716 F.3d 1020 (8th Cir. 2013), 10-3137, B & B Hardware, Inc. v. Hargis Industries, Inc.

Docket Nº:10-3137, 11-1247.
Citation:716 F.3d 1020, 106 U.S.P.Q.2d 1660
Opinion Judge:SHEPHERD, Circuit Judge.
Party Name:B & B HARDWARE, INC., a California Corporation, Plaintiff-Appellant v. HARGIS INDUSTRIES, INC., a Texas Corporation, doing business as Sealtite Building Fasteners, doing business as East Texas Fasteners; East Texas Fasteners, a business entity of form unknown; John Does, 1 through 10, inclusive, Defendants-Appellees. B & B Hardware, Inc., a Califor
Attorney:Timothy James Cullen, argued, Little Rock, AR, for appellant. Herbert A. Yarbrough, III, argued and on the brief, Tyler, TX, H. William Allen, Brooks C. White, Little Rock, TX, Debra Elaine Gunter, Tyler, TX, Susan J. Hightower, Austin, TX, on the brief, for appellees.
Judge Panel:Before LOKEN, COLLOTON, and SHEPHERD, Circuit Judges. COLLOTON, Circuit Judge, dissenting.
Case Date:May 01, 2013
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 1020

716 F.3d 1020 (8th Cir. 2013)

106 U.S.P.Q.2d 1660

B & B HARDWARE, INC., a California Corporation, Plaintiff-Appellant

v.

HARGIS INDUSTRIES, INC., a Texas Corporation, doing business as Sealtite Building Fasteners, doing business as East Texas Fasteners; East Texas Fasteners, a business entity of form unknown; John Does, 1 through 10, inclusive, Defendants-Appellees.

B & B Hardware, Inc., a California Corporation, Plaintiff-Appellant

v.

Hargis Industries, Inc., a Texas Corporation, doing business as Sealtite Building Fasteners, doing business as East Texas Fasteners; East Texas Fasteners, a business entity of form unknown; John Does, 1 through 10, inclusive, Defendants-Appellees.

Nos. 10-3137, 11-1247.

United States Court of Appeals, Eighth Circuit.

May 1, 2013

Submitted: April 17, 2012.

Rehearing and Rehearing En Banc Denied June 20, 2013.

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Timothy James Cullen, argued, Little Rock, AR, for appellant.

Herbert A. Yarbrough, III, argued and on the brief, Tyler, TX, H. William Allen,

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Brooks C. White, Little Rock, TX, Debra Elaine Gunter, Tyler, TX, Susan J. Hightower, Austin, TX, on the brief, for appellees.

Before LOKEN, COLLOTON, and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

Following our prior remand, B & B Hardware, Inc. v. Hargis Industries, Inc., 569 F.3d 383 (8th Cir.2009), the district court conducted a seven-day jury trial on B & B Hardware's (" B & B" ) claim of trademark infringement and unfair competition and on Hargis Industries' (" Hargis" ) counterclaims of false advertising and false designation of origin. The jury returned a verdict which rejected B & B's claims but found in favor of Hargis on its counterclaims. After the district court entered judgment on the jury's verdict, it awarded attorney fees and costs to Hargis. B & B now appeals, arguing that the district court should have given preclusive effect to the Trademark Trial and Appeal Board's (" TTAB" ) findings concerning the likelihood of confusion of the two companies' trademarks. B & B also appeals the award of attorney fees and costs. We affirm the decision of the district court except as to attorney fees. On the matter of attorney fees, we remand for recalculation of those fees.

I.

A more thorough review of the factual background of this case can be found in our prior decisions concerning these parties. B & B Hardware, Inc. v. Hargis Indus., Inc. (Hargis II), 569 F.3d 383 (8th Cir.2009); B & B Hardware, Inc. v. Hargis Indus., Inc. (Hargis I), 252 F.3d 1010 (8th Cir.2001). It is sufficient here to recall that B & B manufactures and sells a fastener product under the name " Sealtight" that is used predominantly in the aerospace industry, whereas Hargis manufactures a line of self-drilling and self-taping screws that are commonly used in the construction of metal buildings under the " Sealtite" mark. For over 15 years, these parties have been locked in litigation over these similar marks.

Upon remand, and as predicted, B & B sought " to assert that the TTAB's determination made in 2007 that there is a likelihood of confusion between the two marks should be given preclusive effect by the district court on the claim of trademark infringement." Hargis II, 569 F.3d at 390 n. 4. In 2007, the TTAB denied Hargis's attempt to register its " Sealtite" mark, concluding that there was a likelihood of confusion with B & B's " Sealtight" mark. The district court rejected B & B's claim that the TTAB decision should be given preclusive effect on the question of likelihood of confusion. The district court held that because the TTAB is not an Article III court, our prior decision in Flavor Corp. of America v. Kemin Industries, Inc., 493 F.2d 275 (8th Cir.1974), does not require that the court give preclusive effect to the TTAB's decision. The district court further rejected B & B's attempt to admit the TTAB decision into evidence, concluding that to do so would be confusing and misleading to the jury.

