TMEP 1217: Res Judicata, Collateral Estoppel, and Stare Decisis

October 2017 Edition of the TMEP

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1217    Res Judicata, Collateral Estoppel, and Stare Decisis

A prior adjudication against an applicant may be dispositive of a later application for registration of the same mark on the basis of the same facts and issues, under the doctrine of res judicata, collateral estoppel, or stare decisis. Prior adjudications include decisions of the Trademark Trial and Appeal Board or any of the reviewing courts.

Res Judicata. Res judicata, or claim preclusion, protects against relitigation of a previously adjudicated claim between the same parties or their privies based on the same cause of action. In re Bose Corp., 476 F.3d 1331, 81 USPQ2d 1748 (Fed. Cir. 2007) (stating that application for registration of speaker design is barred by Federal Circuit’s 1985 decision affirming refusal of registration of the same mark for the same goods on the ground that the proposed mark was functional). A plaintiff is barred by res judicata from bringing a second action if: "(1) there is identity of parties (or their privies); (2) there has been an earlier final judgment on the merits of a claim; and (3) the second claim is based on the same set of transactional facts as the first." Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., 719 F.3d 1367, 1372, 107 USPQ2d 1167, 1171 (Fed. Cir. 2013) (quoting Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1362, 55 USPQ2d 1854, 1856 (Fed. Cir. 2000)); Sharp Kabushiki Kaisha v. ThinkSharp, Inc., 448 F.3d 1368, 1370, 79 USPQ2d 1376, 1378 (Fed. Cir. 2006); Mayer/Berkshire Corp. v. Berkshire Fashions, Inc., 424 F.3d 1229, 1232, 76 USPQ2d 1310, 1312 (Fed. Cir. 2005); Zachry Infrastructure, LLC v. Am. Infrastructure, Inc., 101 USPQ2d 1249 (TTAB 2011). A defendant in an earlier proceeding is precluded from bringing a later action if: "(1) the claim or defense asserted in the second action was a compulsory counterclaim that the defendant failed to assert in the first action, or (2) the claim or defense represents what is essentially a collateral attack on the first judgment." Nasalok Coating Corp. v. Nylok Corp., 522 F.3d 1320, 1324, 86 USPQ2d 1369, 1372 (Fed. Cir. 2008) (finding that cancellation petitioner is barred from challenging the validity of the subject registration where the petitioner could have asserted, but did not assert, a claim of invalidity in an earlier infringement action, and noting that the cancellation petition amounted to a collateral attack on the district court’s judgment).

Identity of Parties. The examining attorney should not invoke res judicata based on an inter partes case or a federal court proceeding involving the applicant, since there is no identity of parties. In this situation, the examining attorney may rely on stare decisis. In re Alfred Dunhill Ltd., 224 USPQ 501, 503 n.7 (TTAB 1984); In re Multivox Corp. of Am., 209 USPQ 627 (TTAB 1981); In re Bordo Prods. Co., 188 USPQ 512 (TTAB 1975). Collateral estoppel may be invoked even where identity of parties is lacking, if the other prerequisites for applying the doctrine are met.

Same Set of Transactional Facts. Res judicata does not apply unless the subsequent claim is based on that same set of transactional facts as the prior claim. Levi Strauss & Co., 719 F.3d at 1372, 107 USPQ2d at 1171; see also Chutter, Inc. v. Great Concepts, LLC, 119 USPQ2d 1865, 1870 (TTAB 2016). Even when there is an identity of parties, a claim for trademark infringement is not the same as an inter partes claim for opposition or cancellation of the registration of a mark. The Court of Appeals for the Federal Circuit has warned that the USPTO should use caution in applying res judicata based on an infringement action, because infringement actions and Board proceedings are "different causes of action [that] may involve different sets of transactional facts, different proofs, different burdens and different public policies. Registrability is not at issue in infringement litigation, and although the likelihood of confusion analysis presents a ‘superficial similarity,’ differences in transactional facts will generally avoid preclusion." Mayer/Berkshire, 424 F.3d at 1232, 76 USPQ2d at 1313 (citing Jet, 223 F.3d at 1364-65, 55 USPQ2d at 1857). See also Nasalok, 522 F.3d at 1324, 86 USPQ2d at 1372.

