The National Law Forum

B&B Hardware, Inc. v. Hargis Industries, Inc.: Trademark Litigation Might Get Simpler

Trademark litigation includes two similar types of proceedings. First, and most common, issues of trademark infringement and cancellation of a mark may be raised in a trial (i.e., a traditional fight in either State Court or Federal District Court before a judge or jury involving oral testimony). Second, and less common, issues of trademark registration may be raised in a trademark opposition or cancellation proceeding before the Trademark Office. These proceedings are primarily conducted in writing and are governed by administrative rules published in the Federal Register based on the Federal Rules of Civil Procedure. While a trial may result in monetary damages or an injunction preventing a party from using a mark, the Trademark Office merely has the authority to grant or cancel federal trademark registrations.

Since the Trademark Office’s process does not allow for litigants to receive monetary awards, injunctions, or even a determination of infringement, entering the Trademark Office for a cancellation or opposition simplifies the proceedings to focus on a limited number of key issues, such as whether a likelihood of confusion exists between a registered mark and another mark. Along with their limited focus and less formal nature, litigants often found comfort in a the lower costs involved in proceedings before the Trademark Office. Generally, once a trademark registration was cancelled, the owner of the mark that was cancelled would understand that a claim for infringement in court was not likely to succeed and would stop using the mark.

In B&B Hardware, Inc. v. Hargis Industries, Inc., the United States Supreme Court was faced with the question of “[w]hether the Trademark Trial and Appeal Board’s (the “TTAB” or the “Board”) finding of a likelihood of confusion precludes Hargis from relitigating that issue in infringement litigation, in which likelihood of confusion is an element.” The long-standing dispute (almost 20 years) between the parties involved in the decision regarded the trademarks SEALTIGHT and SEALTITE. In 1996, Hargis applied for registration of its mark, SEALTITE. B&B opposed the registration based on an alleged likelihood of confusion of Hargis’s trademark with B&B’s own federally registered mark, SEALTIGHT. After applying the standard multi-factor likelihood of confusion test, the TTAB decided in favor of B&B and held that a likelihood of confusion existed between the marks.

At the same time as the proceedings before the TTAB, B&B sued Hargis for trademark infringement in Federal District Court. After receiving a favorable outcome in the proceeding before the TTAB, B&B argued in District Court that Hargis could not contest the TTAB’s determination that a likelihood of confusion existed due to the preclusive effect of the TTAB’s decision. The District Court disagreed with B&B and allowed the jury to hear the evidence and decide on the issue of confusion. The jury returned a verdict for Hargis, finding that there was no likelihood of confusion between the marks. The parties appealed the verdict, including the issue of the preclusive effect of the TTAB decision. The Eighth Circuit affirmed the decision of the District Court. The parties then petitioned for, and were granted, certiorari on the issue by the U.S. Supreme Court.

The Supreme Court reversed the decision of the Eighth Circuit and remanded the case for further proceedings, holding that as long as the ordinary elements of issue preclusion are met and the usages of the marks are materially the same, a finding that a likelihood of confusion exists by the TTAB should have preclusive effect in District Court proceedings.

The doctrine of “res judicata” or “issue preclusion” states that litigants should not get two bites at the same apple, or two chances to argue over the same issue. Thus, if the Trademark Trial and Appeal Board found overlap (i.e., likelihood of confusion) between two marks (despite using the simplified tools involved in proceedings before the Trademark Office), then a District Court should honor the TTAB’s determination and not force the parties to relitigate the issue.

Prior to this decision, if a case was simultaneously pending in District Court and before the TTAB, the TTAB would readily stay its determination until the litigation in District Court was resolved. Because of this, any time one of the parties to an opposition or cancellation proceeding became agitated, they would file a concurrent action before a District Court. Following the Supreme Court’s decision, it is unclear if the TTAB will continue to grant this courtesy.

Trademark oppositions and cancellations must now be taken very seriously. While the TTAB cannot award damages or find infringement, its decisions could now be used as grounds for finding infringement in District Court. For example, a party who defaults in a cancellation proceeding may well lose the right to defend itself properly in District Court if a subsequent action is filed. Going forward, mark owners with proceedings before the TTAB must consider whether to intentionally abandon a trademark application or registration in order to avoid an adverse decision that could have far-reaching effects.

