1. John B. Pegram Fish & Richardson P.C. Issue Preclusion and Estoppel: Trademark and Patent Perspectives 1 © AIPLA 2015 George W. Lewis Westerman, Hattori et al

2. © AIPLA 2015 2 Disclaimer The purpose of this presentation is to provide educational and informational content, and is not intended to provide legal services or advice. The opinions, views and other statements expressed by the presenter are solely those of the presenter, and do not necessarily represent those of his employer, clients, AIPLA or AIPPI-US.

3. © AIPLA 2015 3 What Is Issue Preclusion? “Sometimes two different tribunals are asked to decide the same issue. When that happens, the decision of the first tribunal usually must be followed by the second, at least if the issue is really the same. Allowing the same issue to be decided more than once wastes litigants' resources and adjudicators‘ time, and it encourages parties who lose before one tribunal to shop around for another. The doctrine of collateral estoppel or issue preclusion is designed to prevent this from occurring.”

4. © AIPLA 2015 4 General Rule of Issue Preclusion The general rule is that “[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.” Issue preclusion attaches only “[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment.” Arizona v. California, 530 U.S. 392, 414, 120 S.Ct. 2304 (2000).

5. © AIPLA 2015 5 Issue Estoppels A statute or rule may limit or prevent raising an issue in a tribunal after the issue was raised or could have been raised in an earlier proceeding. For example:  A statutory estoppel preventing a party or a real-party-in- interest (RPI) from raising a claim in a court case or PTO proceeding “on any ground that the petitioner raised or reasonably could have raised during [an earlier] inter partes review.” Current developments:  It appears that “reasonably could have raised” is being narrowly interpreted.

6. © AIPLA 2015 6 Issue Bars A statute or rule may prevent raising an issue in a tribunal after the issue was raised in another proceeding or impose a time limit on when it can be raised in the second tribunal. For example:  A party that files a civil action for invalidity of a patent claim is barred from filing an IPR on the same patent.  A party cannot file an IPR Petition more than a year after it or an RPI is served with a Complaint for infringement of the same patent. Current issue:  Failure to identify an RPI in an IPR Petition may lead to a refusal to institute or dismissal of the IPR, especially if there may be a bar or estoppel involving the RPI.

7. © AIPLA 2015 7 Can a PTO Decision Create Issue Preclusion in a District Court without a Statutory Provision? Traditional Understanding: No. New Understanding: Yes, it may. “So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.” B&B Hardware v. Hargis Industries, --- S.Ct. ----, 2015 WL 1291915 at *14, 113 U.S.P.Q.2d 2045 (March 24, 2015).

8. © AIPLA 2015 8 Will B&B Affect Patent Proceedings? Probably not.  Specific statutes provide for estoppels and bars relating to PTAB Proceedings.  [ITC – MORE]

9. © AIPLA 2015 9 Is the B&B Decision Surprising? Yes – for most U.S. trademark attorneys  Until now, the TTAB applied the rules of issue preclusion to earlier court decisions.  But, the courts did not apply issue preclusion rules to earlier TTAB decisions. No – for almost everyone else  Issue preclusion is the general rule in the United States  The right to use a trademark is more tightly tied to registration in many other countries.

10. © AIPLA 2015 10 U.S Trademark Law Principles “One who first uses a distinct mark in commerce thus acquires rights to that mark.” “Registration is significant.”  Registration on the USPTO Principal Register is prima facie evidence of validity of the mark and registration, of ownership and the exclusive right to use the mark.

11. © AIPLA 2015 11 Summary of the B&B Dispute SEALTIGHT v. SEALTITE (1) B & B registered SEALTIGHT for certain “metal fasteners … namely, self-sealing nuts, bolts, screws, rivets and washers, all having a captive O-ring for use in the aerospace industry.” Later, Hargis applied to register SEALTITE for certain “metal screws for use in the manufacture of metal and post-frame buildings.”

12. © AIPLA 2015 12 Summary of the B&B Dispute SEALTIGHT v. SEALTITE (2) TTAB Case: B & B opposed Hargis' application  Grounds: SEALTIGHT and SEALTITE are confusingly similar TTAB Decision  SEALTITE could not be registered because the marks and goods were so similar as to be likely to cause confusion. Hargis did not seek judicial review of the TTAB decision in either the Federal Circuit or District Court.

13. © AIPLA 2015 13 Summary of the B&B Dispute SEALTIGHT v. SEALTITE (3) District Court  B&B sued Hargis for infringement.  The court refused to apply issue preclusion to the TTAB decision.  A jury found no likelihood of confusion. Court of Appeals  Affirmed District Court judgment.

