In a recent precedential decision, the TTAB again revisited the doctrines of claim and issue preclusion.
Valvoline Licensing & Intellectual Property LLC (“Valvoline”) opposed Sunpoint International Group USA Corp.’s (“Sunpoint”) application to register the mark MAXVOLINE on the sole ground of likelihood of confusion. Sunpoint moved for summary judgment based on the defense of res judicata, which people sometimes interpret as encompassing the doctrines of both claim and issue preclusion.
Sunpoint argued that, in a prior cancellation proceeding between the parties based on the same registrations Valvoline asserted in the current opposition proceeding, the Board determined that Valvoline had failed to prove Sunpoint’s MAXVOLINE mark was likely to cause consumer confusion with Valvoline’s VALVOLINE and MAX LIFE marks. Sunpoint argued this earlier “ruling” barred Valvoline’s current likelihood of confusion claim.
In an interesting wrinkle, despite commenting on the likelihood of confusion issue, the Board in the earlier cancellation proceeding did not enter judgment on the likelihood of confusion claim; it granted Valvoline’s petition to cancel only on the grounds that Sunpoint had failed to use its marks at the time it filed its statements of use. Of critical importance, Sunpoint did not appeal the Board’s cancellation decision, choosing instead to file a new application to register MAXVOLINE.
Claim preclusion “bars a second action when there is (1) an identity of parties or their privies; (2) 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.” [Opinion, at p. 6 (citing Jet, Inc. v. Sewage Aeration Sys., 55 U.S.P.Q.2d 1854, 1856 (Fed. Cir. 2000)]. Issue preclusion, also known as collateral estoppel, bars a party from relitigating the same issue in a second action between the parties. [Id. (citing B&B Hardware, Inc. v. Hargis Indus., Inc., 125 S. Ct. 1293, (2015)]. Issue preclusion requires “(1) identity of an issue in a prior proceeding, (2) that the identical issue was actually litigated, (3) that determination of the issue was necessary to the judgment in the prior proceeding, and (4) that the party defending against preclusion had a full and fair opportunity to litigate the issue in the prior proceeding.” [Id., at pp. 6-7 (citing Mayer/Berkshire Corp. v. Berkshire Fashions Inc., 76 USPQ2d 1310, 1313 (Fed. Cir. 2005)]. Significantly, neither type of preclusion applies if the party against whom the preclusion is sought to be enforced could not appeal the outcome of the earlier proceeding. [Id., at p. 7].
As the prevailing party in the earlier proceeding, Valvoline was unable to appeal the Board’s adverse commentary on the issue of likelihood of confusion. Moreover, while the Board in the earlier cancellation proceeding determined that Valvoline had failed to carry its burden of proof on the issue of likelihood of confusion, that determination did not change the final judgment, which the Board based on a claim of nonuse. If Sunpoint had appealed the earlier Board decision, Valvoline could have cited likelihood of confusion as an alternate ground for affirming the Board’s decision. Sunpoint, however, chose not to appeal, depriving Valvoline of that opportunity. In view of these facts, the Board denied Sunpoint’s res judicata argument.