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Slowly but surely, the extension of the Supreme Court’s 2014 Octane Fitness v. LLC v. Icon Health and Fitness, Inc. decision to trademark claims is gaining traction among federal appellate courts. The Octane Fitness decision addressed the standard for determining whether a case is “exceptional” under the Patent Act and therefore eligible for an award of attorney fees. Earlier this week, the Fifth Circuit jumped on the bandwagon with its decision in Baker v. DeShong, Case No. 14-11157 (May 3, 2016)(available here).

Baker operates the HIV Innocence Group, which provides medical, legal, and investigative services for individuals in criminal and civil suits who have been accused of intentionally or recklessly infecting another person with HIV. Baker owns a trademark registration for the HIV INNOCENCE GROUP mark. He also does not like to be criticized. When Jeffrey DeShong created a website criticizing the HIV Innocence Group, Baker sued him for trademark infringement.

The District Court granted DeShong’s Motion to Dismiss on the ground that the allegations failed to support a claim of likelihood of confusion (discussed in more detail here). Following that ruling, DeShong requested an award of attorney’s fees, arguing that the case was “exceptional”. However, the District Court denied the motion, citing prevailing precedent that to qualify as “exceptional,” a case must be brought in bad faith.

The Fifth Circuit reversed the decision, ruling that the Octane Fitness Court “provided clear guidance” that to be exceptional does not require a claim to be brought in “bad faith.” Instead, an exceptional case is a case that “stands out from the others with respect to the substantive strength of a party’s litigation position” or with respect to “the unreasonable manner” of a party’s actions in litigation.

Although DeShong requested that the Fifth Circuit also find that the claims qualified as an exception for an award of attorney fees, the Fifth Circuit remanded to the District Court to decide the issue. With this ruling, the Fifth Circuit joins the Third Circuit (Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303 (3d Cir. 2014)) and the Fourth Circuit (Georgia-Pac. Consumer Prods. LP v. von Drehle Corp., 781 F.3d 710 (4th Cir. 2015). The Sixth Circuit has not squarely addressed the issued, but remanded a case to the District Court to “assess the applicability” of Octane Fitness to the request for attorney fees (Slep-Tone Entertainment Corp. v. Karaoke Kandy Store, Inc., 782 F.3d 313 (6th Cir. 2015)).

While no circuit court has reached a contrary decision, there has been disagreement among district courts. Most district courts have applied Octane Fitness to trademark infringement claims, but at least one district court has rejected the applicability of Octane Fitness to non-patent claims (Romag Fasteners, Inc. v. Fossil, Inc., 2014 WL 4073204 (D. Conn. Aug. 14, 2014)). There the court concluded that Second Circuit precedent requiring “bad faith” was still good law and therefore binding upon the court.

Although it is possible other courts may choose to reject the applicability of Octane Fitness to trademark infringement claims, this seems unlikely in light of the trend among the circuits. The Fifth Circuit’s decision lends further support to this notion.

Of course, the standard adopted in Octane Fitness does not guarantee that it will be easier to obtain an award of attorney’s fees. We previously discussed a Washington district court decision refusing to grant an award of fees under the Octane Fitness standard.

At a minimum, however, these decisions caution trademark infringement plaintiffs to objectively examine the strength of their claim. They also provide victims of unreasonable or meritless claims of infringement with some potential leverage: the threat of forcing the plaintiff to write a check for the defendant’s legal fees.

Tomita Technologies USA, LLC was handed a devastating loss earlier this week in its long-enduring battle with Nintendo over stereoscopic (i.e. 3D) image technology.  Back in 2013, Nintendo lost a patent infringement jury trial in the Southern District of New York and was ordered to pay $30.2 million in damages to Seijiro Tomita, the inventor of United States Patent No. 7,164,664.  Roughly speaking, the ‘664 Patent provides a way to display 3D images without the need for 3D glasses.  Tomita had accused Nintendo’s 3DS system of infringing the patent.

Nintendo appealed the original jury verdict to the United States Court of Appeals for the Federal Circuit.  The Federal Circuit then reversed the construction of a critical claim term underlying the original judgment, which required a new trial in the district court.  The district court concluded in the new trial that Nintendo did not infringe the patent because the means by which the 3DS accomplished its stereoscopic image was different (and frankly, more sophisticated) than the means disclosed and claimed in the ‘664 patent.

