Trademark Litigation in the Shadow of B&B Hardware

In 2015, the Supreme Court decided a trademark dispute, B&B Hardware, Inc. v. Hargis, Indus. However, in the light of more public trademark cases, such as the Washington Redskins trademark cancelation, the decision has not received much press. In many respects, this is not terribly surprising. B&B Hardware decided a very narrow issue of trademark litigation procedure. However, the consequences will be dramatic for litigants going forward.
B&B Hardware was an incredibly drawn-out dispute between two parties—B&B Hardware, Inc. and Hargis Industries. Hargis attempted to register the mark SEALTITE with the United States Patent and Trademark Office (PTO). B&B Hardware opposed the registration, declaring it too similar to their own SEALTIGHT, though the two marks covered different goods. The PTO uses a standard of “likely to cause confusion” to determine whether a mark should be registered in the face of opposition. The PTO found that the two marks were similar and were likely to cause confusion.
Concurrently with the PTO proceedings, B&B Hardware and Hargis were battling in district court on a claim of trademark infringement regarding the same SEALTIGHT / SEALTITE marks. In a claim of trademark infringement, an element of the claim is that the two marks “likely to cause confusion.” When the PTO ruled in B&B Hardware’s favor and refused to register Hargis’ SEALTITE mark, B&B Hardware moved for summary judgment in the district court proceedings, arguing that, under the doctrine of collateral estoppel, the issue of “likelihood of confusion” had been decided by a Court and that as a result Hargis was estopped from litigating the issue further. On appeal, the Eighth Circuit Court of Appeals rejected B&B Hardware’s argument, holding that the PTO used different factors to determine “likelihood of confusion” than the Eighth Circuit, and that thus collateral estoppel should not apply. Each of the judicial circuits uses a slightly different standard, all based loosely on the Second Circuits famous enunciation in Polaroid Corp. v. Polorad Elecs. Corp. The Supreme Court held that, regardless of the slight differences, the PTO could ground issue preclusion so long as the conditions of collateral estoppel are met.
In many ways, collateral estoppel is useful equitable doctrine, meant to preserve judicial economy and prevent parties from re-litigating issues that have been decided. It prevents litigants from having “two bites at the apple.” However, in the context of administrative proceedings before the PTO, there is debate about whether issue preclusion could or should be grounded. Certainly, the Supreme Court has raised the stakes of these proceedings. Notably, many parties do not even bother to register their trademark with the PTO. In fact, there are many who argue that trademark lawyers for registration are not needed. This, of course, assumes that certain registrants are even in the financial position of considering hiring a lawyer, many of whom are not.
In light of B&B Hardware, the PTO will become a new battleground for the issue of “likelihood of confusion.” There is some benefit in this, as the administrative judges who make such decisions are experts in the law. However, as discussed earlier, the disadvantage is that this may force registrants to hire lawyers to ensure that the registration process goes smoothly, which may not be a financial possibility for many potential registrants.
Additionally, B&B Hardware leaves numerous procedural questions unanswered. If, as many experts predict, the PTO become the gatekeepers of trademark infringement litigation, how should PTO procedures change to comport with Constitutional requirements in the law? For example, no live testimony is permitted in the PTO. Furthermore, juries are not available since administrative judges make the ultimate determination on the issue of registration. Notably, the Supreme Court in B&B Hardware stated specifically that they would not consider whether issue preclusion from a PTO decision would deprive a party of a seventh amendment right to jury trial since the parties did not raise the issue beforehand.
In conclusion, the B&B Hardware decision may have its merits in terms of judicial economy and “equity” as the law understands it. However, the decision is poised to be a trap for less sophisticated or less financially capable parties who attempt register trademarks without lawyers or who do not register their marks at all. Furthermore, other substantial legal issues remain unanswered. It is worth noting that, as of 2017, relatively few courts have applied B&B Hardware. However, this does not shed light on the state of litigation and proceedings before the PTO. Certainly, B&B Hardware will be revisited.
 
Dennis Mai is a JD candidate, 2018, at NYU School of Law.