The jury returned a verdict fully in favor of Hargis, finding that there was no likelihood of confusion between the two marks. Thus, the jury rejected B & B's claims of trademark infringement and unfair competition. Hargis prevailed on its claims of false advertising and false designation of origin. The district court entered judgment based on the jury's verdict and denied B & B's motion for judgment as a matter of law and for a new trial. The district court then granted Hargis's motion for attorney fees, holding that B & B's conduct of willfully and deliberately manufacturing evidence to support its

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trademark infringement claim make this an exceptional case where the award of attorney fees is appropriate under the Lanham Act.

B & B brings this appeal. It argues: (1) the district court erred in failing to instruct the jury to give preclusive effect to the TTAB's decision that there was a likelihood of confusion between the two marks; (2) even if the TTAB's decision was not preclusive, the district court abused its discretion in not giving the TTAB's fact-findings deference or admitting the TTAB's decision into evidence; and (3) the district court erred in concluding that the award of fees was warranted under the Lanham Act. We consider each of these claims in turn.

II.

In 2007, the TTAB denied Hargis's application for registration, determining that there was a likelihood of confusion between the two marks. B & B's primary argument in this appeal is that, under this court's decision in Flavor Corp., the TTAB's decision concluding there is a likelihood of confusion between the Sealtight and Sealtite marks deserves preclusive effect on that question, which necessarily requires entry of judgment in favor of B & B on its trademark infringement claim. As this issue raises a question of law as to whether the application of collateral estoppel is appropriate, we review the question de novo. See Morse v. Comm'r, 419 F.3d 829, 833 (8th Cir.2005).

In Flavor Corp., we addressed whether the defendant, Kemin Industries, was collaterally estopped from challenging the likelihood of confusion determination of the Court of Customs and Patent Appeals (" CCPA" ). Under the facts of that case, the TTAB determined that, due to the phonetically similar marks used by Flavor Corporation and Kemin Industries, there was reasonable likelihood of confusion. Kemin appealed this decision to the CCPA, which then affirmed the TTAB's determination. When the trademark infringement action was filed, the district court determined that the CCPA's decision on the question of likelihood of confusion collaterally estopped Kemin from challenging that decision in the trademark infringement action.

We affirmed on appeal, holding, " [W]here the CCPA has found a likelihood of confusion between two similar marks in a cancellation proceeding, that fact is precluded from relitigation in a subsequent infringement action between the same parties under the doctrine of collateral estoppel." Flavor Corp., 493 F.2d at 281. B & B argues that this holding compels this court to conclude that the district court erred when it refused to give preclusive effect to the findings of the TTAB. This is incorrect.

As the district court pointed out below, before we could apply collateral estoppel in Flavor Corp., we had to confirm " that some question or fact in dispute ha[d] been judicially and finally determined by a court of competent jurisdiction between the same parties or their privies." Flavor Corp., 493 F.2d at 279 (quotation omitted).1

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We then noted that the Seventh Circuit had declined in John Morrell & Co. v. Doyle, 97 F.2d 232 (7th Cir.1938), to give CCPA determinations preclusive effect in subsequent infringement actions " because the CCPA was not an Article III court," but rather it " was merely an administrative arm of the Patent Office." Flavor Corp., 493 F.2d at 280. We did not need to follow the Doyle decision, however, because subsequent to that decision in 1948, Congress made the CCPA an Article III court.2 Because the CCPA had obtained the status of an Article III court at the time it issued its decision, we determined that its likelihood of confusion determination was entitled to issue preclusion. The TTAB is not an Article III court, and thus Flavor Corp. did not reach and is not persuasive on the question before this panel— whether the TTAB's likelihood of confusion determination is entitled to preclusive effect.

Some courts will treat Trademark Board decisions as administrative judgments which carry full preclusive effect as to adjudicated facts, if these are the same facts which are in issue in the later court proceeding. Other courts will not give such judgments preclusive effect, but will give them some weight. Still other courts will recognize such judgments unless the contrary is established with thorough conviction.

6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 32:96 (4th ed.2012). Principles of administrative law suggest that application of collateral estoppel may be appropriate where administrative agencies are acting in a judicial capacity. See Univ. of Tenn. v. Elliott, 478 U.S. 788, 791, 106 S.Ct. 3220, 92 L.Ed.2d 635 (1986) (citing United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 16 L.Ed.2d 642 (1966)) (" We have previously recognized that it is sound policy to apply principles of issue preclusion to the factfinding of administrative bodies acting in a judicial capacity." ). Assuming TTAB decisions may be entitled to preclusive effect, such application is not appropriate here because, as discussed below, the same likelihood-of-confusion issues were not decided by the TTAB as those brought in the action before the district court. When considering whether the application of issue preclusion is appropriate, we look at five elements:

(1) the party sought to be precluded in the second...

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