Ultimately, Tomita lost in this case as a result of something known in patent law as “means-plus-function” claiming.  Dennis Crouch over at Patently-O previously did a nice summary of the what “means-plus-function” claiming is, and why such claiming is starting to fall out of favor with patent applicants.  When you draft a patent claim that identifies a functional attribute of your invention, the protection of the patent is generally limited to the particular structure you have used and disclosed to accomplish this function.  Tomita’s invention depended primarily on hardware components to accomplish the image offset function, whereas Nintendo relied primarily on software algorithms.

Aside from resulting in a bad day for Tomita, this lawsuit highlights again the difficulties that we are currently facing with regards to intellectual property protection for functions that are accomplishable with software.  As it currently sits, the United States does not have any clear protection scheme for protecting software rights.  Rather, software is “protected” through a mishmash of patent, copyright, trademark, and trade secret law, none of which were truly designed to work for software.  (See here.)

Our intellectual property regime also has problems with trying to protect inventions in a world where technological capabilities are expanding at break-neck speed.  Often times, important inventions from the “analog” world can be replicated through software or digital means and in the case of a “means-plus-function” patent, that will frequently be sufficient to avoid infringement.  At some point, we need to make a policy decision as to whether we think this is okay.

To be clear, I’m not suggesting that the differences between the Nintendo and Tomita functions were merely one using software while the other used hardware; there appeared to be additional differences as well.   However, I think a case like this presents a good opportunity to ask the questions about how intellectual property rights should be considered in our environment of constantly evolving technological capability.  We need to find a new balance between incentivizing invention without creating undue obstacles to innovation.

–Dave Holt, Solicitor & Alex Watt, Partner, Browne Jacobson LLP

In the European Union, Coca-Cola has recently followed in the stumbling footsteps of fellow global super-brand Nestlé, falling at the final hurdle in its attempt to register the three-dimensional shape of its iconic ‘Coke bottle’ in classes 6, 21 and 32. You can read the judgment in full here. The shape mark in question (the “Mark”) was depicted as below:

Cke

 

There is much to take from this decision and in reviewing it you will notice that the Mark applied for has the recessed banding we expect from the coke bottle, but does not have any of the particular features or detailing, particularly missing the contoured fluting, that we might usually expect to see on a ‘Coke’ bottle. The claim for that slightly more generic-looking bottle shape, rather than the better-known and distinctive bottle shape, may ultimately have proved to be Coke’s undoing.

Interestingly Coca-Cola also sought to register this mark in Class 6, being “Common metals and their alloys; metal building materials; ironmongery, small items of metal hardware; goods of common metal not included in other classes; metallic bottles”. Perhaps we have missed out on the opportunity for a new, innovative metal coke bottle or coke bottle statue…

The Decision

Coca-Cola appealed the decision of 27 March 2014 made by OHIM’s Second Board of Appeal (“contested decision”), which rejected registration of the Mark, and held:

  • The average consumer of the mass drinks market was not particularly attentive and was likely to have ‘imperfect recollection of trade-marked products’;
  • The Mark as submitted was devoid of distinctive character (article 7(1)(b) of Regulation No 207/2009 (the “Regulation”)) as regards the goods concerned, particularly as the features were common to the shape of the contested goods in classes 6 and 21 and packaging of the goods in class 32;
  • The Mark in question had not acquired distinctive character through use, and the survey submitted by Coca-Cola was held to contain leading questions, mathematical errors, and was conducted by a former director of Coca-Cola. On this basis, the evidence was held to be unreliable and not of probative value;
  • The Mark was, in fact, rarely depicted in the evidence submitted. Instead Coca-Cola submitted evidence of their contoured bottle with fluting, and as such, were of little use in demonstrating acquired ‘distinctive character’ (Article 7(3) of the Regulation).

Coca-Cola sought to have the contested decision annulled (and sought costs, naturally) on the following grounds:

First Plea (inherent distinctiveness)

  • Although bottles are functional, many bottles are designed to attract consumer attention in a crowded market;
  • The Second Board of Appeal should have considered the combination of the specific features, and the effect of the Mark as a whole; and
  • The Second Board of Appeal should not have considered that the use of a distinctive word mark in combination with the Mark means a product is devoid of distinctive character alone (Freixenet v OHIM EU:C:2011:680 para. 42 cited).