ARTICLE BY

John E. Munro

Alain Villeneuve

Vedder Price

B&B Hardware, Inc. v. Hargis Industries, Inc.: Trademark Litigation Might Get Simpler

ARTICLE BY

John E. Munro

Alain Villeneuve

Vedder Price

Fourth Circuit Sustains Securities Fraud Claim Against Drug Manufacturer

On March 6, the US Court of Appeals for the Fourth Circuit found that the United States District Court for the Western District of North Carolina had erred in dismissing a class action lawsuit filed under Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) because the lower court had inappropriately relied on regulatory filings provided to the Securities and Exchange Commission and had incorrectly applied case law precedent. The plaintiff class contended that the defendants, Chelsea International, Ltd. and several of its corporate officers, materially misled investors over the risk associated with securing Food and Drug Administration (FDA) approval for a blood pressure medication that Chelsea was developing. Notably, the plaintiffs alleged that defendants had misled investors to believe that the FDA would approve the drug at issue based on the results of only one successful efficacy study, even though the FDA repeatedly had warned Chelsea that two successful studies and evidence of “duration of effect” would be necessary for approval of the new drug. The Fourth Circuit first held that the District Court erred in finding that Chelsea had failed to demonstrate the scienter necessary to sustain a securities fraud claim under the Exchange Act. The Fourth Circuit found that the District Court erred in its scienter analysis by considering SEC documents submitted by the defendants that were not integral to the complaint. The documents purportedly showed that the defendants did not sell any Chelsea stock during the class period. However, stock sales were never a part of the plaintiffs’ complaint and thus, the Fourth Circuit reasoned that the lower court should not have considered these SEC documents as evidence of the defendants’ intentions. Further, the Fourth Circuit held that material, non-public information known to the defendants about the status of the drug application conflicted with the defendants’ public statements on those subjects, which was an inconsistency the Fourth Circuit deemed sufficient to establish the severe reckless conduct necessary to establish an inference of scienter in securities fraud cases.

Zak v. Chelsea Therapeutics No. 13-2370 (4th Cir. Mar. 16, 2015)

ARTICLE BY

Michael S. Gordon

Katten Muchin Rosenman LLP

Nonprofit Hospitals Face Additional Regulatory Burdens in Financial Assistance and Debt Collection

Roughly 60 percent of hospitals nationwide either have received or are seeking tax-exempt status under the United States Treasury Department (Treasury) and Internal Revenue Service (IRS) rules and regulations. With new final rules and regulations adopted by the Treasury and the IRS effective December 29, 2014, nonprofit hospitals (referred to in the Federal Register as “charitable hospitals”) now face a number of additional requirements when attempting to collect debts owed for care provided to patients and face additional mandates related to financial assistance policies and qualification of certain low-income patients for financial assistance.

The final rules and regulations clarify the broad provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA), which added Section 501(r) to the Internal Revenue Code (Code) imposing the following four additional requirements on charitable hospitals to maintain tax-exempt status:

Conduct a community health needs assessment (CHN Assessment) at least once every three years and adopt an implementation strategy to meet those community health
needs, or be subject to a $50,000 tax penalty.
Establish a written financial assistance policy which prescribes the eligibility criteria for assistance, how patients apply for assistance, and how they are charged for care under the
policy, and a written emergency medical care policy requiring emergency care to individuals regardless of their eligibility for financial assistance.
Limit the use of gross charges and the amounts charged to those patients who qualify for financial assistance for emergency or other medically necessary care to not more than the amounts generally billed to individuals who have insurance covering such cases.
Make reasonable efforts to determine whether an individual is eligible for assistance under the financial assistance policy before engaging in extraordinary collection actions (EC Actions).

Additionally, the PPACA insists that a charitable hospital organization meet each of the above requirements separately with respect to each facility it operates.

Below are some requirements from the new rules and regulations that may be potential areas of focus for regulators in their review and enforcement actions against charitable hospitals.

