Ass’n of Am., Inc., 104 F.3d 38, 42 (2d Cir. 1997). It is unclear, however, whether this standard requires the TTAB to have examined the products’ actual marketplace usage, rather than the usage anticipated or set out in an application or registration.

Finally, the Fifth and Eleventh Circuits have forged a middle road, denying issue preclusion but generally affording TTAB decisions a presumption of correctness “out of respect for the expertise of the TTAB.” Freedom Sav. & Loan Ass’n v. Way, 757 F.2d 1176, 1181 (11th Cir. 1985). These circuits dictate that courts should accept the TTAB’s likelihood of confusion findings “unless the contrary is established by evidence which carries thorough conviction.” American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 10 (5th Cir. 1974).

Given this circuit split, how should the Supreme Court rule? In an amicus brief in support of B&B’s petition for certiorari, the U.S. Solicitor General argued for a clear-cut issue preclusion standard based entirely on “whether the actual usage of the marks at issue in the infringement action differs materially from the usage of the marks set forth in the application for registration and in the opposer’s prior registration submitted in the [TTAB] proceedings.” Applying this standard to B&B Hardware, the TTAB’s ruling would receive preclusive effect if the usage disclosed in B&B’s initial registration and considered by the TTAB concerned the same goods and channels of trade at issue in the federal infringement action. Conversely, issue preclusion would not apply if the marketplace context at issue in the infringement action differed materially from that considered by the TTAB.

Implications for Practitioners

In the grand scheme of trademark law, the question of issue preclusion is a relatively narrow one. Nevertheless, the Supreme Court’s decision in B&B Hardware could have wide-ranging implications for practitioners and trademark owners.

On one hand, a decision in favor of the Eighth Circuit view that denies preclusive effect or deference to the TTAB ruling is likely to reduce the incentive to use that forum as a less-expensive means for resolving trademark disputes. On the other hand, a decision that provides for preclusive effect in all cases is likely to lead to the same outcome, since parties that perceive an advantage in the thorough review of marketplace factors will be forced to bring cases in the federal courts or risk not being able to present such evidence. Although not raised as an issue in B&B’s petition for certiorari, the Supreme Court will also have to consider what rule applies in cases involving intent-to-use applications where there is, by definition, no evidence of the applicant’s marketplace use to consider.

Trademark cases are highly fact-specific and do not often lend themselves to hard and fast rules like those reflected in the Eight Circuit’s opinion and, to a lesser extent, in the decisions from the Third and Seventh Circuits. The Second Circuit’s approach, which relies on a more fact-specific analysis that considers the extent and importance of marketplace evidence before deciding on preclusion, appears to be the most sensible approach. Regardless of the direction it takes, the Supreme Court’s decision should resolve the current circuit split in favor of a uniform approach and bring clarity to the applicable law.

The case is B&B Hardware, Inc. v. Hargis Indus., Inc., 716 F.3d 1020 (8th Cir. 2013), cert. granted, No. 13-352 (U.S. July 1, 2014).