EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc.

• Decision Date: 09 November 1984
• Docket Number: No. 83-2745,83-2745
• Citation: 746 F.2d 375
• Parties: EZ LOADER BOAT TRAILERS, INC., Plaintiff-Appellant, v. COX TRAILERS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 375

746 F.2d 375

223 U.S.P.Q. 1101

EZ LOADER BOAT TRAILERS, INC., Plaintiff-Appellant, v. COX TRAILERS, INC., Defendant-Appellee.

No. 83-2745.

United States Court of Appeals Seventh Circuit.

Argued May 21, 1984.

Decided Oct. 17, 1984.

As Amended Oct. 19 and Nov. 9, 1984.

August E. Roehrig, Jr., Emrich & Dithmar, Chicago, Ill., for plaintiff-appellant.

W. Mack Webner, Littlepage & Webner, P.C., Arlington, Va., for defendant-appellee.

Before WOOD and ESCHBACH, Circuit Judges, and CAMPBELL, Senior District Judge. ^*

ESCHBACH, Circuit Judge.

EZ Loader Boat Trailers, Inc. ("EZ") brought this action in the district court alleging violations of the Lanham Act, 15 U.S.C. Secs. 1114(1)(a) and 1125(a), the Illinois Deceptive Trade Practices and Consumer Fraud Act, Ill.Rev.Stat. ch. 121 1/2, paragraphs 262 and 312, the Illinois Anti-Dilution Statute, Ill.Rev.Stat. ch. 140, p 22, and common-law unfair competition arising from the use of the name "Super Loader" on boat trailers by Cox Trailers, Inc. ("Cox"). Cox moved for summary judgment, arguing that the issue of likelihood of confusion was central to all of EZ's claims, and that that issue had already been litigated in Cox's favor. The district court 568 F.Supp. 1229, found that EZ was collaterally estopped from contesting the issue of confusion by a decision of the Court of Appeals for the Federal Circuit, and granted Cox's motion. We affirm.

I.

Both parties to this appeal manufacture boat trailers. The EZ trailers are sold under the names "EZ Loader," "Easy Loader," and "Mini Loader." In April 1979, Cox filed an application for registration of its mark "Super Loader" with the United States Patent and Trademark Office. EZ filed a Notice of Opposition to the registration and an opposition proceeding was instituted before the Trademark Trial and Appeal Board ("T.T.A.B."). EZ alleged in its opposition notice that "confusion, mistake and deception in the trade and in the minds of purchasers both as between the marks of [EZ] and [Cox] and as to the origin of the respective products will be likely ...." The T.T.A.B. received testimony and hundreds of exhibits on the issue of likelihood of confusion between the marks.

In March 1982, the T.T.A.B. held that "the registration and use of 'Super Loader' for boat trailers will not result in a likelihood of confusion, mistake or deception of purchasers." Ez Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 213 U.S.P.Q. 597, 601 (1982). In July 1982, EZ appealed the findings of the T.T.A.B. to the Court of Appeals for the Federal Circuit. While awaiting the decision of that court, EZ filed the instant action in the United States District Court for the Northern District of Illinois. EZ's five-count complaint alleged that Cox's use of the mark "Super Loader" constituted trademark infringement under the Lanham Act, 15 U.S.C. Secs. 1114(1)(a) and 1125(a), and violated the Illinois Deceptive Trade Practices and Consumer Fraud Act, Ill.Rev.Stat. ch. 121 1/2, paragraphs 262 and 312, and the Illinois Anti-Dilution Statute, Ill.Rev.Stat. ch. 140, p 22. One count also alleged that the use of the mark constituted common-law unfair competition. In every claim save the claim under the Anti-Dilution Act, EZ alleged that the use of the mark "Super Loader" in connection with boat trailers was likely to result in consumer confusion as to the source of Cox's trailers.

In May 1983, after the parties had briefed and argued the case in the district court, the Court of Appeals for the Federal Circuit released its opinion affirming the decision of the T.T.A.B. EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 706 F.2d 1213 (Fed.Cir.1983). The court of appeals stated that the only question before it was "whether the respective marks are sufficiently similar that there is a likelihood of confusion among the customers as to the source of the particular mark." Id. at 1215. Noting that EZ did not challenge the facts relied on by the T.T.A.B., and finding no error of law, the court of appeals affirmed the finding that no such likelihood existed.

Cox then moved for summary judgment in the district court, arguing that EZ was collaterally estopped from relitigating the issue of likelihood of conclusion and that a demonstration of such a likelihood was necessary for EZ to prevail on any of its claims. The district court agreed and granted the motion.

II.

