Law stated as of 01 Jan 2020 • USA (National/Federal)
In V.V.V. & Sons Edible Oils Ltd. v. Meenakshi Overseas, LLC, the US Court of Appeals for the Ninth Circuit reversed the district court's dismissal in part, holding that a Trademark Trial and Appeal Board (TTAB) judgment did not have claim preclusive effect against claims of infringement, dilution, and unfair competition in federal litigation ( (9th Cir. Dec. 27, 2019)).
On December 27, 2019, in V.V.V. & Sons Edible Oils Ltd. v. Meenakshi Overseas, LLC, the US Court of Appeals for the Ninth Circuit reversed the US District Court for the Eastern District of California in part, holding that a Trademark Trial and Appeal Board (TTAB) judgment did not have claim preclusive effect against claims of infringement, dilution, and unfair competition in federal litigation ( (9th Cir. Dec. 27, 2019)).
This case involved the mark IDHAYAM allegedly used by V.V.V. & Sons Edible Oils Limited, an Indian company, to market sesame oil since the 1980s in several countries including the US. In 2009, Meenakshi Overseas LLC, a New Jersey-based company, filed a trademark application with the USPTO to register the mark for use with sesame oil. VVV opposed the application before the TTAB but failed to respond to the TTAB's order to show cause. The TTAB consequently entered judgment against VVV and dismissed its opposition with prejudice. Meenakshi's application subsequently issued as US Registration Number 4006654 (the '654 registration).
Meenakshi applied to register two additional marks featuring the word IDHAYAM and was awarded registration without any opposition from VVV.
VVV applied to register the mark IDHAYAM for use with edible oils shortly after and the TTAB denied the application due to likelihood of confusion with the Meenakshi marks. Two years later, VVV filed another application to register the mark IDHAYAM for use with cooking oils and was against denied due to likelihood of confusion with the Meenakshi marks.
VVV subsequently filed:
A petition for cancellation of all three Meenakshi registrations with the TTAB.
Suit in the Eastern District of California seeking damages and injunctive relief for unfair competition, trademark dilution, and trademark infringement as to the three Meenakshi marks.
Dismissed the petition against the '654 registration with prejudice based on claim preclusion.
Allowed claims against the other two registrations to proceed.
Stayed the case pending resolution of the district court case.
The district court:
Dismissed the claims against the '654 registration solely based on claim preclusion, finding the claims identical largely because VVV relied on facts and theories in its complaint that were:
in its opposition; or
otherwise available at the time of the TTAB proceedings.
Denied VVV's motion to amend its complaint to add a claim that the '654 registration was invalid due to fraud, holding that claim preclusion would bar that claim as well making an amendment frivolous.
Granted Meenakshi's motion to dismiss the claims for the remaining two marks based on VVV's non-opposition.
On appeal, the Ninth Circuit reversed the district court's dismissal of the claims related to the '654 registration and its denial of VVV's motion to amend its complaint, holding:
An exception to claim preclusion applies in cases where a party could not rely on a certain claim or remedy in a first action because there were limitations to the subject matter jurisdiction of the body before which that first action was brought, assuming without deciding that the district court correctly applied the elements of claim preclusion.
An inter partes proceeding before the TTAB is a limited proceeding where the TTAB is only allowed to determine the right to register a mark, not questions of use, infringement, or unfair competition.
It would be unfair to preclude VVV from litigating its claims when the TTAB's powers created barriers preventing VVV from asserting those claims in the TTAB action.
The claim preclusion exception in this case should be distinguished from issue preclusion which the US Supreme Court applied to TTAB proceedings in B&B Hardware, Inc. v. Hargis Industries, Inc., 575 U.S. 138 (2015). Under the B&B Hardware standard, a party is precluded from relitigating an issue in an infringement proceeding before a district court that is materially the same as an issue decided by the TTAB. Neither the parties nor the district court addressed issue preclusion during the proceedings.
The Ninth Circuit affirmed the district court's dismissal of claims related to the other two marks, holding that VVV's non-opposition to Meenakshi's motion to dismiss waived any challenge to the dismissal of those claims.