Arkansas Trademark Case Dismissed; Court Declines to Create New Exception to Res Judicata
The Eastern District of Arkansas granted a motion to dismiss based on res judicata in B & B Hardware, Inc. v. Hargis Industries, Inc., 2007 WL 2711647 (E.D. Ark. 9/13/07).
The parties have a long and unique history that is important to understand the case. B&B Hardware sells a variety of fasteners in various industries under the mark "Sealtight." Hargis sells fasteners exclusively used for portable buildings under the trademark "Sealtite." B & B received a federal trademark registration, and the parties engaged in lengthy TTAB proceedings when Hargis tried to register its mark. In 1997, B & B filed suit for trademark infringement.
The jury returned a verdict for Hargis, finding that Sealtight was merely descriptive, and that judgment was affirmed in B & B Hardware, Inc. v. Hargis Industries, Inc., 252 F.3d 1010 (8th Cir. 2001). Hargis did not petition to cancel "Sealtight." In 2006, "Sealtight" became incontestable, which eliminated the merely descriptive defense. B & B filed the instant action, and Hargis moved to dismiss on grounds of res judicata.
The court agreed with Hargis that incontestability alone does not create an exception to res judicata. The court held that while incontestability affects a trademark's validity, it has no bearing on a trademark's strength, and that the only recognized exception to res judicata for trademark infringement is a significant increase in strength over a significant amount of time. See Test Masters Educational Services v. Singh, 428 F.3d 559 (5th Cir. 2005). B & B failed to establish either of these two factors, and the court dismissed the complaint.
The case also presented two other key issues. After losing the first case, B & B moved to California. The instant case was filed in California, but the California court transferred the case to Arkansas. B & B filed a motion to retransfer to California. Under the "law of the case" doctrine, transferee courts can review a transferor court's decision, but retransfer should only occur in extraordinary circumstances. The court concluded it had authority to review the California court's decision but declined to retransfer the case.
B & B also argued that decisions of the TTAB should be controlling or at least given deference by the court. Both the TTAB and other federal courts have made it clear that the TTAB can only decide issues related to registration; it cannot adjudicate matters of infringement. The court dismissed this argument.
The parties are still engaged in TTAB proceedings.
