B&B HARDWARE, INC. v. HARGIS INDUSTRIES, INC., DBA SEALTITE BUILDING FASTENERS ET AL., ET AL.
No. 13–352
SUPREME COURT OF THE UNITED STATES
March 24, 2015
575 U. S. ____ (2015)
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT. Argued December 2, 2014—Decided March 24, 2015
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337 (1906).
Respondent Hargis Industries, Inc. (Hargis), tried to register its trademark for SEALTITE with the United States Patent and Trademark Office pursuant to the
Later, in an infringement suit before the District Court, B&B argued that Hargis was precluded from contesting the likelihood of confusion because of the TTAB’s decision. The District Court disagreed. The Eighth Circuit affirmed, holding that preclusion was unwarranted because the TTAB and the court used different factors to evaluate likelihood of confusion, the TTAB placed too much emphasis on the appearance and sound of the two marks, and Hargis bore the burden of persuasion before the TTAB while B&B bore it before the District Court.
Held: 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 a district court, issue preclusion should apply. Pp. 8–22.
(a) An agency decision can ground issue preclusion. The Court’s cases establish that when Congress authorizes agencies to resolve disputes, “courts may take it as given that Congress has legislated with the expectation that [issue preclusion] will apply except when a statutory purpose to the contrary is evident.” Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U. S. 104, 108 (1991). Constitutional avoidance
(b) Neither the Lanham Act’s text nor its structure rebuts the “presumption” in favor of giving preclusive effect to TTAB decisions where the ordinary elements of issue preclusion are met. Astoria, 501 U. S., at 108. This case is unlike Astoria. There, where exhausting the administrative process was a prerequisite to suit in court, giving preclusive effect to the agency’s determination in that very administrative process could have rendered the judicial suit “strictly pro forma.” Id., at 111. By contrast, registration involves a separate proceeding to decide separate rights. Pp. 12–14.
(c) There is no categorical reason why registration decisions can never meet the ordinary elements of issue preclusion. That many registrations will not satisfy those ordinary elements does not mean that none will. Pp. 15–22.
(1) Contrary to the Eighth Circuit’s conclusion, the same likelihood-of-confusion standard applies to both registration and infringement. The factors that the TTAB and the Eighth Circuit use to assess likelihood of confusion are not fundamentally different, and, more important, the operative language of each statute is essentially the same.
Hargis claims that the standards are different, noting that the registration provision asks whether the marks “resemble” each other,
(2) The fact that the TTAB and district courts use different procedures suggests only that sometimes issue preclusion might be inappropriate, not that it always is. Here, there is no categorical “reason to doubt the quality, extensiveness, or fairness,” Montana v. United States, 440 U. S. 147, 164, n. 11 (1979), of the agency’s procedures. In large part they are exactly the same as in federal court. Also contrary to the Eighth Circuit’s conclusion, B&B, the party opposing registration, not Hargis, bore the burden of persuasion before the TTAB, just as it did in the infringement suit. Pp. 19–21.
(3) Hargis is also wrong that the stakes for registration are always too low for issue preclusion in later infringement litigation.
716 F. 3d 1020, reversed and remanded.
ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, GINSBURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined. GINSBURG, J., filed a concurring opinion. THOMAS, J., filed a dissenting opinion, in which SCALIA, J., joined.
B&B HARDWARE, INC., PETITIONER v. HARGIS INDUSTRIES, INC., DBA SEALTITE BUILDING FASTENERS, DBA EAST TEXAS FASTENERS ET AL.
No. 13–352
SUPREME COURT OF THE UNITED STATES
March 24, 2015
575 U. S. ____ (2015)
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
JUSTICE ALITO delivered the opinion of the Court.
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.
This case concerns the application of issue preclusion in the context of trademark law. Petitioner, B&B Hardware, Inc. (B&B), and respondent Hargis Industries, Inc. (Hargis), both use similar trademarks; B&B owns SEALTIGHT while Hargis owns SEALTITE. Under the
In addition to permitting a party to object to the registration of a mark, the
The question before this Court is whether the District Court in this case should have applied issue preclusion to the TTAB’s decision that SEALTITE is confusingly similar to SEALTIGHT. Here, the Eighth Circuit rejected issue preclusion for reasons that would make it difficult for the doctrine ever to apply in trademark disputes. We disagree with that narrow understanding of issue preclusion. Instead, consistent with principles of law that apply in innumerable contexts, we hold that a court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met. We therefore reverse the judgment of the Eighth Circuit and remand for further proceedings.
I
A
Trademark law has a long history, going back at least to
Though federal law does not create trademarks, see, e.g., Trade-Mark Cases, 100 U. S. 82, 92 (1879), Congress has long played a role in protecting them. In 1946, Congress enacted the
Registration is significant. The
To obtain the benefits of registration, a mark owner files
If a trademark examiner believes that registration is warranted, the mark is published in the Official Gazette of the PTO.
