Monday, June 19, 2017

Will B&B preclusion become typical?

Buzz Seating, Inc. v. Encore Seating, Inc., No. 16-cv-1131 (S.D. Ohio Jun. 16, 2017)

This case suggests that B&B is quite a broad decision, despite some cautionary statements in the Court’s opinion—you can avoid B&B preclusion if you sell goods other than those in the refused registration, but otherwise, watch out. 

Buzz, a maker of office chairs under the mark FLITE, sued Encore, which also makes an executive chair under the mark FLITE for trademark infringement and related claims. They allegedly advertise in the same publications, attend the same trade shows, and hire the same dealers and  sales representatives.

Encore applied to register FLITE for “Office furniture, including chairs” in 2011; Buzz opposed and filed its own application in 2013.  The TTAB sustained Buzz’s opposition because the marks were identical and the goods and channels of trade were legally identical (describing Buzz’s use as “for stacking or side chairs”).  Instead of appealing, Encore abandoned its first application and filed for a concurrent use application, allowing use in 24 states and concurrent use by Buzz in Ohio.  Buzz sued, and Encore answered and counterclaimed seeking a declaration of noninfringement and an order directing the PTO to reject Buzz’s application.

B&B preclusion applied to likely confusion, given that Encore had already argued before the TTAB that “there is no likelihood of confusion because Buzz Beating’s FLITE stacking chairs are vastly different from Encore’s FLITE executive chairs, are not sold to the same customers, and do not compete in the marketplace.” Encore argued that the TTAB considered only whether the broad category of goods identified in its application were likely to cause confusion, but here it was arguing that the specific executive chairs actually sold under the FLITE mark are not likely to cause confusion when compared to Buzz’s side chairs. But B&B says that preclusion will apply “[i]f a mark owner uses its mark in ways that are materially the same as the usages included in its registration application.”  The description of the class of goods encompassed the specific goods, executive chairs, Encore was selling, and thus there were no material differences between the usage identified in the application and actual usage.  Comment: under this reasoning, it’s hard to see why B&B wouldn’t always demand preclusion in this posture. 

The court pointed out that the TTAB already rejected this nonconfusion argument; Encore to told the TTAB that its chairs were “premium executive chairs sold to corporate customers for use  behind a desk or in a conference room,” and that “a person purchasing a stacking chair such as [Buzz Seating’s] Flite chair would not buy an executive chair and vice-versa.”  Of course, a “crucial” fact in the TTAB’s rejection was that Encore didn’t limit its identification of goods to executive chairs, but the TTAB also held that the differences didn’t avoid a likelihood of confusion, because the question was not whether the chairs would be confused but rather whether there’d be source confusion, and the evidence showed that executive chairs and side chairs were closely related, and sold by the same dealers or distributors to the same customers.  Indeed, Buzz sold both executive chairs and side chairs, and used the same mark at least once.

Even if the court found the differences material under B&B, Encore’s claim would still be barred under claim preclusion, because the issue could have been raised before the PTO.  Encore offered to limit its identification of goods, but the TTAB found it had done so too late.  And this holding further expands B&B—if one can imagine limiting the registration in a way that avoids likely confusion, one should have done so already.  Thus, the noninfringement counterclaim was dismissed.

The court declined to rule on Encore’s counterclaim about priority of registration because it doubted it had jurisdiction over a registration issue for a registration that had yet to issue; the court sought more briefing.

The court also struck affirmative defenses that concerned the same issues, including Encore’s abandonment defense, but it did not strike the defense that Buzz hadn’t used Flite, or made more than de minimis use, in certain regions of the US and that therefore Encore was the senior user in those regions.  The TTAB held that Buzz could succeed in its opposition without proving priority of use on a state-by-state basis, as long as there was prior use in the US, and thus the TTAB didn’t resolve that priority question. 

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