Collateral Estoppel. In the absence of res judicata, the related principle of collateral estoppel, or issue preclusion, can also bar relitigation of the same issue in a second action between the same parties or their privies. Collateral estoppel applies where: "(1) a prior action presents an identical issue; (2) the prior action actually litigated and adjudged that issue; (3) the judgment in that prior action necessarily required determination of the identical issue; and (4) the prior action featured full representation of the estopped party." Stephen Slesinger Inc. v. Disney Enters. Inc., 702 F3d 640, 644, 105 USPQ2d 1472, 1474 (Fed. Cir. 2012); see also Levi Strauss & Co., 719 F.3d at 1371, 107 USPQ2d at 1171; Mayer/Berkshire, 424 F.3d at 1232, 76 USPQ2d at 1313; Jet, 223 F.3d at 1366, 55 USPQ2d at 1859; NH Beach Pizza LLC v. Cristy's Pizza Inc., 119 USPQ2d 1861, 1864 (TTAB 2016); In re Anderson, 101 USPQ2d 1912, 1916 (TTAB 2012). In Lukens Inc. v. Vesper Corp., 1 USPQ2d 1299, 1301 (TTAB 1986), aff’d unpub'd op., 831 F.2d 306 (Fed. Cir. 1987), the Board applied collateral estoppel in an opposition proceeding based on a prior judgment in an ex parte proceeding in 1957, because the applicant had appealed the decision to federal district court and, as such, had the opportunity to introduce new evidence and had a "full and fair opportunity" to litigate the issue of functionality. On the other hand, in Flowers Indus., Inc. v. Interstate Brands Corp., 5 USPQ2d 1580, 1584 (TTAB 1987), the Board refused to apply collateral estoppel, distinguishing Lukens and noting that "the absence of a prior resort to [trial de novo in federal court] in the present case weighs heavily against the application of issue preclusion." See also In re Cordua Rests., Inc., 823 F.3d 594, 601, 118 USPQ2d 1632, 1635 n.2 (Fed. Cir. 2016) (rejecting appellant’s argument that an ex parte determination of registrability in a previous application was binding in a subsequent application as a matter of issue preclusion). In In re Anderson, 101 USPQ2d at 1917, the Board found the doctrine of collateral estoppel to be applicable and to preclude registration in an ex parte proceeding based on a final judgment involving an identical likelihood-of-confusion issue entered in a prior inter partes proceeding involving the applicant and cited registrant, and in Zachry Infrastructure, LLC v. Am. Infrastructure, Inc., 101 USPQ2d 1249 (TTAB 2011), the Board determined that the district court’s finding that the term AMERICAN INFRASTRUCTURE had not acquired distinctiveness was binding on the parties and the Board under the doctrine of collateral estoppel, but declined to enter judgment on the genericness claims since the district court had not addressed the issue of genericness. In Nextel Commc'ns, Inc. v. Motorola, Inc., 91 USPQ2d 1393, 1399 (TTAB 2009), the Board found issue preclusion and entered judgment in favor of opposer on the issue of whether applicant’s 911 Hz chirp sound functioned as a mark for applicant’s two-way radios, based on an earlier opposition proceeding involving the same parties and nearly the same proposed mark, but found issue preclusion inapplicable as to other goods that were not at issue in the earlier proceeding. In Daimler Chrysler Corp. v. Maydak, 86 USPQ2d 1945, 1950 (TTAB 2008), the Board held that it did not need to decide a collateral estoppel claim where a permanent injunction issued during civil litigation between the parties prohibits the applicant from using or registering the mark for any products or services, therefore, making its registration by the applicant "a legal impossibility."

Stare Decisis. Stare decisis provides that when a court has once laid down a principle of law as applicable to a certain set of facts, it will adhere to that principle, and apply it to all future cases, where the facts are substantially the same, regardless of whether the parties and properties are the same. In re Johanna Farms Inc., 8 USPQ2d 1408, 1410 (TTAB 1988).