Opposition proceedings before the TTAB are in many ways “similar to a civil action in a federal district court.” TTAB Manual of Procedure §102.03 (2014) (hereinafter TTAB Manual), online at http://www.uspto.gov (as visited Mar. 20, 2015, and available in Clerk of Court’s case file). These proceedings, for instance, are largely governed by the Federal Rules of Civil Procedure and Evidence. See
The primary way in which TTAB proceedings differ from ordinary civil litigation is that “proceedings before the Board are conducted in writing, and the Board’s actions in a particular case are based upon the written record therein.” TTAB Manual §102.03. In other words, there is no live testimony. Even so, the TTAB allows parties to submit transcribed testimony, taken under oath and subject to cross-examination, and to request oral argument. See
When a party opposes registration because it believes the mark proposed to be registered is too similar to its own, the TTAB evaluates likelihood of confusion by applying some or all of the 13 factors set out in In re E. I. DuPont DeNemours & Co., 476 F. 2d 1357 (CCPA 1973). After the TTAB decides whether to register the mark, a party can seek review in the U. S. Court of Appeals for the Federal Circuit, or it can file a new action in district court. See
The
B
Petitioner B&B and respondent Hargis both manufacture metal fasteners. B&B manufactures fasteners for the aerospace industry, while Hargis manufactures fasteners for use in the construction trade. Although there are obvious differences between space shuttles and A-frame buildings, both aerospace and construction engineers prefer fasteners that seal things tightly. Accordingly, both B&B and Hargis want their wares associated with tight seals. A feud of nearly two decades has sprung from this seemingly commonplace set of facts.
In 1993 B&B registered SEALTIGHT for “threaded or unthreaded metal fasteners and other related hardwar[e]; namely, self-sealing nuts, bolts, screws, rivets and washers, all having a captive o-ring, for use in the aerospace industry.” App. 223a (capitalization omitted). In 1996, Hargis sought to register SEALTITE for “self-piercing and self-drilling metal screws for use in the manufacture of metal and post-frame buildings.” App. 70a (capitalization omitted). B&B opposed Hargis’ registration because, although the two companies sell different products, it believes that SEALTITE is confusingly similar to SEALTIGHT.
The twists and turns in the SEALTIGHT versus SEALTITE controversy are labyrinthine. The question whether either of these marks should be registered, and if so, which one, has bounced around within the PTO for about two decades; related infringement litigation has been before the Eighth Circuit three times; and two separate juries have been empaneled and returned verdicts. The full story could fill a long, unhappy book.
For purposes here, we pick up the story in 2002, when the PTO published SEALTITE in the Official Gazette. This prompted opposition proceedings before the TTAB,
Invoking a number of the DuPont factors, the TTAB sided with B&B. The Board considered, for instance, whether SEALTIGHT is famous (it’s not, said the Board), how the two products are used (differently), how much the marks resemble each other (very much), and whether customers are actually confused (perhaps sometimes). See App. to Pet. for Cert. 55a–71a. Concluding that “the most critical factors in [its] likelihood of confusion analysis are the similarities of the marks and the similarity of the goods,” id., at 70a, the TTAB determined that SEALTITE—when “used in connection with ‘self-piercing and self-drilling metal screws for use in the manufacture of metal and post-frame buildings’”—could not be registered because it “so resembles” SEALTIGHT when “used in connection with fasteners that provide leakproof protection from liquids and gases, fasteners that have a captive o-ring, and ‘threaded or unthreaded metal fastners and other related hardware . . . for use in the aerospace industry’ as to be likely to cause confusion,” id., at 71a. Despite a right to do so, Hargis did not seek judicial review in either the Federal Circuit or District Court.
All the while, B&B had sued Hargis for infringement. Before the District Court ruled on likelihood of confusion, however, the TTAB announced its decision. After a series of proceedings not relevant here, B&B argued to the District Court that Hargis could not contest likelihood of confusion because of the preclusive effect of the TTAB
B&B appealed to the Eighth Circuit. Though accepting for the sake of argument that agency decisions can ground issue preclusion, the panel majority affirmed for three reasons: first, because the TTAB uses different factors than the Eighth Circuit to evaluate likelihood of confusion; second, because the TTAB placed too much emphasis on the appearance and sound of the two marks; and third, because Hargis bore the burden of persuasion before the TTAB, while B&B bore it before the District Court. 716 F. 3d 1020 (2013). Judge Colloton dissented, concluding that issue preclusion should apply. After calling for the views of the Solicitor General, we granted certiorari. 573 U. S. ___ (2014).
