04/29/15

IN THIS ISSUE
Trademark Board Decisions Can Lead to Issue Preclusion
Marks Found Geographically Descriptive of "Redneck Riviera"

Trademark Board Decisions Can Lead to Issue Preclusion

Timothy J. Lockhart

The U.S. Supreme Court has issued two trademark decisions this year—its first such decisions in almost a decade.  In January the Supreme Court held that the issue of whether a new mark can acquire an older mark’s priority (a process known as “tacking”) is a question for juries to decide.  Hana Fin., Inc. v. Hana Bank, 135 S. Ct. 907 (2015), reported on here.  In March the court ruled that if the other ordinary elements of issue preclusion are met and if the trademark issues adjudicated by the U.S. Patent and Trademark Office’s Trademark Trial and Appeal Board (TTAB) are materially the same as those that later come before a district court, issue preclusion should apply.  B&B Hardware, Inc. v. Hargis Indus., 135 S. Ct. 1293 (2015).

B&B Hardware (B&B) uses its SEALTIGHT mark with a fastener employed predominantly in the aerospace industry.  Hargis Industries (Hargis) manufactures a line of self-drilling and self-taping screws commonly used in the construction of metal buildings under the SEALTITE mark.  For almost 20 years the parties have been, as noted by the U.S. Court of Appeals for the Eighth Circuit, “locked in litigation over these similar marks.”

Hargis sought to register SEALTITE with the U.S. Patent and Trademark Office, and B&B opposed on the grounds of a likelihood of confusion between the two marks.  In 2007 the TTAB denied the application, finding that Hargis’s mark was likely to cause confusion with B&B’s mark.  In a trial of  B&B’s allegations against Hargis for trademark infringement and unfair competition, the district court rejected B&B’s arguments and found in favor of Hargis on its counterclaims.

B&B appealed, claiming that the TTAB’s decision had settled the issue of likelihood-of-confusion, thereby precluding that issue from being re-litigated.  However, the U.S. Court of Appeals for the Eighth Circuit said that because the TTAB is not an Article III court under the U.S. Constitution, a TTAB finding that one mark is likely to be confused with another is not preclusive with respect to the issue of trademark infringement raised between the mark’s owners.  B&B Hardware, Inc. v. Hargis Indus., 716 F.3d 1020 (8th Cir. 2013), rev’d, 135 S. Ct. 1293 (2015), reported on here.

B&B then appealed, successfully, to the Supreme Court.  Writing for the 7-2 majority, Justice Alito noted that when “Congress has authorized agencies to resolve disputes, ‘courts may take it as given that Con­gress has legislated with the expectation that the principle [of issue preclusion] will apply except when a statutory purpose to the contrary is evident’” (citing Astoria Fed. Sav. & Loan Ass’n. v. Solimino, 501 U.S. 104, 108 (1991)).  Neither the Trademark Act’s text nor its structure, the court said, rebuts the “presumption” in favor of giving preclusive effect to TTAB decisions where the ordinary elements of issue preclusion are met.

The court noted that trademark registration involves a proceeding separate from an infringement proceeding to decide separate rights—i.e., the issue of whether a mark should be registered as opposed to the issue of whether its use infringes another entity’s trademark rights.  However, the court said there is no categorical reason why registration decisions can never meet the ordinary elements of issue preclusion.

To assess the likelihood of confusion, the TTAB uses some or all of the factors set out in In re E. I. DuPont DeNemours & Co., 476 F.2d 1357 (CCPA 1973).  To make the same assessment the Eighth Circuit looks to the similar, but not identical, factors identified in SquirtCo v. Seven-Up Co., 628 F.2d 1086 (8th Cir. 1980).  The Supreme Court said that the factors are not fundamentally different and that minor variations in the application of what is essentially the same legal standard do not defeat preclusion.

In addition, the court said that, contrary to the Eighth Circuit’s conclusion, the same likeli­hood-of-confusion standard applies to both registration and infringe­ment.  First, the language of the “registration” and “infringement” sections of the Trademark Act, 15 U.S.C. §1052(d) and §1114(1), respectively, is essentially the same; the relatively minor differences do not create two different standards.  Second, the likelihood-of-confusion language in those “provisions has been central to trademark registration since at least 1881” and “[t]hat could hardly have been by accident.”  Third, district courts can cancel registrations during infringement litigation just as they can adjudicate infringement in suits seeking judicial review of registration decisions.  “There is no reason to think that the same district judge in the same case should apply two separate standards of likelihood of confusion.”

Hargis claimed that the statutory standards are different, noting that the reg­istration provision asks whether the marks “resemble” each other while the infringement provision is directed to­ward  the “use in commerce” of the marks.  But the court said that “[j]ust because the TTAB does not always consider the same usages as a district court does, it does not follow that the Board applies a different standard to the usages it does consider” (footnote omitted; emphasis original).

That the TTAB and district courts use different pro­cedures, the court said, suggests only that sometimes issue preclusion might be in­appropriate.  “Although many [TTAB registration decisions] will not satisfy those ordinary ele­ments, that does not mean that none will.”  And the court noted that con­trary to the Eighth Circuit’s conclusion, B&B, as the party opposing reg­istration, bore the burden of persuasion before the TTAB just as it did in the infringement suit.