Changed Circumstances. All these doctrines are discretionary and will not be applied where circumstances relating to trademark use and consumer recognition have changed since the prior judgment was rendered. See In re Honeywell Inc., 8 USPQ2d 1600, 1602–03 (TTAB 1988) (finding that res judicata did not preclude application for registration of a configuration of a circular thermostat cover based on prior decisions holding the design functional, where the marks were somewhat different, and the applicant presented evidence that conditions in the marketplace had changed in the seventeen years since the record in its prior application closed); Johanna Farms, 8 USPQ2d at 1411-12 (stating that stare decisis did not preclude registration of LA YOGURT for yogurt under §2(f) based on a prior decision holding the mark unregistrable on the Supplemental Register, where applicant submitted additional evidence in the nature of a survey and consumer letters dealing with the question of how purchasers perceive the proposed mark); Flowers Indus., 5 USPQ2d at 1584 (finding that application for registration of HONEY WHEAT for bread under §2(f) is not precluded by a forty-year old Commissioner’s decision affirming a refusal of registration of the same mark on the same grounds, because the applicant had now used the proposed mark for more than fifty years, whereas its predecessor had used it for only ten years at the time of the earlier decision); Bordo Prods., 188 USPQ at 514 (holding that application for registration of BORDO for pitted dates is not precluded by decision in an opposition by the owner of the cited registration against applicant’s earlier application for the same mark for the same goods due to changed circumstances based on affidavits that the goods move through different channels of trade, evidence of contemporaneous use for over fifty years with no known actual confusion, and failure of the owner of the cited registration to take steps to enjoin applicant from using the mark).

In Bose, 476 F.3d at 1334, 81 USPQ2d at 1751, the applicant argued that facts and circumstances had changed since the prior decision in that: (1) the Court did not explicitly consider the "curved front edge" of the design in the prior decision; (2) there had been a change in the legal standard for functionality, in view of the Supreme Court’s decision in TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001 (2001); and (3) applicant had "presented additional evidence, such as the absence of promotional material that ‘touts’ the utilitarian aspects of the mark." The Court rejected these arguments, noting that it had acknowledged in the prior decision that the design includes a "bowed front edge," and "bowed" is simply another term for "curved;" that TrafFix did not affect the prior functionality analysis and provides further support for finding that Bose’s design is functional; and that the focus on advertising materials, which do not promote the utilitarian aspects of the curved front edge, is not relevant because the proposed mark is an entire pentagonal-shaped design and not merely the curved front edge, and the promotional advertisements submitted in the earlier case "did clearly promote the functional reason for the overall design." Bose, 476 F.3d at 1335-37, 81 USQP2d at 1752-53.

Slight differences in a mark or in an identification of goods or services will not avoid application of these doctrines. In re Orion Research Inc., 669 F.2d 689, 205 USPQ 688 (C.C.P.A. 1980); Miller Brewing Co. v. Coy Int’l Corp., 230 USPQ 675 (TTAB 1986). See also MasterCard Int’l Inc. v. Am. Express Co., 14 USPQ2d 1551, 1553 (TTAB 1990) (finding that applicant is barred by collateral estoppel from litigating the issue of descriptiveness or genericness of the proposed mark as used on the services that were the subject of the prior proceeding, but may go forward with respect to use of the mark on other services).

Final Decision Required. These doctrines should be invoked only after the time for further court review has expired and no such review has been sought or, if sought, the review action has been terminated. If a proceeding is pending, the examining attorney may suspend action on the application pending termination, once all other matters are in condition for publication or final refusal. See TMEP §716.02(d) regarding suspension.

Examining Attorney Should Issue Appropriate Refusals. The examining attorney should issue refusals based on res judicata, collateral estoppel, or stare decisis, as appropriate, but should not rely exclusively on such doctrines. Even if the examining attorney believes that registration is barred by one of these doctrines, he or she must also issue and provide full evidentiary support for any relevant substantive refusals.