II
The first question that we must address is whether an agency decision can ever ground issue preclusion. The District Court rejected issue preclusion because agencies are not Article III courts. The Eighth Circuit did not adopt that view, and, given this Court’s cases, it was right to take that course.
This Court has long recognized that “the determination of a question directly involved in one action is conclusive as to that question in a second suit.” Cromwell v. County of Sac, 94 U. S. 351, 354 (1877). The idea is straightforward: Once a court has decided an issue, it is “forever settled as between the parties,” Baldwin v. Iowa State Traveling Men’s Assn., 283 U. S. 522, 525 (1931), thereby “protect[ing]” against “the expense and vexation attending multiple lawsuits, conserv[ing] judicial resources, and foster[ing] reliance on judicial action by minimizing the possibility of inconsistent verdicts,” Montana v. United States, 440 U. S. 147, 153–154 (1979). In short, “a losing
Although the idea of issue preclusion is straightforward, it can be challenging to implement. The Court, therefore, regularly turns to the Restatement (Second) of Judgments for a statement of the ordinary elements of issue preclusion. See, e.g., Bobby v. Bies, 556 U. S. 825, 834 (2009); New Hampshire v. Maine, 532 U. S. 742, 748–749 (2001); Baker v. General Motors Corp., 522 U. S. 222, 233, n. 5 (1998). The Restatement explains that subject to certain well-known exceptions, 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.” Restatement (Second) of Judgments §27, p. 250 (1980); see also id., §28, at 273 (listing exceptions such as whether appellate review was available or whether there were “differences in the quality or extensiveness of the procedures followed”).
Both this Court’s cases and the Restatement make clear that issue preclusion is not limited to those situations in which the same issue is before two courts. Rather, where a single issue is before a court and an administrative agency, preclusion also often applies. Indeed, this Court has explained that because the principle of issue preclusion was so “well established” at common law, in those situations in which Congress has authorized agencies to resolve disputes, “courts may take it as given that Congress has legislated with the expectation that the principle [of issue preclusion] will apply except when a statutory purpose to the contrary is evident.” Astoria, supra, at 108. This reflects the Court’s longstanding view that “‘[w]hen an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it
Although apparently accepting Astoria and Utah Construction,1 Hargis argues that we should not read the
At the outset, we note that Hargis does not argue that giving issue preclusive effect to the TTAB’s decision would be unconstitutional. Instead, Hargis contends only that
We reject Hargis’ statutory argument that we should jettison administrative preclusion in whole or in part to avoid potential constitutional concerns. As to the Seventh Amendment, for instance, the Court has already held that the right to a jury trial does not negate the issue-preclusive effect of a judgment, even if that judgment was entered by a juryless tribunal. See Parklane Hosiery Co. v. Shore, 439 U. S. 322, 337 (1979). It would seem to follow naturally that although the Seventh Amendment creates a jury trial right in suits for trademark damages, see Dairy Queen, Inc. v. Wood, 369 U. S. 469, 477, 479–480 (1962), TTAB decisions still can have preclusive effect in such suits. Hargis disputes this reasoning even though it admits that in 1791 “‘a party was not entitled to have a jury determine issues that had been previously adjudicated by a chancellor in equity.’” Brief for Respondent 39 (quoting Parklane Hosiery, supra, at 333). Instead, Hargis contends that issue preclusion should not apply to TTAB registration decisions because there were no agencies at common law. But our precedent holds that the Seventh Amendment does not strip competent tribunals of the
The claim that we should read the
III
The next question is whether there is an “evident” reason why Congress would not want TTAB decisions to
The
This case is also unlike Astoria, where a plaintiff claiming discrimination first went to an agency and then sued in court about the same alleged conduct. See 501 U. S., at 111. The Court concluded, quite sensibly, that the structure of that scheme indicated that the agency decision could not ground issue preclusion. When exhausting an administrative process is a prerequisite to suit in court, giving preclusive effect to the agency’s determination in that very administrative process could render the judicial suit “strictly pro forma.” Ibid.; see also Elliott, supra, at 795–796 (similar analysis). Here, if a party urged a district court reviewing a TTAB registration decision to give
What matters here is that registration is not a prerequisite to an infringement action. Rather, it is a separate proceeding to decide separate rights. Neither is issue preclusion a one-way street. When a district court, as part of its judgment, decides an issue that overlaps with part of the TTAB’s analysis, the TTAB gives preclusive effect to the court’s judgment. See App. to Pet. for Cert. 54a–55a (giving preclusive effect to the District Court’s earlier decision regarding SEALTIGHT’s distinctiveness because the issue “was actually litigated and necessarily determined”).
