On March 24, 2015, in B&B Hardware, Inc. v. Hargis Industries, Inc., the US Supreme Court reversed the decision of the US Court of Appeals for the Eighth Circuit and held that a court should give preclusive effect to Trademark Trial and Appeal Board (TTAB) decisions on likelihood of confusion in related infringement litigation (No. 13–352, (U.S. Mar. 24, 2015)).

The parties have been litigating for nearly two decades concerning B&B Hardware, Inc.'s mark SEALTIGHT for metal fastener products for the aerospace industry and Hargis Industries, Inc.'s mark SEALTITE for metal fasteners for use in construction of metal and post-frame buildings. In 2003, B&B opposed Hargis's application for registration for SEALTITE based on likelihood of confusion. Invoking a number of the DuPont likelihood of confusion factors, in 2007 the TTAB sided with B&B and denied registration for SEALTITE. Hargis did not seek judicial review of the TTAB's decision in federal court.

Before the TTAB announced its decision, B&B sued Hargis for trademark infringement in the US District Court for the Eastern District of Arkansas. The jury returned a verdict in favor of Hargis, finding no likelihood of confusion. In post-trial proceedings B&B argued that the 2007 TTAB decision should be given preclusive effect on the issue of likelihood of confusion. However, the district court rejected B&B's argument, reasoning that the TTAB is not an Article III court.

On appeal the Eighth Circuit did not adopt the district court's limitation of issue preclusive effect to decisions of Article III courts, but affirmed the district court's denial of B&B's motion for judgment as a matter of law or alternative motion for a new trial for other reasons. The Eighth Circuit's primary objection to the application of issue preclusion was that the TTAB and the district court did not decide the same likelihood of confusion issues, specifically because the TTAB considers the DuPont factors in a likelihood of confusion analysis while the Eighth Circuit looks to the similar, but not identical, SquirtCo factors.

On appeal, the US Supreme Court held that issue preclusion should apply to TTAB decisions in trademark infringement actions when the issue decided by the TTAB is materially the same as that before a district court, assuming that the ordinary elements of issue preclusion are met. The Court looked to the Restatement (Second) of Judgments for a statement of these elements, including that the issue is actually litigated, there is a valid and final judgment, and determination of the issue is essential to the judgment.

Relying on the Restatement and the Court's own precedent, the Court first held that issue preclusion is not limited to Article III courts and presumptively applies to administrative agency decisions unless a statutory purpose to the contrary is evident. The Court rejected Hargis's statutory argument that the Lanham Act should be read narrowly as not authorizing issue preclusion, holding that nothing in the text or structure of the Lanham Act rebuts the presumption in favor of giving preclusive effect to TTAB decisions.

Regarding the Eighth Circuit's primary objection to issue preclusion based on the different factors and procedures used by the TTAB and the Eighth Circuit to assess likelihood of confusion, the Court held that:

On the issue of de novo review of TTAB decisions, the Court noted that issue preclusion could not apply to a TTAB decision in a district court action reviewing that decision, but that situation is different from the present case.

The Supreme Court's decision is important because it clarifies the weight of TTAB decisions on the issue of likelihood of confusion. The potential preclusive effect of TTAB decisions makes the stakes even higher for both parties in any opposition or cancellation proceeding. Counsel to both trademark applicants and opposers should be aware of this decision and its implications for their clients' trademark registration and enforcement strategies.