In this court, EZ presents several challenges to the grant of summary judgment. It argues that it was error for the district court to give collateral effect to the decision of the court of appeals because of the limited nature of the previous proceedings. It contends that the intervening grant of federal registrations for its trademarks makes reliance on the doctrine of collateral estoppel inequitable. Alternatively, it argues that the decision of the court of appeals does not preclude it from proceeding on all of its claims because likelihood of confusion, at least as found by the court of appeals, is not central to each claim.

A. Application of Collateral Estoppel

Under the doctrine of collateral estoppel, once an issue has been "actually and necessarily determined, that determination is conclusive in subsequent suits based on a different cause of action" between the parties. Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 973, 59 L.Ed.2d 210 (1979); Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 649, n. 5, 58 L.Ed.2d 552 (1979); 1B Moore's Federal Practice p 0.441 (1983). EZ does not argue that the Court of Appeals for the Federal Circuit is not a court of competent jurisdiction, nor can it argue that the court did not decide the issue of whether a likelihood of confusion exists between EZ's and Cox's marks. Its argument that collateral estoppel should not apply is based on its claim that it did not have a fair and full opportunity to litigate the question in the previous proceedings. See Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 333, 91 S.Ct. 1434, 1445, 28 L.Ed.2d 788 (1971); Restatement (Second) of Judgments Sec. 28 (1982).

EZ's complaints center on what it perceives to be inadequacies in the proceedings before the T.T.A.B. Before we discuss these complaints further, it should be noted that, faced with an adverse determination by the T.T.A.B., EZ had a choice of appealing the Board's findings to the Court of Appeals for the Federal Circuit, or appealing to the district court. 15 U.S.C. Sec. 1071. If EZ had chosen to appeal to the district court, it would have been entitled to a de novo hearing at which it could have introduced additional evidence. By choosing instead to appeal to the court of appeals, EZ waived its right to such a hearing. 15 U.S.C. Sec. 1071(b)(1). The fact that EZ chose the forum in which to proceed weighs in favor of collateral application of that forum's findings, see, e.g., Miller Brewing Co. v. Jos. Schlitz Brewing Co., 605 F.2d 990, 992 (7th Cir.1979), cert. denied, 444 U.S. 1102, 100 S.Ct. 1067, 62 L.Ed.2d 787 (1980), and of discounting EZ's complaints of procedural inadequacies. Nevertheless, we will examine these complaints in turn.

In arguing that it did not receive a full and fair opportunity to litigate the issue of confusion, EZ focuses on the T.T.A.B. proceedings. The T.T.A.B. is limited by statute to determining whether to grant or deny registration of a trademark; it may not decide whether the use of a certain trademark violates the Lanham Act or grant an injunction against an infringing use. See 15 U.S.C. Sec. 1067. EZ contends that the limited jurisdiction of the T.T.A.B. argues against affording preclusive effect to its findings. However, the limited remedial powers of the Board are not in and of themselves an argument against the application of collateral estoppel. Courts have long held that where an agency acts in a judicial capacity and resolves disputes properly before it, the agency's findings may be given preclusive effect as long as the procedures utilized by the agency do not prevent the party against whom estoppel will be applied from having a fair opportunity to present its case. See United States v. Utah Construction and Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966) (res judicata); Bowen v. United States, 570 F.2d 1311, 1321-22 (7th Cir.1978) (collateral estoppel). There is no question that the T.T.A.B. was acting in a judicial capacity. An opposition proceeding is an adversary proceeding. Both parties to this appeal were represented by attorneys before the Board; both presented evidence and submitted briefs. Moreover, EZ sought and obtained judicial review of the Board's conclusions. See Bowen, 570 F.2d at 1322. We are not, therefore, concerned merely with the question of whether to give collateral effect to an agency determination. ¹

At least one other court has held that a decision of the Court of Customs and Patent Appeals (now the Court of Appeals for the Federal Circuit) affirming the T.T.A.B.'s finding of no likelihood of confusion collaterally estopped a plaintiff in a subsequent infringement action. Flavor Corporation of America v. Kemin Industries, Inc., 493 F.2d 275 (8th Cir.1974). Nevertheless, we are cognizant of the fact that the court of appeals was, of course, dependent upon the record developed before the T.T.A.B., as we are of the general policy that "the rules of issue preclusion should not be inexorably applied when a fair opportunity to litigate the issue in the prior proceeding was lacking." Bowen, 570 F.2d at 1322; Restatement (Second) of Judgments, Title E, Issue Preclusion, Introductory Note (1982). We will therefore consider EZ's arguments that the proceedings before the T.T.A.B. did not afford it a fair opportunity to present its case.

EZ's first complaint is that the T.T.A.B. did not entertain live testimony from witnesses. EZ fails to disclose how its case was affected in any way by the...