Hargis also argues that allowing TTAB decisions to have issue-preclusive effect will adversely affect the registration process. Because of the TTAB’s “‘limited jurisdiction’” and “‘the narrowness of the issues’” before it, Hargis contends, the Court should infer that TTAB proceedings are supposed to be more streamlined than infringement litigation. See Brief for Respondent 30 (quoting TTAB Manual §402.01). But, the argument goes, if TTAB decisions can have issue-preclusive effect in infringement litigation, parties may spend more time and energy before the TTAB, thus bogging down the registration process. This concern does not change our conclusion. Issue preclusion is available unless it is “evident,” Astoria, supra, at 108, that Congress does not want it. Here, if a streamlined process in all registration matters was particularly dear to Congress, it would not have authorized de novo challenges for those “dissatisfied” with TTAB decisions.
At last we turn to whether there is a categorical reason why registration decisions can never meet the ordinary elements of issue preclusion, e.g., those elements set out in §27 of the Restatement (Second) of Judgments. Although many registrations will not satisfy those ordinary elements, that does not mean that none will. We agree with Professor McCarthy that issue preclusion applies where “the issues in the two cases are indeed identical and the other rules of collateral estoppel are carefully observed.” 6 McCarthy §32:99, at 32–244; see also 3 Gilson §11.08[4][i][iii][B], p. 11–319 (“Ultimately, Board decisions on likelihood of confusion . . . should be given preclusive effect on a case-by-case basis”).
A
The Eighth Circuit’s primary objection to issue preclusion was that the TTAB considers different factors than it does. Whereas the TTAB employs some or all of the DuPont factors to assess likelihood of confusion, the Eighth Circuit looks to similar, but not identical, factors identified in SquirtCo v. Seven-Up Co., 628 F. 2d 1086, 1091 (CA8 1980). The court’s instinct was sound: “[I]ssues are not identical if the second action involves application of a different legal standard, even though the factual setting of both suits may be the same.” 18 C. Wright, A. Miller, & E. Cooper, Federal Practice & Procedure §4417, p. 449 (2d ed. 2002) (hereinafter Wright & Miller). Here, however, the same likelihood-of-confusion standard applies to both registration and infringement.
To begin with, it does not matter that registration and infringement are governed by different statutory provisions. Often a single standard is placed in different statutes; that does not foreclose issue preclusion. See, e.g., Smith v. Bayer Corp., 564 U. S. 299 (2011). Neither does it matter that the TTAB and the Eighth
The real question, therefore, is whether likelihood of confusion for purposes of registration is the same standard as likelihood of confusion for purposes of infringement. We conclude it is, for at least three reasons. First, the operative language is essentially the same; the fact that the registration provision separates “likely” from “to cause confusion, or to cause mistake, or to deceive” does not change that reality.3 See 2 Gilson §5.01[2][a], at 5–17 (explaining that “the same statutory test” applies). Second, the likelihood-of-confusion language that Congress used in these Lanham Act provisions has been central to trademark registration since at least 1881. See Act of Mar. 3, 1881, ch. 138, §3, 21 Stat. 503 (using a “likely to cause confusion” standard for registration). That could hardly have been by accident. And third, district courts can cancel registrations during infringement litigation,
Hargis responds that the text is not actually the same because the registration provision asks whether the marks “resemble” each other,
Hargis’ argument falls short, however, because it mistakes a reason not to apply issue preclusion in some or even many cases as a reason never to apply issue preclusion. Just because the TTAB does not always consider the
This is a standard application of issue preclusion. For instance, if an entire car crash is litigated in state court, and then one of the drivers also tries to litigate in federal court a separate claim about the same crash, the second court will apply issue preclusion because the same issue was already decided. If, however, the second litigation was about a different car crash, there would be no issue preclusion. Even if the same legal standard—e.g., negligence—applied in both cases, the usages (i.e., the facts of the different crashes) would be different.
The same is true in the trademark context. If the TTAB does not consider the full range of a mark’s usages, then it is not deciding “likelihood of confusion” for all of those usages. This does not result from different standards, but from different usages. Hargis is correct that “likelihood of confusion” for purposes of registration is often about a different set of usages than “likelihood of confusion” for purposes of infringement, but that does not mean that the underlying legal standard is different.
Hargis and the Eighth Circuit both point to the fact that the TTAB often gives more weight to the appearance and sound of a mark than some district courts do. That may be true, but it is not because the TTAB applies a different standard. Rather, it is because in the context of a registration proceeding, those factors are often the most critical. See, e.g., 3 McCarthy §20:15, at 20–45 (“the Board must decide the registration issue on the basis of the mark and goods as described in the application”). For instance, the TTAB often has before it a drawing of the mark, rather than the mark as it is used in commerce. See ibid. When
In sum, the same legal standard applies in both TTAB registration proceedings and district court infringement litigation. When the usages adjudicated by the TTAB are materially the same as those before a district court, the “issue” is the same.