Interestingly, the decision in Nestlé v Cadbury supports the argument that a shape must be distinctive ‘in and of itself’, rather than simply being associated with other trademarks. As Coca-Cola rightly suggested, this does make the threshold very high for registration of a trade mark, which the Mark arguably does not clamber over.

The court held that the criteria for assessing a three-dimensional shape mark are no different to any other trade mark. However, the court noted that the perception of a consumer of a three-dimensional mark is not necessarily the same as a word or figurative mark which is independent of the goods it designates.

The court decided in relation to the first plea that both the constituent elements of the Mark, and the Mark as a whole did not depart significantly from the norms of the sector, and no elements rendered the mark distinctive enough to allow consumers to infer its commercial origin. The first plea was therefore dismissed.

Second Plea (acquired distinctiveness)

Coca-Cola went on to plead that the large volume of evidence provided to OHIM and to the court demonstrated acquired distinctive character, particularly due to the broad use of the mark and the survey evidence demonstrating association of the Mark with Coca-Cola. Coca-Cola also suggested that the use of the bottle with contoured fluting did give acquired distinctive character to the Mark, on the basis that the Mark is a component thereof.

The court noted that the Mark needed to have “become distinctive through use before the application for registration was filed” (para.67, emphasis added), and that distinctive character cannot be proven simply by furnishing sales volumes figures and advertising material. The court reiterated that for a mark to have acquired distinctiveness under Article 7(3) of the Regulation, the relevant consumers “or at least a significant proportion thereof, identifies goods as originating from a particular undertaking because of the mark”.

Interestingly, the court held that the sign must have distinctive character throughout the European Union, and that a lack of distinctiveness in a single member state may be enough to refuse registration. Coca-Cola only surveyed in 10 of the 27 Member States, which the court held to be less than a ‘significant proportion’ of the relevant public for the Mark. The other evidence submitted by Coca-Cola was also found to be insignificant on various grounds.

The court, reiterating the need for the Mark to be a clear indicator of commercial origin, confirmed that Coca-Cola had not demonstrated the Mark had acquired distinctiveness, and thus the second plea was unfounded.

Conclusions

In much the same way as was found in the recent Nestlé v Cadbury decision, the general court has set out a clear statement to applicants that their marks must be clearly indicative of commercial origin, and that mere recognition, whether alone or in combination with other marks is unlikely to be sufficient for acquired distinctiveness. Therefore the position remains that three-dimensional shape marks are difficult to attain. However, one might ask: if the Coke bottle is not a sufficiently distinctive shape – what three-dimensional shape mark will be distinctive?

However, in our view, we consider that it might well have been possible to register the three-dimensional Coke bottle shape had Coke not been so ambitious in their application and applied only for the more distinctive fluted bottle-shape that was referred to within much of their evidence – rather than the more generic shape in their application. It is also notable that survey evidence has once again been found unsatisfactory, which should serve as a reminder to applicants for such marks that there is a high bar, and that they will need to think very carefully about their approach to survey evidence, ensuring that it is comprehensive (particularly in respect of community marks) and carried out by a truly independent party.

Section 2(d) of the Trademark Act is the statutory basis for refusing registration based on likelihood of confusion with another mark. It is invoked on an ex parte basis by USPTO Examining Attorneys, and it is also raised in the context of inter partes cases between adversaries.

When an applicant seeking to register its mark is refused registration based on Section 2(d), it is not uncommon for applicant’s counsel to immediately argue for coexistence, explaining all the reasons why no likelihood of confusion exists, and sometimes that strategy will work.

My preference is to pause after receiving the refusal, to assess the strength of the refusal, to examine the cited mark and registration or application, to consider the relative priority positions, and determine the real necessity for and consequences of arguing no likelihood of confusion.

For example, if it could be determined that the cited registration is actually “deadwood,” the mark no longer in use and abandoned, wouldn’t it be better to hit the pause button on the refusal while the deadwood registration is removed through the filing of a petition to cancel?

Using this approach could prevent the narrowing of applicant’s trademark rights and protect the applicant from taking public positions that could be used against it by adversaries in a future enforcement matter. This strategy is frequently used by sophisticated trademark counsel.

What if the cited prior registration is not “deadwood” though, and the applicant actually has priority of use — if so, and the cited registration is not yet five years old, then it’s fair to ask why arguing for coexistence makes any sense at all, at least as an opening strategy.

