Background
Italian winemaker Cesari S.R.L. has sold wine under the mark LIANO for years. California’s Peju Province Winery sought to register the mark LIANA for its own wines. In 2004, the Trademark Trial and Appeal Board (TTAB) found no likelihood of confusion between LIANO and LIANA and allowed Peju’s registration to proceed. Two decades later, Cesari brought a federal trademark infringement action in the Southern District of New York, asserting that Peju’s continued use of LIANA in the marketplace was likely to cause consumer confusion with LIANO.
The district court granted summary judgment to Peju, ruling that the 2004 TTAB decision had preclusive effect under the Supreme Court’s B&B Hardware, Inc. v. Hargis Industries, 575 U.S. 138 (2015) framework — that is, the TTAB’s likelihood-of-confusion finding was binding on the district court and precluded Cesari from relitigating the issue. Cesari appealed.
The Court’s Holding
The Second Circuit vacated the district court’s summary judgment and remanded for further proceedings. The court held that issue preclusion did not apply because the issues decided by the TTAB in 2004 were not identical to the issues before the district court.
Under B&B Hardware, a TTAB likelihood-of-confusion determination can have preclusive effect in a federal infringement case — but only when the issues are truly identical. Here, the Second Circuit found a material difference: the TTAB in 2004 had analyzed only the goods as described in Peju’s application, without considering the parties’ actual marketplace use. In particular, the TTAB never addressed Peju’s principal defense that its wine was a dessert wine distinguishable from Cesari’s products in how the products were actually marketed and consumed. Because the TTAB’s decision did not engage with actual commercial use, the “identical issue” requirement was not met and preclusion was improper.
Key Takeaways
- B&B Hardware permits TTAB decisions to have preclusive effect in federal court — but only when the TTAB actually considered the same issues, including actual marketplace usage, that are before the federal court.
- A TTAB decision analyzing marks as applied-for (based on registration descriptions) may not preclude relitigation in a context where actual commercial use paints a different picture.
- Defendants in trademark cases cannot automatically invoke old TTAB wins to defeat federal infringement claims if the TTAB proceeding was more limited in scope than the federal court inquiry.
- Brand owners should track both the scope of TTAB rulings and subsequent changes in how their marks are actually used in commerce, as the preclusive value of a TTAB decision can erode over time as market realities evolve.
Why It Matters
B&B Hardware created a significant strategic consideration in trademark litigation: win at the TTAB, and you might preclude a federal infringement suit. But the Second Circuit’s Cesari ruling shows that TTAB wins are not automatic shields in federal court. When a TTAB proceeding addressed only paper marks rather than actual marketplace use — which is often the case in opposition and cancellation proceedings focused on the registration itself — the preclusive value of that decision in later federal litigation may be limited or nonexistent. This is particularly important for brand owners dealing with markets where usage patterns, marketing channels, and consumer demographics have changed significantly since an earlier TTAB ruling.
Surfaced via Law360 IP.