B
The Eighth Circuit’s second primary objection was that TTAB procedures are different from district court procedures. But while that is true, it does not mean that the TTAB’s decisions should not have preclusive effect. The Restatement (Second) of Judgments makes clear that procedures in the second forum may be so different from those in the first that issue preclusion should not apply. See Restatement (Second) of Judgments §28(3), at 273. This happens, for example, when the second forum provides procedural opportunities—such as a right to a jury trial—that were unavailable in the first. See id., §28, Comment d. But as we have already explained, the right to a jury trial does not, on its own, prevent an administrative decisions from grounding issue preclusion in a later suit.
Hargis is correct that the TTAB uses different procedures from those of a district court. As Hargis points out, there is no live testimony, but the TTAB does allow for the use of depositions and other discovery tools. These are common tools in administrative law, and they can provide a “full and fair opportunity to litigate” the issues before the agency. See Montana, 440 U. S., at 153. There is no reason to doubt that the TTAB’s procedures are sufficient to ground issue preclusion in many cases. The Eighth Circuit’s concerns about the TTAB’s procedures were misplaced.
Hargis also argues that the stakes for registration are too low for issue preclusion to apply. But as we have already explained, registration is a significant process with important legal consequences. When a party opposes registration, both sides have every incentive to litigate the issue fully. The TTAB’s decisions are backed up by plenary review, which further indicates that they are intended to be weighty decisions. Hargis’ argument that registration is a low-stakes proceeding is simply incorrect.
In conclusion, we hold that a court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met. We therefore reverse the judgment of the Eighth Circuit and remand for further proceedings consistent with this opinion.
SAMUEL A. ALITO, JR.
ASSOCIATE JUSTICE OF THE SUPREME COURT
Materiality, of course, is essential—trivial variations between the usages set out in an application and the use of a mark in the marketplace do not create different “issues,” just as trivial variations do not create different “marks.” See generally 4 id., §23:50, at 23–265 (explaining that “adding descriptive or non-distinctive” elements to another’s mark generally will not negate confusion). Otherwise, a party could escape the preclusive effect of an adverse judgment simply by adding an immaterial feature to its mark. That is not the law. See, e.g.,
A fortiori, if the TTAB considers a different mark altogether, issue preclusion would not apply. Needless to say, moreover, if the TTAB has not decided the same issue as that before the district court, there is no reason why any deference would be warranted.
For a similar reason, the Eighth Circuit erred in holding that issue preclusion could not apply here because the TTAB relied too heavily on “appearance and sound.” App. to Pet. for Cert. 10a. Undoubtedly there are cases in which the TTAB places more weight on certain factors than it should. When that happens, an aggrieved party should seek judicial review. The fact that the TTAB may have erred, however, does not prevent preclusion. As Judge Colloton observed in dissent, “‘issue preclusion prevent[s] relitigation of wrong decisions just as much as right ones.’” 716 F.3d, at 1029 (quoting Clark v. Clark, 984 F.2d 272, 273 (CA8 1993)); see also
B
Hargis also argues that registration is categorically incompatible with issue preclusion because the TTAB uses procedures that differ from those used by district courts. Granted, “[r]edetermination of issues is warranted if there is reason to doubt the quality, extensiveness, or fairness of procedures followed in prior litigation.” Montana, 440 U.S., at 164, n. 11; see also Parklane Hosiery, 439 U.S., at 331, and n. 15 (similar). But again, this only suggests that sometimes issue preclusion might be inappropriate, not that it always is.
No one disputes that the TTAB and district courts use different procedures. Most notably, district courts feature
Here, there is no categorical “reason to doubt the quality, extensiveness, or fairness,” ibid., of the agency’s procedures. In large part they are exactly the same as in federal court. See
The Eighth Circuit likewise erred by concluding that Hargis bore the burden of persuasion before the TTAB. B&B, the party opposing registration, bore the burden, see
C
Hargis also contends that the stakes for registration are so much lower than for infringement that issue preclusion should never apply to TTAB decisions. Issue preclusion may be inapt if “the amount in controversy in the first action [was] so small in relation to the amount in controversy in the second that preclusion would be plainly unfair.”
The benefits of registration are substantial. Registration is “prima facie evidence of the validity of the registered mark,”
The importance of registration is undoubtedly why Congress provided for de novo review of TTAB decisions in district court. It is incredible to think that a district court’s adjudication of particular usages would not have preclusive effect in another district court. Why would
V
For these reasons, the Eighth Circuit erred in this case. On remand, the court should apply the following rule: 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.
