B&B Hardware, Inc. v. Hargis Industries, Inc.

 By: Jonathan Hu

On December 2nd of 2014, the Supreme Court heard oral arguments for B&B Hardware v. Hargis Industries, Inc. The case represented the conclusion of a long legal battle between the two parties and was the Court’s first review of trademark law in more than a decade.[1]

Background:

The Petitioner, B&B Hardware, Inc. (“B&B”), manufactures and sells self-sealing fasteners in the aerospace industry. B&B registered the mark “SEALTIGHT” in 1993. The Respondent, Hargis Industries, Inc. (“Hargis”), also manufactures and sells fasteners, but in the construction industry. Hargis attempted to register the mark “SEALTITE” in 1996, but B&B opposed the application and sued Hargis for infringement. The Trademark Trial and Appeal Board (“TTAB”) determined that there was a likelihood of confusion between the two marks and thus denied Hargis’ application. In contrast, a jury trial in 2000 found B&B’s mark to be merely descriptive and that it had not acquired a secondary meaning. This finding was further upheld by the Eighth Circuit in 2001.[2] However, when the TTAB took up Hargis’ petition to cancel B&B’s mark in 2001, the TTAB dismissed the petition in 2003. The TTAB also denied a subsequent attempt by Hargis to register “SEALTTIE” in 2007.[3]

In 2003, B&B filed a second infringement suit against Hargis. The district court dismissed this suit in 2007 on the grounds that the first infringement suit precluded the second one.[4] However, the Eighth Circuit reversed this decision in 2009 on the grounds that the prior case did not address the issue of likelihood of confusion.[5] On remand, a jury found no likelihood of confusion between “SEALTIGHT” and “SEALTITE”. In response, B&B sought a new trial because the district court refused to give preclusive effect, or even deference, to the TTAB’s likelihood of confusion finding. The district court denied the motion.[6] The Eighth Circuit affirmed and reasoned that the TTAB did not decide the same likelihood of confusion issue that was presented to the district court.[7]

The Supreme Court granted a writ of certiorari on July 1st, 2014.[8]

Issues:

Two issues were granted and presented to the Court:

  • Whether the TTAB’s finding of a likelihood of confusion precludes respondent from re-litigating the issue in infringement litigation, in which a likelihood of confusion is an element; and
  • Whether if issue preclusion does not apply, the district court was obliged to defer to the Board’s finding of a likelihood of confusion absent strong evidence to rebut it.

Hearing:

The Supreme Court heard oral arguments on December 2­, 2014.  A few specific lines of questioning arose from the Court.

  • Differences between the TTAB and the US District Court
  • What is at stake?

Justice Ginsburg started the questioning by asking Petitioner whether the stakes are different between the two sessions and essentially if this was by design. She noted that the Second Restatement of Judgments allows for administrative judgments to be confined to specifically agreed issues and not be preclusive. The goal of this is to encourage expeditious trials and avoid having parties being bogged down by pretrial preparations. She highlighted this by noting that it was one thing to deny someone a trademark and another to disallow any use of it at all because of infringement.

Petitioner responded by arguing that the inquiry was ultimately the same in both, albeit different issues.  Petitioner then analogized the issue of confusion as a factual one, akin to priority that the TTAB may determine and could be thereafter precluded from being re-litigated. Ultimately, even if the stakes may be different between the TTAB and the district court, the issue being analyzed would be the same.

Respondent also forwarded the interesting argument that the issues at stake with the TTAB and the district court were different.  Respondent argued that the TTAB analyzed “confusing marks” while a district court infringement suit looked at “confusing use.” Justice Scalia, however, was not convinced and inquired the difference between having a trademark applied to a good and a good’s use. Respondent tried to use an example of shoes with a “SIKE” mark, but Justice Scalia remained uncertain, if not unconvinced, that the issue would be limited to confusing use, but not confusing resemblance.

  • What evidence is permitted?

