Opposition To A Trademark Registration Was Not Barred By Collateral Estoppel Or Res Judicata Arising From A Prior District Court Infringement Decision

Case: Mayer/Berkshire Corp. v. Berkshire Fashions, Inc., No. 04-1254 (Fed Cir. 9/22/05)

The One Sentence Summary: The PTO’s Trademark Trial and Appeal Board’s (the “Board”) grant of summary judgment based on the principle of res judicata arising from an earlier trademark infringement action was improper, because, among other things, the standards for claiming trademark infringement and opposing trademark registration are not the same.

What They Were Fighting About: In an earlier district court cause, Berkshire Fashions had prevailed in its defense of a trademark infringement action involving the mark “BERKSHIRE,” brought by Mayer/Berkshire, who had registered the mark for class 25 category of goods. Subsequent to prevailing in the trademark action, Berkshire Fashions filed an application for the mark “BERKSHIRE” for class 18 category of goods, which was opposed by Mayer/Berkshire pursuant to Section 13 of the Lanham Trademark Act, 15 USC §1063. The Board held that Mayer/Berkshire’s opposition action was barred by res judicata based on the earlier district court decision, because the jury had found that there was no likelihood of confusion from Berkshire Fashion’s use of the BERKSHIRE mark.

Federal Circuit Holdings:

• The Board erred in holding that the claim was barred by res judicata because the trademark action and the registration opposition action were not based on the same transactional facts.

A second suit is barred by claim preclusion if (1) the parties are the same (2) there was an earlier final judgment on the merits of the claim and (3) the second claim is based on the same transactional facts as the first. Citing Jet, Inc. v. Sewage Aeration Systems, 223 F. 3d 1360 (Fed. Cir. 2000). “[A] trademark infringement action in the district court is not automatically of
preclusive effect in a cancellation proceeding in the PTO, for a claim for trademark infringement may not be based on the same transactional facts as a petition to cancel a registered mark, or the facts relevant to infringement may not be sufficiently applicable to trademark registration to warrant preclusion. In a trademark infringement action, the owner of a registered mark sues for relief from the injury caused by the defendant’s actual sale, offering for sale, or advertising of goods or services bearing the challenged mark, whereas an opposition to registration is based on the content of the registration application. . . . These different causes of action may involve different sets of transactions, different proofs, different burdens, and different public policies. Registration is not at issue in infringement litigation, and although the likelihood of confusion analysis prevents a superficial similarity, differences in transactional facts will generally avoid preclusion.” Citing Jet, Inc., 223 F. 3d 1360 (citations omitted).

• The Board erred in holding that the claim was barred by res judicata because the two actions invoke different standards.

A claim of infringement is “a claim of injury resulting from applicant’s use of its mark in commerce” whereas a claim of priority and likelihood of confusion is “a claim that the opposer believes it would be damaged by the registration of the applicant’s mark.” (emphasis in original) “The issue litigated in the district court action was whether the marketing by Berkshire Fashions . . . was likely cause confusion with Mayer/Berkshire’s registered BERKSHIRE trademarks. In an opposition proceeding the question of likelihood of confusion requires consideration not only of what the applicant has already marketed or has stated the intention to market, but all of the items for which registration is sought.”

• The Board failed to consider evidence of actual confusion which arose from materially changed marketing practices by Berkshire Fashions after the court’s judgment.

The reversal of summary judgment was also appropriate where Mayer/Berkshire’s evidence was sufficient at the summary judgment stage to show that in the five year period between the district court trial and the opposition proceeding Berkshire Fashions’ marketing evolved from the “inconspicuous marking of some goods with labels bearing only the trade name” to “major marketing activity promoting the trademark BERKSHIRE in a manner that . . . caused significant actual confusion.” The court agreed with the court in Litton Industries, Inc. v. Litronix, Inc., 577 F. d 709, 711 (CCPA 1978) which stated, “res judicata and collateral estoppel are not applicable where it is apparent that all the questions of fact and law involved in the second proceeding were not determined in the first proceeding.”

• The Court advised that the PTO should be wary of applying the doctrine of res judicata.

“[T]he purposes of administrative trademark procedures include protecting both the consuming public and the purveyors. Thus the party objecting the registration may raise grounds not only of commercial injury to itself, but of confusion or deception or mistake to the consumer.” Because preclusion can be a “drastic remedy,” it “must be certain to every intent.”