Many experienced trademark attorneys with those facts would recognize the leverage given by the refusal and, at a minimum, reach out to counsel for the owner of the cited mark to discuss the multitude of options available to applicant as the senior user of the mark in question.

A tool infrequently used by trademark counsel is the option of a petition for partial cancellation, by invoking the remedy found in Section 18 of the Trademark Act. This can be a powerful tool when an applicant lacks priority and/or the cited registration is more than 5 years old.

Under Section 18, the TTAB may modify or partially cancel a cited registration by limiting and narrowing the specified goods or services. This can be a particularly powerful tool, when an applicant’s options are otherwise quite limited, without priority, or if facing an old registration.

To properly employ this tool, applicant’s counsel must plead and prove that the proposed narrowing in the cited registration would avoid a likelihood of confusion, and that the proposed narrowing of the goods/services description is consistent with the actual marketplace usage.

Think of it as a way to narrow a blocking registration enough to allow for coexistence of applicant’s mark on the Principal Register — it is a way to cure the problem of an over-broad registration, making room for your client’s pending application, if the facts support coexistence.

Even if an applicant may not have the appetite for seeing a Section 18 petition for partial cancellation through to conclusion, it can be a powerful attention-getting device that may level the playing field and spur a dialogue between the parties to explore the possibility of consent.

On a related note, in the context of possible strategies ripe for an applicant whose mark has been opposed by a registration owner having an over-broad description of goods/services, you may recall that we wondered out loud whether Section 18 might become a creative solution:

“I’m looking more forward to hearing about what in-house, corporate trademark counsel think about the decision and how it will influence their trademark enforcement strategies. . . .

But, in the meantime, what no one seems to be talking about (yet) is how the Supreme Court’s B&B Hardware decision might impact the lingering concerns surrounding trademark bullying. (I haven’t seen anyone talking about Section 18 counterclaims as a creative response strategy either, but we’ll save that topic for another day).

Although trademark bullying concerns were not before the Supreme Court, it seems likely this decision scored a victory for those who might fall into the category of trademark bullies. And, as you may recall, a couple of years ago, the Supreme Court didn’t allow trademark bullying concerns to influence its interpretation of the laws in question there: Supreme Court Upholds Nike’s Promise to “Break the Wrist, and Walk Away”.”

To the extent you’re in the Twin Cities or can get here fast, we’ll explore this topic more in tomorrow’s continuing legal education program called “Mastering U.S. Trademark Registration Practice,” during my session at 2:35 PM session entitled: “Strategic Use of Trademark Trial and Appeal Board Proceedings to Advance Trademark Registration Goals.”

We hope to see you there, for details on registration, here is the link to the Minnesota Continuing Legal Education site. If you can’t make it tomorrow, the video replay of tomorrow’s live session is Monday March 7, 2016.

SilverPatron

When we write about non-traditional trademark enforcement here on DuetsBlog, we almost always are referring to the protection of non-traditional marks like product configurations, product containers, product packaging, color marks, scent marks, tactile marks, and other non-verbal indications of source for a product or service. But, today we’re adding a little twist to our normal discussion of non-traditional trademark enforcement.

Last month, the PATRÓN tequila brand poured a non-traditional trademark enforcement action on the CASA NOBLE tequila brand, alleging likelihood of confusion and dilution of PATRÓN’s federally-registered and distinctive bottle design trademark. CASA NOBLE’s answer is due today.

Several aspects of this enforcement action are non-traditional, beyond the fact that PATRÓN seeks to enforce rights in its bottle design, i.e., a distinctive product container and a form of product packaging, that is by definition, a classic non-traditional trademark.

Given the variety of assertions mixed in by PATRÓN that go well beyond whether CASA NOBLE has the right to register a particular bottle design (apparently used in commerce since 2008), you’d think the action might have been filed in federal district court with claims of trademark infringement and dilution, unfair competition and passing off, instead of simply with the USPTO. Something tells me this action eventually will spill into federal court too.