The Court asked all parties about the differences in the proceeding process between the TTAB and the district court. While Petitioner and the Government tried to paint the processes as nearly identical, with insignificant differences, the Court pushed the point home that there were evidentiary limitations with the TTAB. For example, Justice Kagan brought up the fact that an average proceeding cost at the TTAB is only about 10% of that at a district court, and that the TTAB does not allow live witnesses to testify. As for the latter point, Respondent drew from the case at hand, in which the TTAB proceeding only had four depositions and no discovery. In comparison, the district court proceeding had fourteen live witnesses and approximately four-thousand pages of discovery.

The limitations on evidence dovetailed with Justice Sotomayor’s reference to the Court’s holding in Kappos v. Hyatt. The Court held in 2012 that if new evidence was presented on a disputed question of fact, a district court would have to make a de novo factual finding that took account of the new evidence and the administrative record before the Patent and Trademark Office.[9]  As Respondent argued, the evidence that was most crucial for resolution of infringement litigation – the sophistication of consumers – was legally inadmissible before the TTAB.

  • Is there a middle ground of deference?

Lastly, the Court inquired both parties about the possibility of only deference being given in place of preclusion. However, neither party was interested. Petitioner first explicitly made known its preferred position, before concluding that any possible deference should be strong. Respondent likewise argued that any deference would only exist when inquiries were identical between the TTAB and the district court. However, Respondent noted such scenario would never actually happen.

Conclusion

A decision is expected to be delivered around April or May 2015.[10] From initial impressions, it seems that the case is close with the Court leaning in no specific direction.[11] It remains to be seen if the Court is too uncomfortable with deciding any kind of impactful or sweeping decision and will instead produce a limited decision. Indeed, some outside parties are concerned that the decision in this case may affect other legal precedence like Coakwell v. United States and its subsequent progeny.[12]

 


 

[1] Mann, Ronald, Argument preview: Justices will use rare look at trademark law to consider broad and narrow conceptions of trademark, SCOTUSblog, (January 4, 2015), http://www.scotusblog.com/2014/12/argument-preview-justices-will-use-rare-look-at-trademark-law-to-consider-broad-and-narrow-conceptions-of-trademarks/.

[2] B&B Hardware, Inc. v. Hargis Industries, Inc., 252 F.3d 1010 (8th Cir. 2001).

[3] B&B Hardware, Inc. v Sealtite Building Fasteners, 2007 WL 2696310, at *12-13 (2007).

[4] B&B Hardware, Inc. v. Hargis Industries, Inc., 2007 WL 2711647 (E.D. Arkansas 2007).

[5] B&B Hardware, Inc. v Hargies Industries, Inc., 569 F.3d 383, 390 (8th Cir. 2009).

[6] B&B Hardware, Inc. v. Hargis Industries, Inc., 736 F.Supp.2d 1212 (E.D. Arkansas 2010).

[7] B&B Hardware, Inc. v. Hargis Industries, Inc., 716 F.3d 1020, 1024 (8th Cir. 2013).

[8] B&B Hardware, Inc. v. Hargis Industries, Inc., 134 S.Ct. 2899 (2014).

[9] Kappos v. Hyatt, 132 S.Ct. 1690, 1700 (2012).

[10] Israelsen, R. Gregory, Supreme Court hears oral arguments in B&B Hardware, Inc. v. Hargis Industries, Inc., Lexology (January 5, 2015), http://www.lexology.com/library/detail.aspx?g=756f5468-6b16-42df-a8a8-8c9aeaac2edd.

[11] Mann, Ronald, Supra 1.

[12] Englehard, Alexander B. and Charles L. Gholz, Will B&B Hardware v. Hargis Industries Affect Coakwell v. United States?, Intellectual Property Today (January 4, 2015), http://www.iptoday.com/issues/2014/05/will-ub&b-hardware-u-v-uhargis-industries-u-affect-ucoakwell-u-v-uunited-states-u.asp.