- The CHN Assessment process requires careful documentation of each of the multiple levels of need assessment, community input and collaboration, and a hospital’s plan for addressing the need with an adopted strategy for implementation.
- A hospital’s financial assistance policy must contain all eligibility criteria, all financial assistance and discounts available under the policy, and methods to apply for financial assistance, as well as any actions that may be taken in the event of nonpayment under certain circumstances.
- Hospitals must continue to take certain measures to make the financial assistance policy, the policy’s application form and a plain language summary of the policy available upon request, available in certain areas of the hospital for visitors and patients (e.g. emergency department and hospital intake areas), available on a website, and available to members of the community served.
- Certain additional written notices with financial assistance policy information, summaries and hospital contact information for policy-related documents must be provided to patients against whom a hospital actually intends to engage in EC Action.
- Hospitals must limit the costs for any care for which financial assistance policy-eligible individuals will be personally responsible to not more than amounts generally billed (AGB), and the criteria and method for calculating the AGB must be clearly defined by a hospital in its financial assistance policy.
- Reasonable efforts, as defined in the new regulations, must be followed and carefully documented by hospitals during each step of an EC Action assessment application, including notification and further billing and collection communication(s) with financial assistance policy-eligible individuals. The regulations define EC Action as including, among other things, reporting adverse information about the individual to credit bureaus; requiring or deferring medically necessary care because of nonpayment of bills for previously provided care; and instituting legal process such as liens, foreclosure, attachment of property, or garnishing wages.

The full Treasury and IRS rules and regulations related to the additional requirements on charitable hospitals contain specific regulatory changes and other nuances not touched on in the “big picture” points mentioned above. The full text of the new regulations can be found at: http://www.gpo.gov/fdsys/pkg/FR-2014-12-31/pdf/2014-30525.pdf.

Charitable hospitals may lawfully bill for and collect funds they are owed for patient care. However, the new rules and regulations in this area mean hospital leadership and experienced legal counsel should closely review all related policies, procedures, and facility practices to ensure all billing and collection policies and practices fully comply with the law.

ARTICLE BY

David R. Broyles

Poyner Spruill LLP

Tax Issues in Divorce: Real Estate Itemization Credits

With the April 15th tax filing deadline quickly approaching, I am beginning to see an increase of the tax-related issues arise in my client’s cases. The right of either of the parties to claim itemized deductions associated with the real estate taxes and mortgage interest paid on the marital residence is a frequent issue of contention.

It is important to first understand that if you were divorced in the early part of 2015 and filing under a “married, filed jointly” designation for the 2014 tax year, by default, you are sharing in the itemized deduction with your spouse due to the joint filing. From a practicality standpoint, many divorced couples that file their last joint tax return together reach an agreement to equally split any tax refund or liability associated with their joint filing.

With a “married, filing separately” or “individual” tax filing designation, it is important to come to an agreement with your spouse or ex-spouse regarding the itemized deductions associated with the marital residence. As the combined deduction between yourself and your spouse cannot exceed the actual interests or taxes paid in a tax year, getting ahead of the issue and reaching an agreement prior to either party’s tax filing is extremely important.

For successfully navigating this issue, I recommend that you consider the following three points:

How much did either party pay towards the mortgage interest and real estate taxes?

With the overwhelming number of divorce matters settling by private agreement, it is important to take into consideration the financial obligations under the controlling agreement. For example, if a party is behind on child support support or failed to make timely mortgage payments, they should not receive the tax benefit of claiming 50% of the mortgage interest or real estate tax deductions.

It is also common for the parties to pay a disproportionate amount towards the monthly mortgage/tax obligation due to either a greater income level or private agreement. In these scenarios, I often find it useful for the parties to split the itemized deduction in direct proportion to the amount paid.

Balancing out the real estate tax deductions with other tax-related benefits.

Many parties often overlook the benefit of trading off real estate tax deductions with other tax-related benefits such as claiming the children as dependants, charity deductions or medical expenses. If the goal is to equalize tax credits to both parties in a divorce litigation, applying other deductions or credits to one party may assist the parties in achieving their tax credit equalization plan.

Maximize your tax benefit by speaking with a qualified tax professional.

The goal of applying any itemized deduction is to reduce your adjusted gross income (AGI) by as much as possible. As there may be scenarios in which it is beneficial from a tax standpoint for one spouse to claim the majority of the mortgage interest deduction, it is very important that you engage a qualified tax professional to maximize the tax benefit to both parties in the divorce process. Similar to my previous point, if one spouse benefits from taking a disproportionate amount of the real estate itemizations, there are other available remedies to ensure that the other party receives similar tax benefits, such as, claiming children as dependants and/or a uneven distribution of the charity donations.etc.

ARTICLE BY

David A. Beaver

Stark & Stark

New Jersey Law Blog

Are Employees in Pennsylvania Bound by their Contractual Commitments?