PATRÓN is not only agitated and stirred by the shape of CASA NOBLE’s bottle, but it seeks to label CASA NOBLE with a questionable motive and intent, blending in allegations about trade dress, copying, passing off, use of a similar advertising slogan, and even unusual allegations about how CASA NOBLE’s parent hired PATRÓN’s previous advertising agency (Cramer-Krasselt), “because of its close familiarity with all aspects of the advertising and promotion of the PATRÓN brand” and who “had been charged with promoting the PATRÓN brand” until August 2014:

“Thus, by copying the famous PATRÓN Bottle Design Mark; adopting the slogan ‘Perfection,’ which is very similar to Patrón’s ‘Simply Perfect’ slogan and its senior use of ‘Perfection’; adopting the word ‘crystal’ in the face of Patrón’s senior use of that word; and hiring the same advertising agency that Patrón formerly used to advertise and promote its tequila, Applicant has engaged in a deliberate and willful strategy to pass off its tequila as being sponsored by, connected to, or associated with Patrón and the famous PATRÓN Tequila brand.”

While I suppose much of this potentially could be generally relevant to the question of intent, in the likelihood of confusion analysis, it seems to go well beyond the basic question of whether Casa Noble’s application to federally register its bottle design on the right below is too close to PATRÓN’s federally-registered bottle design mark on the left:

Patron Bottle Design U.S. Reg. No. 2,147,067
Patron Bottle Design
U.S. Reg. No. 2,147,067
Casa Noble Bottle Serial No. 86/383,941
Casa Noble Bottle
Serial No. 86/383,941

 

 

 

 

 

 

 

 

 

 

 

 

 

Of course, strength and context will be important in answering that question; provided the samples of alternative and competing tequila bottle designs submitted by PATRÓN are truly representative of the range of designs available in the marketplace, CASA NOBLE will have some serious explaining to do when it comes to its own design choices:

TequilaBottlesTequilaBottlesMore

Nevertheless, if I were in CASA NOBLE’s camp, I’d be anxious to explore any design changes to the PATRÓN bottle over time — is it just me, or do you too have questions about whether the current SILVER PATRÓN bottle actually shows use of the mark as registered and appearing in the above drawing?

I’d also be pretty interested in whether PATRÓN is aware of any instances of actual confusion over the past seven years, presumably if any existed, they’d be referenced in the opposition.

And, if the CASA NOBLE first use date of 2008 is accurate, doesn’t that mean the allegedly infringing bottle was created at least six years before PATRÓN’s previous advertising agency was hired by CASA NOBLE?

No doubt, this will be an interesting one to sip on from time to time, any predictions on how long it stays in the USPTO?

PatronOpposition

For those interested in learning more about the valuable benefits of federal trademark registration and how to successfully navigate the registration process at the USPTO, it’s time to mark your calendars for an upcoming educational opportunity in Minneapolis on Tuesday February 16, 2016.

Here is the official brochure for the event, here is an online link for information on how to register for this event, and a listing of the talented panel of speakers for the day.

Attendees of this live Minnesota Continuing Legal Education full day seminar will learn how to overcome a wide variety of grounds for refusal, benefit from strategies and valuable tips for handling ex parte appeals and requests for reconsideration, understand how TTAB proceedings can help a brand owner’s registration efforts, especially in light of the Supreme Court’s recent B&B Hardware decision, and receive valuable insights from former USPTO Examining Attorneys.

As an added bonus over the lunch hour, attendees will learn how to develop a reputation for thought leadership using various social media tools, as I moderate an engaging discussion with these social media mavens: Aaron Keller of Capsule, Shayla Stern of Fast Horse, Seth Leventhal of Minnesota Litigator, and last, but certainly not least, Ron Coleman of Likelihood of Confusion.

We’re counting the days, and we hope to see you there . . . .

It’s that time of year again, the Midwest IP Institute is back in action for the 14th year in a row, and if you’re attending you’ll receive this little gem, the 13th Edition of The IP Book:

2015IPBookCover

So, don’t miss it, Gerard Rogers, Chief Judge of the TTAB will provide us with News from the Trademark Trial and Appeal Board, and he will also share his perspectives on the implications of the Supreme Court’s B&B Hardware Decision on TTAB practice.

Our friend John Welch of the TTABlog will be joining me on the podium for the annual review of trademark cases: The Year in Trademark Law.

In addition, my partner and fellow DuetsBlogger Brad Walz will provide valuable insights on how to avoid the cost and expense of trademark oppositions altogether by utilizing ex parte Letters of Protest at the USPTO.

Please join us this Thursday and Friday at the Minnesota Continuing Legal Education Center in downtown Minneapolis for two days of intellectual property education and networking.