Finally, the court ruled that Hargis was wrong that the stakes for registration are al­ways too low for issue preclusion in later infringement litigation.  Congress’s creation of “this elaborate registration scheme,” the court said, “with so many important rights attached and backed up by plenary review, confirms that registration decisions can be weighty enough to ground issue preclusion.”

In her concurring opinion Justice Ginsburg noted that “contested registrations are often decided upon ‘a comparison of the marks in the abstract and apart from their marketplace usage’” (citing 6 J. Thomas McCarthy, Trademarks and Unfair Competi­tion §32:101 at 32–247 (4th ed. 2014)).  When the registra­tion proceeding is of that character, Justice Ginsburg said, there will be no preclusion of the likelihood-of-confusion issue in a subsequent infringement suit.

Justice Thomas, in a dissent joined by Justice Scalia, noted that the portion of the Astoria case on which the majority relied was dictum and claimed that other cases have taken different positions on the preclusion issue.  According to Justice Thomas, “The common law does not sup­port a general presumption in favor of administrative preclusion for statutes passed before this Court’s decision in Astoria, and the text, structure, and history of the [Trademark] Act provide no support for such preclusion.”  With regard to his second point Justice Thomas noted both “the limited authority the [Trademark] Act gives the TTAB” and the Act’s “provision for judicial review,” which allows district courts to conduct “de novo review of the TTAB’s decision[s].”

Marks Found Geographically Descriptive of "Redneck Riviera"

Timothy J. Lockhart

The U.S. Trademark Trial and Appeal Board (TTAB) has reaffirmed, on the applicant’s request for reconsideration, the refusal to register the marks REDNECK RIVIERA and REDNECK RIVIERA FEST as intended for use with hotel, bar, and restaurant services and various types of entertainment services.  The TTAB reiterated its prior agreement with the U.S. Patent and Trademark Office (USPTO) Examining Attorney that the marks are primarily geographically descriptive of the “northwest coastline of the Gulf of Mexico stretching from southeastern Mississippi to the Florida panhandle beaches east of Panama City.”  In re Rich Marks, LLC, Serial Nos. 85789873, 85789870, and 85784407 (February 25, 2015) [not precedential].

The “Redneck Riviera” is more properly if less commonly known as the “Emerald Coast” to distinguish it from the “Gold Coast” on Florida’s Atlantic side.  According to urbandictionary.com, a source cited by the Examining Attorney, the Redneck Riviera is a “strip of surf and sand that stretches some 95-miles along Florida's Highway #98” and has the “most beautiful beaches in the world”—“[s]ugar white sand, gently washed by an azure sea.”  The website says the area, also called “L.A.” for “Lower Alabama,” is “[h]ome of the best spring breaks, water parks for the kids, tattoo parlors, beer joints, crab shacks, burger barns and tee shirt boutiques.”

The Examining Attorney refused registration on the grounds that the marks are geographically descriptive under Section 2(e)(2) of the Trademark Act, 15 U.S.C. §1052(e)(2), in that the marks identify a particular geographic area and consumers would reasonably assume that the services listed in the applications originate from that area.  The Examining Attorney also refused registration under Section 2(e)(3) of the Trademark Act, 15 U.S.C. §1052(e)(3), on the grounds that the marks are primarily geographically deceptively misdescriptive in that although they identify a particular area of the Gulf Coast, the marks are actually owned by an entity located in Nashville, Tennessee.

On January 6, 2015, the TTAB issued an opinion affirming the Examining Attorney’s refusal to register the marks.  The TTAB affirmed the refusals on the ground that the marks are geographically descriptive under Section 2(e)(2) of the Trademark Act and therefore did not reach the alternate refusal that the marks are geographically deceptively misdescriptive under Section 2(e)(3).

The applicant filed a request for reconsideration, claiming that the TTAB’s decision was not based on reliable sources of evidence or sufficient sources of evidence.  The TTAB rejected both claims, pointing to the nationally known sources of information in the record, including ABC and CBS News, and an entry in The Columbia Encyclopedia, and the relatively large number of such sources.  After summarizing that evidence, the TTAB said that “the term ‘Redneck Riviera’ has been an important part of the Southern vernacular for decades,” naming “a real place, which name combines two characteristics of this region—a unique cultural stereotype of the laid-back, rural south juxtaposed against the stunning beauty of the Gulf seascapes.”

The TTAB added that “the history and characteristics of the northwest Gulf Coast reflect incredibly beautiful beaches, tacky trinkets, new high-rise condominiums, southern folkways and honky-tonks.”  The latter include, noted the TTAB, the long-established and well-known Flora-Bama Lounge & Oyster Bar, which The Augusta Chronicle called “Ground Zero on the Redneck, Riviera, the place where songster Jimmy ‘Margaritaville’ Buffett spent a lot of time wasting away.”

Accordingly, the TTAB reaffirmed the refusal to register the marks, noting that not to do so would enable the applicant to “appropriate exclusive rights to usage of this long preexisting designation in connection with entertainment and hotel services operating in this very region for years without end.”

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