With an ever mobile workforce utilizing electronic devices, non-compete/non-solicitation agreements are more common than ever before. More employees at lower levels of organizations are being asked to sign such agreements which restrict their subsequent employment. Pennsylvania courts, like those in many other states, look with disfavor on such agreements – viewing them as historic restraints of trade which inhibit an individual’s ability to earn a living.

To be enforceable, such agreements must:

Relate to a contract for the sale of goodwill or sale of property or a contract for employment;
Be supported by adequate consideration; and,
Be reasonably limited in both time and territory.

Initial employment is sufficient consideration for such an agreement. If not entered into at or about the commencement of employment, then, to be enforceable, such an agreement must be supplemented by additional consideration – i.e., a monetary payment or benefit, change in job status, or conversion of an at-will relationship into a contract of employment for a specific period of time. All of these items are possible points of contention by a former employee seeking to avoid his commitment and to engage in competitive activity.

The Uniform Written Obligations Act (UWOA), however, provides that a signed, written promise is not unenforceable for lack of consideration if the writing contains an expressed statement in any form of language that the signer “intends to be legally bound.” Insertion of such language into a covenant not to compete thus raises the issue of whether an employer can prevent a former employee from trying to avoid his contractual obligation by claiming that his commitment was not supported by consideration (or additional consideration for such agreements made after the commencement of employment).

Pennsylvania courts generally will not review the adequacy of consideration in determining the enforceability of a contract. Courts, however, regularly do make such an inquiry when a covenant not to compete is at issue. Only new, valuable consideration will support the enforcement of such an obligation – not continued at-will employment, a contract under seal, or nominal consideration.

Thus, there is tension between the UWOA and the inherent reluctance of Pennsylvania courts to review the adequacy of consideration on one hand, and these courts’ inclination to ensure that the employee receives something of value in exchange for his post-employment commitment not to compete on the other hand. When called upon to resolve this conflict, both a Pennsylvania trial court and the Superior Court sided with the employee and held that the mere insertion of “intending to be legally bound” language from the UWOA into a covenant not to compete did not prevent the court from considering whether the agreement was supported by adequate consideration. Since the agreement at issue in that case was entered into after the commencement of employment without any additional consideration, both courts refused to hold the employee to his commitment.

These decisions clearly are inconsistent with the terms of the UWOA. The Supreme Court of Pennsylvania, therefore, has agreed to review the underlying case and determine whether the inherent dislike of covenants not to compete by courts will trump the literal language of the UWOA. If the Pennsylvania Supreme Court reverses the decision of the two lower courts, then all employers with a nexus to Pennsylvania will be well-advised to insert such “magic language” in all present and future covenants not to compete, thereby taking any question of consideration off the table.

ARTICLE BY

Martin Saunders

Steptoe & Johnson PLLC

Employers Take Note: The Supreme Court’s Game-Changing Decision in Young v. UPS Requires Review of Pregnancy Accommodation Policies and Practices

Earlier today, the Supreme Court issued a much-anticipated decision in the closely watched case of Young v. UPS, holding that a plaintiff may be able to prove unlawful failure to accommodate a pregnancy-related condition through evidence that other non-pregnant employees were provided with the requested accommodation. As further explained in this Alert, theYoung v. UPS decision promises dramatic changes in how pregnancy discrimination and accommodation claims are viewed and handled by courts nationwide, and requires employers to review and, if necessary, change their relevant policies and practices.

Young v. UPS involves former UPS driver Peggy Young, who, upon becoming pregnant, was put on a lifting restriction by her doctor: no lifting of more than 20 pounds during the first 20 weeks of pregnancy, and no lifting of more than 10 pounds through the remainder of the pregnancy. At that time, UPS required its drivers to be able to lift a minimum of 70 pounds. As a result, the company told Young that she could not return to work until the restriction was released. The lower federal court granted summary judgment in favor of UPS, holding that no pregnancy discrimination had occurred, and the Fourth Circuit Court of Appeals affirmed. In one of its most important employment discrimination decisions in decades, today the Supreme Court vacated the Fourth Circuit’s decision, allowing Young to proceed in her pregnancy discrimination claim.