Finally, if you’re wanting a preview of the B&B Hardware discussion, there is a webinar tomorrow you won’t want to miss, my partner and fellow DuetsBlogger Tiffany Blofield is teaming up again with Caldwell Camero of General Mills to discuss their perspectives on how the Supreme Court’s B&B Hardware decision has changed our trademark world.

In case you missed the webinar from last year, we’re having another Strafford IP webinar on “Navigating Trademark Oppositions and Cancellation Proceedings at the TTAB,” next Tuesday August 18, at noon CST. Here are the details for the webinar.

This year, we’ll have the benefit of knowing how the Supreme Court decided the B&B Hardware case, so please join us. I’m presenting again with two very capable TTAB practitioners: Linda McLeod of Kelly IP in Washington, D.C., and Jonathan Hudis of Quarles & Brady’s D.C. Office.

To brush up on the impact of the B&B Hardware decision, you might want to review these posts beforehand:

Likelihood of Preclusion: Fallout From the Supreme Court Ruling on Likely Confusion

On Unintended Consequences: Will the B&B SCOTUS Ruling Encourage Trademark Bullies?

Channeling Justice Ginsburg of U.S. Supreme Court on the Right to Register a Trademark

(Just) the Right to Register a Trademark

The first three to post a comment here may attend for free, as my guests, without paying the typical registration fee — we hope you can join us!

A good general business practice is to apply to register trademarks early. You’ll find out if there is an issue. You’ll have time to change rather than having to take everything off the shelf under the threat of a lawsuit. Yet a recent decision from the Trademark Trial and Appeal Board in New York Yankees Partnership v. IET Products and Services, Inc. presents a good example of when you’re better off avoiding the application process all together.  It also raises some interesting questions in light of the B&B Hardware ruling (doesn’t everything these days?)

At issue were two applications, a standard character mark for the phrase THE HOUSE THAT JUICE BUILT along with a design logo of a syringe wearing an Uncle Sam hat (shown below, left). Both applications identified apparel and baseball caps. The New York Yankees opposed, asserting claims of likelihood of confusion, false association, and dilution by blurring based upon prior rights in the phrase THE HOUSE THAT RUTH BUILT along with the logo of a baseball bat wearing an Uncle Sam hat (shown below, right).

Combined Juice Logos

In case you’re not up to date on your slang, “juice” is hip way to reference steroids. So when you hear that an athlete is “juicing,” it’s likely a reference to allegations or admissions that the athlete has used steroids (although there’s an outside chance they recently purchased a new blender).  A discussion of the steroids problem in baseball could fill a number of pages (enough for a congressional report, perhaps). While the problem was rampant among players for all teams, some of the most well-known players during the steroid era played for the New York Yankees, including Roger Clemens, Andy Pettitte, Gary Sheffield, David Justice, Jose Canseco, Jason Giambi, and, most recently, Alex Rodriguez.

The applicant’s primary defense was that its marks were a parody of the Yankees logo and stadium nickname, and therefore were protected by Section 43(c)(3) of the Lanham Act, which provides that:

The following shall not be actionable as dilution by blurring . . . any fair use . . . of a famous mark by another person other than as a designation of source for the person’s own goods or services.”

The Board took this opportunity to clarify the case law regarding the use of the parody defense in Trademark Trial and Appeal Board proceedings. In the Board’s 2012 decision of Research in Motion Ltd. v. Defining Presence Marketing Group Inc., the Board had stated that it would “assess an alleged parody as part of the circumstances to be considered for determining whether the [opposer] has made out a claim for dilution by blurring.” In doing so, the Board relied upon the Fourth Circuit decision of Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC.

The Board reasoned that because the Lanham Act’s fair use defense is limited to use “other than as a designation of source,” it would be “virtually impossible to conceive of a situation where a parody defense to a dilution claim can succeed in a case before the Board” (But you’re saying there’s a chance?).  As a result, the Board rejected the defense and found the applied-for marks to be likely to dilute the Yankees’ marks.

The case was submitted on brief on June 12, 2014, well before the B&B Hardware decision. Yet the Board did not issue its decision until nearly a year later on May 8, 2015, approximately a month and a half after the Supreme Court issued the B&B Hardware ruling. In light of this timing, the B&B decision may not have played a role in the outcome of this decision.