The judgment of the United States Court of Appeals for the Eighth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
B & B HARDWARE, INC., PETITIONER v. HARGIS INDUSTRIES, INC., DBA SEALTITE BUILDING FASTENERS, DBA EAST TEXAS FASTENERS ET AL.
No. 13–352
SUPREME COURT OF THE UNITED STATES
[March 24, 2015]
575 U. S. ____ (2015)
GINSBURG, J.
The Court rightly recognizes that “for a great many registration decisions issue preclusion obviously will not apply.” Ante, at 14–15. That is so because contested registrations are often decided upon “a comparison of the marks in the abstract and apart from their marketplace usage.” 6 J. McCarthy, Trademarks and Unfair Competition §32:101, p. 32–247 (4th ed. 2014). When the registration proceeding is of that character, “there will be no [preclusion] of the likel[ihood] of confusion issue . . . in a later infringement suit.” Ibid. On that understanding, I join the Court’s opinion.
B&B HARDWARE, INC., PETITIONER v. HARGIS INDUSTRIES, INC., DBA SEALTITE BUILDING FASTENERS, DBA EAST TEXAS FASTENERS ET AL.
No. 13–352
SUPREME COURT OF THE UNITED STATES
[March 24, 2015]
575 U. S. ____ (2015)
THOMAS, J., with whom SCALIA, J., joins
The Court today applies a presumption that when Congress enacts statutes authorizing administrative agencies to resolve disputes in an adjudicatory setting, it intends those agency decisions to have preclusive effect in Article III courts. That presumption was first announced in poorly supported dictum in a 1991 decision of this Court, and we have not applied it since. Whatever the validity of that presumption with respect to statutes enacted after its creation, there is no justification for applying it to the Lanham Act, passed in 1946. Seeing no other reason to conclude that Congress implicitly authorized the decisions of the Trademark Trial and Appeal Board (TTAB) to have preclusive effect in a subsequent trademark infringement suit, I would affirm the decision of the Court of Appeals.
I
A
The presumption in favor of administrative preclusion the Court applies today was first announced in Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U.S. 104, 108 (1991). In that case, the Court confronted the question
Despite rejecting the availability of preclusion, the Court nevertheless, in dictum, announced a presumption in favor of giving preclusive effect to administrative determinations “where Congress has failed expressly or impliedly to evince any intention on the issue.” Id., at 110. That dictum rested on two premises. First, that “Congress is understood to legislate against a background of common-law adjudicatory principles.” Id., at 108. And, second, that the Court had “long favored application of the common-law doctrines of collateral estoppel (as to issues) and res judicata (as to claims) to those determinations of administrative bodies that have attained finality.” Id., at 107.
I do not quarrel with the first premise, but I have serious doubts about the second. The Court in Astoria offered only one decision predating the enactment of the ADEA to shore up its assertion that Congress had legislated against a background principle in favor of administrative preclusion—United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422 (1966). See Astoria, supra, at 107.1 And that decision cannot be read for the broad proposition
Like Astoria itself, Utah Construction discussed administrative preclusion only in dictum. The case arose out of a contract dispute between the United States and a private contractor. 384 U.S., at 400. The contract at issue contained a disputes clause providing for an administrative process by which “‘disputes concerning questions of fact arising under th[e] contract’” would be decided by the contracting officer, subject to written appeal to the head of the department. Id., at 397–398. The Wunderlich Act of 1954 likewise provided that such administrative factfinding would be “final and conclusive” in a later breach-of-contract action “‘unless the same is fra[u]dulent or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence.’” Id., at 399. Because both “the disputes clause [of the contract] and the Wunderlich Act categorically state[d] that administrative findings on factual issues relevant to questions arising under the contract [would] be final and conclusive on the parties,” the Court required the lower courts to accept those findings. Id., at 419. Only after acknowledging that its decision “rest[ed] upon the agreement of the parties as modified by the Wunderlich Act” did the Court go on to comment that the decision was “harmonious with general principles of collateral estoppel.” Id., at 421.
To create a presumption based solely on dictum would be bad enough, but the principles Utah Construction referred to were far too equivocal to constitute “long-established and familiar” background principles of the common law of the sort on which we base our statutory inferences. Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783 (1952). Although Utah Construction asserted that “[w]hen an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to
B
If the occasion had arisen in Astoria for the Court to examine the history of administrative preclusion, it would have discovered that the issue was far from settled.