The Supreme Court held that an individual may establish a prima facie case of pregnancy discrimination by “showing actions taken by the employer from which one can infer, if such actions remain unexplained, that it is more likely than not that such actions were based on a discriminatory criterion.” Put another way, an employee may establish her prima faciecase of pregnancy discrimination by pointing to some evidence that the employer’s actions were discriminatory. As the Court explained, the burden of making this showing is “not onerous,” and, significantly, does not require the plaintiff to show that non-pregnant employees who were allegedly treated more favorably were in similarly situated positions. Rather, the employee needs only to show that: (1) she was pregnant at the relevant time; (2) her employer did not accommodate her; and (3) her employer did accommodate others who are similar only “in their ability or inability to work.” The Court reasoned that Young could satisfy her prima facie burden by pointing to evidence that UPS had policies accommodating non-pregnant employees’ lifting restrictions – for example, its Americans with Disabilities Act (ADA) and job injury policies provided for light duty-type arrangements – but the same accommodation was not extended to pregnant employees.

The Court went on to explain that once the plaintiff meets the initial burden of establishing her prima facie case, then, as is typical in discrimination cases, the burden shifts to the employer to articulate a legitimate, non-discriminatory reason for denying the requested accommodation. While this burden traditionally set a comparatively low bar for employers to overcome, the Court cautioned that an employer’s reasoning that “it is more expensive or less convenient” to extend protection to pregnant women will not suffice, though the Court did not elaborate as to what articulated reasoning will, in fact, be deemed to be legitimate and sufficient. If an employer is able to satisfy its burden of articulating a legitimate, non-discriminatory reason, the final burden shifts back to the plaintiff to show that reason to be pretextual. While showing “pretext” traditionally has presented a comparatively high bar for plaintiffs to overcome, here again the Court lent a helping hand to plaintiffs in pregnancy discrimination cases by holding that this burden may be met if the employee can point to evidence that the employer’s policies “impose a significant burden on pregnant workers, and that the employer’s ‘legitimate, non-discriminatory’ reasons are not sufficiently strong to justify the burden, but rather – when considered along with the burden imposed – give rise to an inference of intentional discrimination.” In Young’s case, for example, the Court reasoned that if the facts are as Young says they are, she may be able succeed in her claims by proving “that UPS accommodates most non-pregnant employees with lifting limitations while categorically failing to accommodate pregnant employees with lifting limitations,” thereby giving rise to an inference of intentional discrimination based on pregnancy.

Today’s Supreme Court’s decision in Young v. UPS is a game changer for pregnancy discrimination and accommodation cases. Setting lower burdens for plaintiffs and a higher burden for employers to overcome than, arguably, ever before seen from the Court in employment discrimination cases, at a minimum employers can expect that going forward it will be substantially easier for plaintiffs to succeed in pregnancy discrimination and accommodation claims, and that policies that tend to negatively impact pregnant employees – particularly where there is evidence that the requested accommodations have been provided to non-pregnant employees – are likely to be scrutinized and may well be deemed to be unlawful. It is important for employers to review their policies and practices with today’s ruling in mind, and to make whatever changes necessary to ensure appropriate accommodation of, and no adverse effect with respect to, pregnant employees. Any requests for pregnancy-related accommodations must be taken seriously and evaluated thoughtfully, so as to ensure compliance and help prevent claims.

ARTICLE BY

Sonya Rosenberg

Neal, Gerber & Eisenberg LLP

Full Speed Ahead for Meaningful Use re: Medicare and Medicaid Electronic Health Records

On Friday, March 20, 2015, the Centers for Medicare and Medicaid Services (“CMS”) issued a proposed rule which would make significant changes to the federal Medicare and Medicaid Electronic Health Records (“EHR”)Incentive Programs (collectively the “Meaningful Use Program”).

The Meaningful Use Program operates in 3 stages, with providers required to demonstrate increasing use/metrics at each stage to continue to receive payments. Under the Meaningful Use Program, eligible professionals, eligible hospitals and critical access hospitals can receive incentive payments for demonstrating Meaningful Use of certified EHR technology. Furthermore, starting in 2015, health care providers who are eligible to participate in the program, but choose not to participate or are not able to demonstrate Meaningful Use, may see downward payment adjustments to the amounts reimbursed by Medicare. Thus, the Meaningful Use Program has been a source of additional income to some providers, but for many others it has been a serious concern due to the significant capital outlays required to demonstrate Meaningful Use of certified EHR and potential penalties that may be forthcoming. The proposed rule from last Friday has some providers even more concerned about the feasibility of meeting Meaningful Use standards and the push to achieve Meaningful Use when so many are struggling.