However, it is worth noting that the Board declined to reach the Yankees’ likelihood of confusion claim, instead issuing a ruling on the claim of dilution by blurring. It is often the reverse, because the evidentiary standards involved in a claim of a likelihood of confusion claim are easier to meet than the standards for a dilution claim. This is particularly true with respect to the evidentiary showing required to establish fame for dilution. In light of B&B Hardware, will the Board be more likely to abstain from reaching likelihood of confusion claims in the future?

Also, the Board seemed to make a concerted effort to identify the facts and issues which it did not consider in reaching its decision. The result is that if the Yankees sue the applicant for trademark infringement, the applicant need not be concerned about a preclusive ruling from the Board regarding likelihood of confusion or the applicability of the parody defense to the claim of dilution.

It appears that the Board may be taking care to provide clear guidance on the issues that were (and weren’t) decided.  While we’ve certainly been critical of the B&B decision on this blog, perhaps there is a silver lining after all.

Move over likelihood of confusion, there is another sheriff in town, at least when it comes to looking for guidance on best practices and strategic considerations for a brand owner’s clearance, registration, protection and enforcement of trademark rights in the United States.

As if us dedicated trademark types didn’t already have enough likelihoods (confusion, dilution, success, jurisdiction) to consider, weigh and balance. Dabblers probably best step aside.

Now, thanks to the recent Supreme Court decision in B&B Hardware, Inc. v. Hargis Industries, Inc., we must factor in the likelihood of preclusion too, throughout the trademark life cycle.

After noting that “the idea of issue of preclusion is straightforward,” but admitting it “is challenging to implement,” the Court broadly held that “a court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met.” (emphasis added)

This broad holding begs the question of what other types of issues decided by the TTAB — beyond the likelihood of confusion question before the Court — may result in the application of issue preclusion. Priority? Inherent Distinctiveness? Genericness? Functionality? Descriptiveness? Acquired Distinctiveness? Fame? Dilution? Intent to Deceive? Bona Fide Intent to Use? Fraud? Intent to Deceive the USPTO? Intent to Resume Use? Abandonment? Laches? Deceptiveness for False Advertising? False Suggestion of Connection for Right of Publicity Violations?

As to the likelihood of confusion question (which the Court found to be fundamentally the same for registration and infringement purposes), the Court unclearly directed: “So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.” (emphasis added) As is typical when the Supreme Court speaks, more questions are raised than answered.

Does the Court contemplate anything other than the potential for unregistered common law rights and restricted channels of trade when it refers to “usages adjudicated by the TTAB”? What about applications and registrations for typed drawing marks versus stylized marks? What about the presence of house marks and/or famous trade dress on packaging, but not included in the drawing of the applied-for mark? What about goods listings that are appropriate under USPTO rules (e.g., jewelry), but broader than what might be in actual use to support the registration or application (e.g., lapel pins)? Does a cautious following of B&B Hardware counsel in favor of seeking to register narrower trademark claims that include only the stylized version of a mark used with the sleekest description of goods possible?

Exactly what does the Court mean by materially the same usages? Does it contemplate partial preclusion scenarios? Does the materially the same reference invoke the material alteration standard? Does it invoke the “can’t materially differ” standard in trademark tacking cases? If so, under Hana Financial, doesn’t that question go to a jury? Yet, in B&B Hardware (argued to the Supreme Court on the very same day as Hana Financial), the Court wasn’t troubled by the absence of juries in TTAB decisions.

Perhaps most notably, the word “should” appeared twenty-six times in the majority opinion of the Supreme Court’s B&B Hardware decision, and the word “shall” only appeared five times (each of the five references related to specific statutory language), leaving me to ask, must a district court apply issue preclusion when the Supreme Court thinks it should, when the Court specifically avoided use of the words shall and must? In other words, is the decision of preclusion left to the sound discretion of the district court?

One of the other million dollar unanswered question remains: How does one predict the likelihood of preclusion?

For those looking for absolute certainty, don’t clear and adopt a mark for use you can’t federally register, don’t apply to register a mark likely to be opposed unless you can win and you’re prepared to see it though, don’t start defending an opposition if you aren’t prepared to see it through, but if you do and lose, by all means take a de novo appeal to federal district court if you’re a losing opposer who may want to force the use to stop, or if you’re a losing applicant who wants to keep using the applied-for mark.

For the rest of us who are comfortable living with some level of uncertainty, it’s time to read the tea leaves with a view to predicting not only likelihood of confusion, but the likelihood of preclusion too.