At common law, principles of res judicata and collateral estoppel applied only to a decision by a “court of competent jurisdiction.” Aurora City v. West, 7 Wall. 82, 102 (1869); accord, Hopkins v. Lee, 6 Wheat. 109, 113 (1821);
Nineteenth century courts generally understood the term “court of competent jurisdiction” to include all courts with authority and jurisdiction conclusively to resolve a dispute. See J. Wells, A Treatise on the Doctrines of Res Judicata and Stare Decisis §§422–423, pp. 336–338 (1878); 2 Black, supra, §516, at 613–614. Thus, courts of law, courts of equity, admiralty courts, and foreign courts could all satisfy the requirement of a “[c]ourt of competent juris-
But however broadly “[c]ourt of competent jurisdiction” was defined, it would require quite a leap to say that the concept encompasses administrative agencies, which were recognized as categorically different from courts. E.g., Pearson v. Williams, 202 U.S. 281 (1906); F. Cooper, Administrative Agencies and the Courts 241–242 (1951) (taking the position that agencies “are not courts, and their determinations are not judgments“). This distinction stems from the Constitution itself, which vests the “judicial Power” not in administrative agencies, but in federal courts, whose independence is safeguarded by certain constitutional requirements.
It is therefore unsurprising that federal courts—including this Court—have been far more hesitant than today’s majority to extend common-law preclusion principles to decisions of administrative tribunals. In Pearson, for example, this Court declined to recognize any preclusive effect of a decision of an immigration board. 202 U.S., at 284–285. Writing for the Court, Justice Holmes explained that “[t]he board is an instrument of the executive power, not a court“; that it consisted of officials “whose duties are declared to be administrative by” statute; and that “[d]ecisions of a similar type long have been recognized as decisions of the executive department, and cannot constitute res judicata in a technical sense.” Ibid.
Other courts likewise declined to apply general preclusion principles to decisions of administrative agencies. For example, as late as 1947, the D. C. Circuit would rely
The Restatement of Judgments also reflected this practice: It contained no provision for administrative preclusion and explained that it would not address “the effect of the decisions of administrative tribunals.”
Consistent with that comment, federal courts approved of administrative preclusion in narrow circumstances arguably involving only claims against the Government, over which Congress exercises a broader measure of control.2 In the 19th century, for instance, this Court effectively gave preclusive effect to the decisions of the U. S. Land Department with respect to land patents when it held such patents unreviewable in federal court “for mere errors of judgment.” Smelting Co. v. Kemp, 104 U.S. 636, 646 (1882) (“A patent, in a court of law, is conclusive as to all matters properly determined by the Land Department“). Commentators explained that these cases could
This history undercuts any suggestion in Utah Construction that administrative preclusion was widely accepted at common law. Accordingly, at least for statutes passed before Astoria, I would reject the presumption of administrative preclusion.3
II
In light of this history, I cannot agree with the majority’s decision to apply administrative preclusion in the context of the Lanham Act.4 To start, the Lanham Act was en-
The first feature indicating that Congress did not intend preclusion to apply is the limited authority the Act gives the TTAB. The Act authorizes the TTAB only to “determine and decide the respective rights of [trademark] registration,”
A second indication that Congress did not intend administrative preclusion to apply is the Lanham Act’s provision for judicial review. After the TTAB issues a registration decision, a party “who is dissatisfied with the decision” may either appeal to the Federal Circuit or file a civil action in district court seeking review.
The decision to provide this de novo review is even more striking in light of the historical background of the choice: Congress passed the Lanham Act the same year it passed the Administrative Procedure Act, following a lengthy period of disagreement in the courts about what deference administrative findings of fact were entitled to receive on direct review. The issue had been the subject of debate for over 50 years, with varying results. See generally 2 J. Dickinson, Administrative Justice and the Supremacy of Law 39–75 (1927). Sometimes this Court refused to review factual determinations of administrative agencies at all, Smelting Co., 104 U.S., at 640, 646, and sometimes it allowed lower courts to engage in essentially de novo review of factual determinations, see ICC v. Alabama Midland R. Co., 168 U.S. 144, 174 (1897); Reckendorfer v. Faber, 92 U.S. 347, 351–355 (1876).
In the early 20th century, the Court began to move toward substantial-evidence review of administrative determinations involving mixed questions of law and fact, ICC v. Union Pacific R. Co., 222 U.S. 541, 546–548 (1912), but reserved the authority to review de novo any so-called “jurisdictional facts.” Crowell v. Benson, 285 U.S. 22, 62–63 (1932). Courts then struggled to determine the boundary between jurisdictional and nonjurisdictional facts, and thus to determine the appropriate standard of review for administrative decisions. See, e.g., Estep v. United States, 327 U.S. 114, 142 (1946) (Frankfurter, J., concurring in result) (noting the “casuistic difficulties spawned” in Crowell and the “attritions of that case through later decisions“). Although Congress provided for substantial-evidence review in the Administrative Procedure Act,
I need not take a side in this historical debate about the proper level of review for administrative findings of fact to conclude that its existence provides yet another reason to doubt that Congress intended administrative preclusion to apply to the Lanham Act.
