Every business wants to develop a positive image in the minds of customers. Many companies spend lavishly on marketing to establish reputations for quality, performance and value. A company’s reputation can be among its most valuable assets. If an unknown computer company could use the name “Apple” – or something confusingly similar like “Appel” – on its electronic devices, consumers could be misled into thinking they were buying an Apple product. Apple’s reputation and sales could deteriorate as consumers wrongly conclude Apple’s quality and performance have slipped.
Trademark law helps protect both trademark owners and consumers from the confusion that may result when different companies use the same or confusingly similar identifying marks, either intentionally or inadvertently. Enforcing your company’s trademark rights against infringing competitors is critical to maintaining a robust and valuable trademark for your company’s goods and services.
Last week the U.S. Supreme Court issued an important decision in a trademark case that may significantly impact how you approach contesting another person’s application to register a trademark similar to yours. It will also inform any decision you make to pursue an infringement claim in federal court against the owner of a trademark that is confusingly similar to your trademark.
By way of background, the Lanham Act is the federal statute that establishes the legal framework to register and protect trademarks in the United States. It also creates a federal claim for trademark infringement that allows for the recovery of damages (i.e., money) and the issuance of court orders to enjoin and redress unlawful activity (e.g., seizure of offending goods).
With respect to registration, any person that wishes to secure the benefits of federal trademark registration can file an application for a mark with the U.S. Trademark Office. Anyone who wants to oppose the registration can file an administrative action with the Trademark Trial and Appeals Board (“TTAB”) – the administrative body within the U.S. Trademark Office that resolves disputes arising in the registration process – explaining why the proposed registration would damage a previously registered mark. To resolve the dispute, the Board will usually evaluate the two marks in the abstract to determine whether registering the proposed mark would harm the previously registered mark. The decision frequently boils down to whether the proposed mark is “confusingly similar” to the registered mark. A decision that turns on whether consumers who purchase the goods on which the competing marks appear would likely be confused by the marks and thus purchase the wrong goods.
With respect to trademark infringement, a person who discovers another party infringing his registered mark can bring an action in federal court to enjoin use of the offending mark, seize infringing goods, and collect damages and attorneys’ fees. Counterfeit goods worth hundreds of millions of dollars flow into the U.S. everyday. Successful trademark infringement suits can arrest the flow of such goods by seizing the counterfeit products and helping companies avoid losing millions of dollars in lost profits to counterfeiters.
This is why the Supreme Court’s decision in B&B Hardware Inc. v. Hargis Industries, Inc. 575 U.S. __ (2015), is important. The court decided that when the TTAB determines in an administrative proceeding that a mark seeking registration is “confusingly similar” to a previously registered mark that decision is binding on the parties, even in subsequent infringement litigation in federal court.
Prior to the court’s decision it was widely viewed that federal court decisions on the issue of “likelihood of confusion” bind the TTAB, but TTAB decisions on the same issue do not bind federal courts. As a result, many trademark attorneys viewed disputes involving trademark registration before the TTAB to be far less consequential than claims for infringement filed in federal district court. The Supremes’ decision in B&B Hardware changes all that.
So what are the takeaways? The decision clearly raises the stakes in proceedings before the TTAB.
When considering whether and how to challenge a trademark registration before the TTAB, you should carefully consider the possibility that a decision in the Trademark Office could be binding on any claims for damages or injunctive relief you may subsequently file in federal court to redress a claim of infringement.
You may wish to invest more attention and resources on registration disputes before the TTAB because the risk of an unfavorable decision could come back to haunt you later in infringement claims filed in federal court.
Faced with the specter of increased costs, administrative delays, and uncertainty in TTAB proceedings, you may wish to preempt such proceedings by filing a judicial action in federal district court alleging affirmative infringement claims or seeking declaratory judgment of non-infringement. This would stay, and possibly avoid entirely, any TTAB proceedings.
If you elect to prosecute your opposition to a trademark registration before the Board, it’s more important than ever to build a record that establishes the basis and scope of the Board’s decision on the issue of “likelihood of confusion.” It’s critical to do everything you can to ensure the administrative record reflects whether the Board’s decision is based on an abstract comparison of the two marks or an analysis of the actual usage of the marks in the marketplace and their impacts on consumers.
After all, as the Supremes’ stated in the decision, “when registration is opposed, there is good reason to think that both sides will take the matter seriously.” Words to live by for companies building brands and the attorneys who advise them.