Under the proposed rule, CMS will make several changes to the Meaningful Use Program. The following are descriptions of some of CMS’ important proposals:

Stage 3 Meaningful Use will have an optional year in 2017 and starting in 2018, all providers will report on the same definition of Meaningful Use at Stage 3, regardless of prior participation. CMS intends this requirement to respond to stakeholder input re the complexity of the program, success to date and to set a long-term sustainable foundation for the Meaningful Use Program.
In order to align the Meaningful Use Program with other CMS incentives, such as the Physician Quality Reporting System or PQRS, CMS will require all providers to report on a calendar year EHR reporting period beginning in 2017.
CMS desires to promote improved patient outcomes and health information exchange in Stage 3 and thus the rule focuses on patient engagement. For example, providers must meet two of the following three requirements for patient engagement: (i) patients view, download or transmit their health information; (ii) secure messaging between providers and patients; and (iii) patient generated health data from a non-clinical setting is incorporated into a certified EHR.

While CMS sets forth many goals in support of its proposed rulemaking (e.g., the triple aim), one message comes through clearly, CMS is pushing forward with EHR and is not slowing down due to sluggish adoption by health care practitioners. Accordingly, providers and their industry groups have been lamenting the onerous burdens of the Meaningful Use Program and the fact that less than 35% of hospitals and only a small fraction of physicians have met Stage 2 requirements. Furthermore, providers who fail to meet the minimum use thresholds could be subject to hundreds of millions of dollars in penalties.

Contrary to providers, those in the health information technology or digital health industry should be quite pleased with the rule as it may provide them with additional customers and markets as providers try to interface with and collect data from patients’ health wearables (e.g., smart watches with heart rate sensors).

In sum, the proposed rule clearly signifies that CMS is planning to take a stringent approach to ensure that providers are meaningfully compliant by 2018. Providers can take steps to mitigate their exposure to penalties by investing in certified EHR, perhaps in conjunction with applying for hardship exemptions from the Meaningful Use Program’s requirements, to delay the date where they must comply or be subject to penalties. Health information technology vendors generally and EHR vendors specifically should plan to modify and ensure that their technology is compliant and sufficiently differentiated to provide value to health care providers that must comply with the Meaningful Use Program’s requirements.

ARTICLE BY

Eric A. Klein

Vinay Bhupathy

Sheppard, Mullin, Richter & Hampton LLP

Supreme Court Holds That TTAB Decisions on Likelihood of Confusion May Bind Courts in Infringement Litigation

In a 7 – 2 decision issued March 24, 2015, the U.S. Supreme Court held that decisions of the Trademark Trial and Appeal Board (TTAB) on the issue of likelihood of confusion, made in registration cases, can be binding on courts in deciding the same issue in subsequent infringement cases. Such “issue preclusion” will likely arise if the uses of the marks before the court are materially the same as the uses considered by the TTAB. The decision in B&B Hardware, Inc. v. Hargis Industries, Inc. is likely trigger more hotly contested — and more expensive — TTAB litigation.

In this case, B&B owned a registration for “Sealtight” for metal fasteners used in the aerospace industry. Hargis sought to register “Sealtite” for metal screws used in the manufacture of buildings. B&B opposed registration, claiming that use of the marks on the respective goods would create a likelihood of confusion. The TTAB agreed and sustained the opposition. In a parallel infringement action, the district court refused to be bound by the TTAB decision, reasoning that the TTAB is not an Article III court. The jury went on to find that confusion was not likely.

The Eighth Circuit affirmed. It held that while an administrative agency’s decision can be a basis for applying collateral estoppel, the doctrine was not appropriate in this context, primarily because the TTAB and the Eighth Circuit use different factors to evaluate likelihood of confusion.

In an opinion by Judge Alito, the U.S. Supreme Court reversed. It held first that “issue preclusion is not limited to those situations in which the same issue is between two courts” (emphasis in original). Rather, under Astoria Fed. Sav. & Loan Assn. v. Solomino, 501 U.S. 104 (1991), “courts may take it as a given” that Congress intends issue preclusion to apply to administrative proceedings where appropriate, except when a statutory purpose to the contrary is evident. The court held that no such purpose was evident in the Lanham Act of 1946.

