Claim preclusion, also called “res judicata,” is a judge-created legal doctrine that is intended to prevent litigants from endlessly litigating the same issues over and over again in different proceedings and before different tribunals. Claim preclusion applies when a “court of competent jurisdiction” has entered a “final judgment” on the merits of a case between two or more parties. In practice, claim preclusion prevents parties from bringing some other lawsuit or proceeding to re-litigate legal claims already decided AND also litigating legal claims that could have been raised in a prior action. In other words, claim preclusion applies to legal issues actually litigated AND also to any claims the plaintiff could have asserted in a previous lawsuit. If a litigant successfully raises the doctrine of claim preclusion in a second (or subsequent) lawsuit, claim preclusion will result in the second (or subsequent) lawsuit being dismissed. As noted, to successfully raise the legal defense of claim preclusion, the following conditions must be met:

• The same parties must be involved in the subsequent litigation
• The prior litigation must have been conducted in a “court of competent jurisdiction” and
• The previous court/tribunal must have reached a “final judgment” on the merits

Claim preclusion can be a valuable legal doctrine for any litigation defense team.

How Does Claim Preclusion Apply to Decisions by the Trademark Trial and Appeal Board?

The Trademark Trial and Appeal Board (“TTAB”) is an administrative tribunal within the US Patent & Trademark Office. The TTAB is empowered under its enabling statute to hear and resolve disputes over the right to register a trademark. The TTAB cannot make broader decisions, such as rendering final judgments on disputes over who has the right to use a trademark, whether trademark infringement occurred or whether there has been unfair competition. Further, the TTAB cannot make a determination of fault or damage to a litigant and cannot award money damages or issue injunctive relief.

Because of the limited nature of the TTAB’s jurisdiction and power, several federal courts have held that claim preclusion does NOT apply to decisions made by the TTAB. The most recent decision was issued by the federal Court of Appeals for the Third Circuit in the case of Beasley v. Howard, Case No. 20-1119 (3rd Cir. September 17, 2021). The case involved a dispute over the trademark “The Ebonys.” The plaintiff, David Beasley, disputed ownership of the trademark, claiming that he was the proper owner. Beasley filed a petition before the TTAB seeking cancelation of the trademark registration based on alleged fraud committed against the Trademark Office. However, Beasley lost his case before the TTAB.

Undeterred, Beasley later filed a lawsuit in federal court again asserting his claim to ownership of the trademark, asking for cancellation of the trademark registration and also asserting claims for trademark infringement. The defendants raised claim preclusion as a defense which was successful at the trial level. But, on appeal, the Third Circuit reversed. According to the court, because the TTAB has jurisdictional authority that is limited to determining the right to register a trademark, the TTAB is not a “court of competent jurisdiction” for purposes of applying claim preclusion. In general, claim preclusion will not bar subsequent litigation “… where the plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy because of the limitations on the subject matter jurisdiction of the courts.”

But all is not necessarily lost for Beasley’s opponent. The Third Circuit held that CLAIM preclusion did not warrant dismissal of Beasely’s case, but the court also noted that ISSUE preclusion might still apply to parts of Beasley’s federal case. Issue preclusion is a much narrower legal doctrine that will prevent re-litigation of specific issues. Indeed, the Third Circuit held that issue preclusion would bar Beasley from seeking trademark cancelation based on fraud.

For more information, contact Revision Legal at 231-714-0100. Our litigation team has deep experience in trademark law, internet law and patent law.

B&B Hardware and the Preclusive Effect of TTAB Decisions in Federal Court

While the Third Circuit in Beasley v. Howard reached conclusions limiting claim preclusion in the TTAB context, the Supreme Court addressed related issues in B&B Hardware, Inc. v. Hargis Industries, Inc., 575 U.S. 138 (2015). In B&B Hardware, the Court held that issue preclusion—also called collateral estoppel, which is distinct from claim preclusion—can apply to TTAB likelihood of confusion findings in subsequent federal court trademark infringement litigation. The distinction is critical: issue preclusion bars re-litigation of specific issues actually decided in a prior proceeding, while claim preclusion bars entire claims.

