OVERVIEW:

Since the late 1800’s Levi Strauss has stitched the back pocket of their jeans with two connecting arches that meet in the center of the pocket. Levi Strauss holds several registered trademarks with the USPTO for their bow shaped design. Levi Strauss also actively monitors their competitors’ stitching designs to make sure they are not infringing or diluting their trademarks.

In 2005 Abercrombie and Fitch desired to register a trademark for a “mirror image stitching design” to be used on clothing, the trademark application was split into two applications one (the parent) covered jackets and the second (the child) covered all other types of clothing. When the parent application was published for opposition, Levi Strauss initiated an opposition proceeding for the parent, and filed a petition to cancel the child registration. In both circumstances, Strauss alleged that the design would cause confusion and dilute the Levi Strauss Trademark.

Further, Levi sued Abercrombie for infringement in a line of jeans, which held the opposition proceedings. A jury held that Abercrombie jeans of using the mirror image design did not infringe the mark, and the Levi Strauss failed to prove dilution by blurring of their registered trademark.

Levi Strauss did not appeal the judgment on infringement, which therefore became the final judgment on the infringement case, but Levi Strauss did appeal the dilution case. The ninth circuit reversed the district court’s ruling on dilution, reasoning that “blurring does not require identity or near identity of the marks at issue and that the district court’s reliance on that erroneous requirement affected its dilution determination. Upon returning to the district court, Levi Strauss voluntarily dismissed their dilution claim because the brand of Abercrombie selling the jeans with the mark was discontinued.

Responsive to dismissing the suit, the opposition and cancellation proceedings resumed. Abercrombie filed motions for claim preclusion and issue preclusion because of the previous litigation. The board at the US patent and trademark office ruled that claim preclusion did not apply because of the “Significant differences” between the “Transactional facts required to establish infringement in a district court, and cancellation of a registration at the board.” Yet, the Board did grant summary judgment dismissing the proceedings on the grounds of issue preclusion, holding that “there is no genuine dispute of material fact that the elements of issue preclusion exist and thus operate to bar Levi Strauss’s dilution and likelihood of confusion claims.

Both issue preclusion and claim preclusion bars certain attempts at second litigation chances.

Issue preclusion serves, in certain circumstances, “to bar the revisiting of ‘issues’ that have been already fully litigated.” Issue preclusion requires 4 circumstances for a second suit to be barred:

(1) Identity of the issues in a prior proceeding;

(2) The issues were actually litigated;

(3) The determination of the issues was necessary to the resulting judgment; and

(4) The party defending against preclusion had a full and fair opportunity to litigate the issues.

Claim preclusion is not based on an earlier court’s resolution of a particular issue, but prevents a litigant from pressing issues in a second suit that it could have and should have raised in an earlier case.

Using the above standards, the court of appeals held that the litigation in district court did not support either issue or claim preclusion to bar Levi Strauss from making their opposition and cancellation proceedings.

Regarding issue preclusion the court of appeals held the earlier litigation was a voluntary dismissal with prejudice, and being a voluntary dismissal the courts finding did not depend on earlier findings that supported the reversed judgment (and it did not decide and specific issue at all). And the earlier judgment on infringement cannot bar Levi Strauss’s challenges in the USPTO because the cancellation and opposition proceedings involve a much broader set of issues than were presented, and therefore adjudicated.

Regarding claim preclusion, the court of appeals held that the array of differences in transaction facts conclusively demonstrates that claim preclusion cannot serve to bar such preclusions. The court of appeals reasons that a claim for dilution is not a claim preclusion in the PTO because the dilution claim in district court, like the infringement claim, involved a distinctly narrower set of product-specific transaction facts than those at issue in the registration proceedings.

Therefore, the court of appeals reversed the Board’s ruling and remanding the case for further proceedings.

AUSTIN TRADEMARK ATTORNEY’S TAKE-A-WAYS:

  1.  It is very important to look at what your competitors are trying to file trademark applications for. This is because it may be easier to cancel or oppose a trademark before it is registered rather than after it. This is because as the facts in this case law out, cancellation and opposition proceedings have a much broader scope than what is litigated in infringement or dilution cases.
  2. By voluntarily withdrawing from a case before it is decided, Applicants may protect themselves from claim and/or issue preclusion because the court may not actual resolve a particular issue. In this case, if Levi did not withdraw “with prejudice” the outcome on claim preclusion may have been different, which may have barred them from brining suit.
  3. Timeliness of raising infringement vs. cancellation/opposition may affect an outcome in the case. It appears from this case (without further facts), that Levi should have continued with their opposition/cancelation proceedings first, and then based on the outcome of that case raised the infringement/dilution cases.