III
In addition to being unsupported by our precedents or historical evidence, the majority’s application of administrative preclusion raises serious constitutional concerns.
Executive agencies derive their authority from
Because federal administrative agencies are part of the Executive Branch, it is not clear that they have power to adjudicate claims involving core private rights. Under our Constitution, the “judicial power” belongs to Article III courts and cannot be shared with the Legislature or the Executive. Stern v. Marshall, 564 U.S. 462, 482–483 (2011); see also Perez, ante, at 8–11 (opinion of THOMAS, J.). And some historical evidence suggests that the adjudication of core private rights is a function that can be performed only by Article III courts, at least absent the consent of the parties to adjudication in another forum. See Nelson, Adjudication in the Political Branches, 107 Colum. L. Rev. 559, 561–574 (2007) (hereinafter Nelson); see also Department of Transportation v. Association of American Railroads, ante, at 4 (THOMAS, J., concurring in judgment) (explaining that “there are certain core functions” that require the exercise of a particular constitutional power and that only one branch can constitutionally perform).
The historical treatment of administrative preclusion is consistent with this understanding. As discussed above, most administrative adjudications that were given preclusive effect in Article III courts involved quasi-private rights like land grants. See Smelting Co., 104 U.S., at 646. And in the context of land grants, this Court recognized that once “title had passed from the government,” a more complete form of judicial review was available because “the question became one of private right.” Johnson v. Towsley, 13 Wall. 72, 87 (1871).
It is true that, in the New Deal era, the Court sometimes gave preclusive effect to administrative findings of fact in tax cases, which could be construed to implicate private rights. See, e.g., Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 401–404 (1940); Tait v. Western Maryland R. Co., 289 U.S. 620, 622–624 (1933). But administrative tax determinations may simply have enjoyed a special historical status, in which case this practice might be best understood as a limited deviation from a general distinction between public and private rights. See Nelson 588–590.
Trademark registration under the Lanham Act has the characteristics of a quasi-private right. Registration is a creature of the Lanham Act, which “confers important legal rights and benefits on trademark owners who register their marks.” Ante, at 3 (internal quotation marks omitted). Because registration is merely a statutory government entitlement, no one disputes that the TTAB may constitutionally adjudicate a registration claim. See Stern, supra, at 493; Nelson 568–569.
By contrast, the right to adopt and exclusively use a trademark appears to be a private property right that “has been long recognized by the common law and the chancery courts of England and of this country.” Trade-Mark Cases, 100 U.S. 82, 92 (1879). As this Court explained when addressing Congress’ first trademark statute, enacted in 1870, the exclusive right to use a trademark “was not created by the act of Congress, and does not now depend upon it for its enforcement.” Ibid. “The whole system of trade-mark property and the civil remedies for its protection existed long anterior to that act, and have remained in full force since its passage.” Ibid. Thus, it appears that the trademark infringement suit at issue in this case might be of a type that must be decided by “Article III judges in Article III courts.” Stern, 564 U.S., at 484.
The majority, however, would have Article III courts decide infringement claims where the central issue—whether there is a likelihood of consumer confusion between two trademarks—has already been decided by an executive agency. This raises two potential constitutional concerns. First, it may deprive a trademark holder of the opportunity to have a core private right adjudicated in an Article III court. See id., at 487. Second, it may effect a transfer of a core attribute of the judicial power to an executive agency. Cf. Perez, ante, at 10–12 (opinion of THOMAS, J.) (explaining that interpretation of regulations having the force and effect of law is likely a core attribute of the judicial power that cannot be transferred to an executive agency). Administrative preclusion thus threatens to “sap the judicial power as it exists under the Federal Constitution, and to establish a government of a bureaucratic character alien to our own system, wherever fundamental rights depend . . . upon the facts, and finality as to facts becomes in effect finality in law.” Crowell, 285 U.S., at 57.
At a minimum, this practice raises serious questions that the majority does not adequately confront. The majority does not address the distinction between private rights and public rights or the nature of the power exercised by an administrative agency when adjudicating facts in private-rights disputes. And it fails to consider whether applying administrative preclusion to a core factual determination in a private-rights dispute comports with the separation of powers.
* * *
I would hold that the TTAB’s trademark-registration decisions are not entitled to preclusive effect in a subsequent infringement suit. The common law does not support a general presumption in favor of administrative preclusion for statutes passed before this Court’s decision in Astoria, and the text, structure, and history of the Lanham Act provide no support for such preclusion. I disagree with the majority’s willingness to endorse Astoria’s unfounded presumption and to apply it to an adjudication in a private-rights dispute, as that analysis raises serious constitutional questions. Because I can resolve this case on statutory grounds, however, I leave these questions for another day. I respectfully dissent.