The court acknowledged that the TTAB considers different factors than do courts in determining likelihood of confusion. In particular, the TTAB compares marks and goods as they are set forth in prior registrations and pending applications, whereas a court will consider all elements of the parties’ uses, including the context in which the marks appear on packaging. But the court held that the same legal standard of “likelihood of confusion” always applies, even if different usages are considered. Therefore, the possibility of applying collateral estoppel cannot be categorically ruled out.

Importantly, however, the court did not hold that issue preclusion always applies. The question depends primarily on whether the actual usages of the respective marks are “materially different” from the usages specified in the applications or registrations at issue. “If the TTAB does not consider the marketplace usage of the parties’ marks, the TTAB’s decision should have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue,” it said.

Justice Ginsburg separately concurred to emphasize this point. Quoting the authoritative McCarthy on Trademarks and Unfair Competition treatise, she noted that contested registrations are often decided upon “a comparison of the marks in the abstract and apart from their marketplace usage.” When the registration proceeding is of that character, she said, there will be no preclusion in a later infringement suit.

As a result, the preclusive effect of a prior TTAB decision will be a point of contention in a subsequent infringement action. The court will have to look closely at what the TTAB decided, and the evidence it relied upon. For example, in some cases the opposer relies on a registration which is unrestricted as to trade channels or likely purchasers, even though the opposer’s actual business may be restricted to a narrow area. This can sometimes lead to anomalous results, if the applicant seeks to register the same or similar mark for the same or similar goods, but uses its mark in entirely different fields of endeavor, such that the prospects for confusion in the “real world” are remote. Nevertheless, the TTAB will likely refuse registration in that scenario. It would appear that the B&B decision would permit the court, in a subsequent infringement case, to disregard the TTAB decision and decide “likelihood of confusion” based on the parties’ actual use.

In many cases, however, the question of preclusive effect will not be so clear cut. For this reason, parties litigating in the TTAB must consider that the TTAB decision will compel an identical result if infringement litigation ensues later. Typically, TTAB cases have been litigated in a more leisurely and less expensive manner than a court case. After B&B, some may choose to develop a fuller record to help assure preclusion in the event of a future infringement action against the applicant. This would lead to TTAB cases being litigated even more aggressively (and expensively) than they are now.

The decision may also encourage opposers, who fail to prevent registration at the TTAB, to seek review not by appeal to the federal circuit, but by the alternative means of filing a civil action in U.S. District Court under Section 21 of the Lanham Act. In such a case, the opposer would be entitled to de novo review of the TTAB decision and would be able to include infringement claims. The TTAB decision would have no preclusive effect in that case.

The B&B decision finally answers the question of which different circuits have taken different approaches. It does not, however, provide an answer to the question of whether a TTAB decision on likelihood of confusion will or will not have a preclusive effect on a court in a particular infringement litigation. That question will be determined on a case-by-case basis, under normal principles of issue preclusion.

ARTICLE BY

Andrew Baum

Foley & Lardner LLP

Law School Applicants Drop 50% in Last Decade; Class of 2010 Provides Insights Into Reason for Decline

According to a report just released by the Law School Admission Council, the number of people applying for law school in the Fall of 2015 as of March 13 is less than half of the number of people who applied to an accredited law school for the Fall of 2005 — 41,136 vs. 95,800.

Another study just out from Ohio State University’s Michael E. Moritz College of Law professor Deborah Jones Merritt, who examined the job prospects for new lawyers admitted to the Ohio bar in 2010, reflects the stark realities facing recent law school grads:

Overall unemployment rate is 6.3%
40% work for law firms
20% currently work in jobs that require no law degree
Percentage of solo practitioners is up significantly from graduates a decade ago

This chart from Merritt’s report details the employment status for the Class of 2010 nine months and 55 months post-graduation:

law

Merritt found that many law school graduates might have difficulty finding legal work because of geographical constraints. She reports that two-thirds of the students seek bar admission in the state where they attended law school, and three-fourths stay within the same region as that school.

Gender also has a role to play, according to Merritt:

Men are more likely to work in private practice or business
Women are more likely to work in government, public interest and academia
Men outnumber women in solo and small firm practices
Four years after passing the bar, 58% of male lawyers were in private practice vs. 45% of female lawyers

This data may be welcome news to current practitioners who see the glut of graduates taking a toll on market rates for legal services and who struggle daily with increased competition. What’s your take?

ARTICLE BY

Stephen Fairley

The Rainmaker Institute

The National Law Forum

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