14. © AIPLA 2015 14 Is likelihood of confusion for purposes of registration the same standard as likelihood of confusion for purposes of infringement? The Supreme Court concluded it is, for at least three reasons. 1. The operative language of the law is essentially the same. o The same “statutory test” applies. o Minor differences in wording do not change that reality. 2. The language used in these provisions has been central to trademark registration law since at least 1881. o “That could hardly have been by accident.” 3. There is no reason to think that the same district judge in the same case should apply two separate standards of likelihood of confusion to infringement and registerability.

15. © AIPLA 2015 15 TO ANSWER, OR NOT TO ANSWER Pre B&B Hardware Previous advice - No Harm in Answering

16. © AIPLA 2015 16 IF ISSUE PRECLUSION DOES NOT APPLY OUTSIDE THE TTAB The TTAB only Decides the Right to Register and NOT the Right to Use The TTAB cannot award damages or issue Injunctive Relief The Burden of going forward and proving the case is on the Opposer The Losing Applicant Could Keep Using Mark Without Appeal, and Vigorously Defend if Sued Successful Opposer Still Had to File Suit to Challenge Use and Obtain Injunctive Relief

17. © AIPLA 2015 17 Post B&B Hardware IF the Applicant Answers - Applicant is potentially at Great Risk Now An Applicant must consider the likelihood of ISSUE PRECLUSION applying in a subsequent action for Infringement and Damages in Federal Court. The Decision acknowledges “for a great many registration decisions issue preclusion obviously will not apply because the ordinary elements will not be met.” Full Impact of Decision still unknown until Lower Courts apply the Decision Applicant will have to asses if the “usages” are “materially the same ”

18. © AIPLA 2015 18 STANDARD BEFORE THE TTAB In the absence of any restriction to the nature and use of the goods, it is presumed that these goods and/or services travel in all normal channels of trade, and are available to the same class of purchasers. If the services/goods of the application and registration are broadly identified and they are presumed to encompass the more narrowly identified goods/services in the application/registrations

19. © AIPLA 2015 19 STANDARD BEFORE THE FEDERAL DISTRICT COURT Generally the Court will consider the actual usages of the goods of the Plaintiff and Defendant

20. © AIPLA 2015 20 EXAMPLE - Marks: SPRACO vs. SPRAYCO Goods: Goods Identified in the Registration - Spray Nozzles vs. Goods identified in the opposed Application - Dispenser Bottles for Commercial and Home Use and Closures Registrant/Opposer prevailed in the Opposition ACTUAL USAGE - REGISTRANT ‘S GOODS – Nozzles for commercial spray paint system vs. APPLICANT’S GOODS - hand operated sprayers, comprising plastic bottle sold empty and plastic spray nozzle hand operated sprayers, comprising plastic bottle sold empty and plastic spray nozzle for home use What result in Federal District Court? Are the “usages” are “materially the same”?

21. © AIPLA 2015 21 EXAMPLE - Comparison of Standard Character Marks and Special Form Marks STANDARD BEFORE THE TTAB - If a mark (in either an application or a registration) is presented in standard characters, the owner of the mark is not limited to any particular depiction of the mark. It is presumed that the registered/applied for mark in standard characters presumably could be used in the same manner of display as the Opposed mark. Registrant’s Mark – vs. Applicant’s Mark – TH (STANDARD CHARACTERS) Registrant/Opposer prevails in the Opposition

22. What result in Federal District Court? Are the “usages” are “materially the same”? ACTUAL USAGE © AIPLA 2015 22

23. © AIPLA 2015 23 [ Big Debate ?]

24. © AIPLA 2015 24 Cases of No Issue Preclusion If the TTAB considers a completely different mark, issue preclusion would not apply. In the case of a judgment entered by consent, or default, none of the issues is actually litigated; therefore, there would be no issue preclusion. Settlements ordinarily do not result in issue preclusion, unless it is clear that the parties intend their agreement to have such an effect. Consent judgments ordinarily support claim preclusion, but not issue preclusion.  The losing party would be barred from making the same claim against the winning party.  No effect on third party litigation.

25. Thank You! 25 John B. Pegram Senior Principal Fish & Richardson P.C. New York pegram@fr.com www.fr.com George W. Lewis Partner Westerman Hattori Daniels & Adrian, LLP Washington, DC glewis@whda.com www.whda.com