B&B Hardware held that when the TTAB’s likelihood of confusion inquiry is ‘materially the same’ as the inquiry a district court would conduct in an infringement case, the TTAB’s finding may be preclusive. This means that a party who litigates and loses a likelihood of confusion issue before the TTAB may be barred from re-litigating that same issue in a subsequent federal court infringement case. Importantly, the Court noted that in many cases the TTAB’s likelihood of confusion analysis will not be materially the same as the federal court’s because the TTAB focuses on the marks’ appearances on paper rather than in their actual marketplace context.

Issue Preclusion vs. Claim Preclusion in the TTAB Context

The distinction between issue preclusion and claim preclusion is essential to understanding how TTAB decisions affect subsequent litigation. Claim preclusion, as discussed, bars re-litigation of claims that were raised or could have been raised in a prior proceeding on the merits. Issue preclusion bars re-litigation only of specific issues that were actually litigated, necessarily decided, and essential to the prior judgment.

In practice, this means that a party who loses an opposition proceeding before the TTAB is not necessarily barred from filing a trademark infringement lawsuit in federal court based on the same marks—because claim preclusion generally does not apply to TTAB decisions, as multiple courts have held. However, that same party may be precluded from relitigating the likelihood of confusion finding if B&B Hardware’s conditions are satisfied. Strategic parties must carefully evaluate which issues to litigate before the TTAB versus in federal court to preserve maximum flexibility.

Practical Implications for Trademark Prosecution and Enforcement

The B&B Hardware decision and the developing law on claim preclusion in the TTAB context have significant implications for how trademark owners should manage opposition proceedings. If a trademark owner is also contemplating federal court litigation against the same applicant, strategic decisions must be made about:

• Whether to oppose the trademark application in the TTAB at all, given the risk that a TTAB finding adverse to the opposer might be given preclusive effect in subsequent litigation
• Whether to aggressively litigate the likelihood of confusion issue in the TTAB or reserve that argument for federal court where the analysis may differ
• Whether to file a concurrent federal court action and move to suspend TTAB proceedings pending the court’s resolution of the dispute
• Whether the TTAB’s focus on marks as registered versus marks as actually used in commerce will produce a likelihood of confusion analysis that differs materially from what a federal court would conduct

TTAB Cancellation Proceedings and Their Preclusive Effect

The same analytical framework applies to TTAB cancellation proceedings. When a party petitions the TTAB to cancel an existing trademark registration, the TTAB’s resolution of the cancellation may—depending on the issues litigated—have preclusive effect in subsequent federal court proceedings. A successful cancellation petitioner who then seeks to enforce its own trademark rights in federal court may find that prior TTAB determinations on descriptiveness, likelihood of confusion, or abandonment are entitled to issue preclusive effect.

Conversely, a party defending against a cancellation petition should consider whether aggressively litigating certain issues in the TTAB creates risks in anticipated federal court litigation. The interplay between TTAB proceedings and federal court actions has become one of the most complex and strategically important areas of trademark practice.

When to Pursue TTAB Proceedings vs. Federal Court

The decision whether to assert trademark rights through TTAB proceedings, federal court litigation, or both is among the most consequential strategic choices in trademark enforcement. TTAB proceedings are typically less expensive, more focused on registration rights, and do not allow for monetary damages or injunctive relief. Federal court litigation is more expensive, but allows for the full range of remedies under 15 U.S.C. § 1117, including actual damages, disgorgement of profits, statutory damages for counterfeiting, and injunctive relief.

For most trademark owners with serious enforcement needs, a coordinated strategy that considers both TTAB and federal court options—and carefully manages the preclusion risks in each forum—is the most effective approach. The trademark litigation attorneys at Revision Legal have the experience to develop and execute that strategy. Contact us today.