Jurisdiction Question Could Settle Hardware Dispute

Jurisdiction Question Could Settle Hardware Dispute

“Sealtight” and “Sealtite” are both construction materials. The former is a fastener common in the aerospace industry; the latter a screw used on metal buildings.

For more than 15 years, assorted tribunals have been trying to figure out whether these similar-sounding names are likely to “cause confusion” under the Lanham Act. If they are, Sealtite—the newer of the two products—cannot qualify for a trademark.

Now a cert petition in B&B Hardware Inc. v. Hargis Industries Inc. asks the U.S. Supreme Court to make sense of the matter. At issue is whether the Trademark Trial and Appeal Board’s finding that Sealtite could cause confusion prevents a district court from re-analyzing that question on a related claim.

The court has asked the U.S. solicitor general for his views, a signal that the justices are seriously considering granting review.

In B&B Hardware, the U.S. District Court for the Eastern District of Arkansas reached the opposite conclusion from the trademark board on the “likelihood of confusion” after considering it anew in a suit for injunctive relief.

Goodwin Procter appellate litigation co-chairman William Jay, who represents Sealtight-maker B&B, argues that issue preclusion should have banned the district court’s new finding. Under that doctrine, also called collateral estoppel, an earlier tribunal’s final judgment on an issue binds future tribunals in suits by the same parties.

Jay argues the U.S. Court of Appeals for the Eighth Circuit ignored this “bedrock principle” of civil procedure in its May 2013 decision.

“There is only one Lanham Act,” Jay wrote in his petition. “Applying the statutory phrase ‘likely… to cause confusion’ is the same endeavor, whether it occurs before the TTAB or in district court.”

Parties can litigate “likelihood of confusion” in two contexts. The trademark board, known as TTAB, considers the topic in deciding whether to grant an application. If the board answers yes to the question, it will deny the trademark. District courts also look at the matter in infringement suits.

Hargis maintains that issue preclusion does not apply when the same parties litigate before TTAB and the district court, because the two tribunals have different purposes and use somewhat different analyses.

The case began in 1996, when Hargis applied to the trademark board to register “Sealtite.” B&B, which trademarked its product in 1993, opposed the application. The board sided with B&B after weighing six factors on the “likelihood of confusion” question.

B&B sought to enforce its victory in district court, which, unlike the trademark board, can grant injunctive relief and damages. The jury there looked at the “likelihood of confusion” issue anew, and, using its own six-factor test, reached the opposite conclusion from TTAB.

The Eighth Circuit upheld the district court’s ruling for Hargis, and found that issue preclusion did not apply because the two tribunals used different tests. It said that the trademark board’s ruling did not adequately factor in that the products are marketed to different industries.

To Jay, the Eighth Circuit wrongly elevated its preferred test over the law of issue preclusion.

That approach, Jay argues, gives a losing party the opportunity to change its legal arguments—or pick a friendlier venue—and try the issue again. It also ignores that the trademark board, comprising administrative judges and Patent and Trademark Office officials, is the “expert tribunal” on this topic, he wrote.

Jay warns that the ruling introduces “significant asymmetry” into trademark practice. Three circuits would endorse issue preclusion under the facts of B&B, and two others would afford the trademark board a “heavy presumption of correctness,” he wrote. Moreover, TTAB gives preclusive effect to district courts’ findings on the topic, and the U.S. Court of Appeals for the Federal Circuit has ratified that approach.

At 37, Jay brings significant Supreme Court experience to the case. He was an assistant to the solicitor general for about five years, where he argued 11 cases before the high court.

Arkansas solo Tim Cullen, as well as Jacob Osborn and Robert Carroll, both of Goodwin Procter, also are on the B&B brief.

Jamie Schuman is a freelance writer and graduate of The George Washington University Law School.

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