Federal Circuit discusses application of res judicata to trademark oppositionsJune 2, 2006

In a recent case, the Federal Circuit settled a dispute over whether a trademark applicant must defend all oppositions in order to preserve their right to defend against any one of them.In this case, Sharp Kabushiki Kaisha (‘Sharp’), owner of the registered trademark SHARP, filed a Notice of Opposition with the Trademark Office to prevent ThinkSharp from registering two marks, THINKSHARP as a word mark and with a design. (A Notice of Opposition is USPTO administrative proceeding that allows the owner of a registered trademark to challenge pending trademark applications which they believe are too similar to or would weaken their trademarks. Sharp filed the Notice of Opposition against both of ThinkSharp’s applications, claiming that their trademark SHARP would be diluted by and confused with THINKSHARP.ThinkSharp chose to only defend their word mark registration, allowing a default judgment to be entered against them in their word-and-design application (essentially abandoning the application by failing to file an answer with the Trademark Office). Sharp argued on appeal that the default judgment against ThinkSharp’s word-and-design application invoked res judicata, a legal doctrine preventing legal issues from being relitigated in separate actions due to the burden associated with duplicative litigation.Res judicata embodies two independent concepts: issue preclusion and claim preclusion. Issue preclusion prevents the same issue or legal matter from being litigated after the matter has been decided. In this case, because ThinkSharp never litigated the merits of their word-and-design mark, the court found issue preclusion did not exist. Claim preclusion can bar litigation of claims not raised in an earlier case if three conditions are met: (1) the parties to the two cases must be the same (or in ‘privity’ with one another, a legal concept not at issue here), (2) there must have been a final judgment on the merits of the prior claim, and (3) the second claim must be based on the same transactional facts as the first and should have been litigated in the prior case. The Court ruled that there was no claim preclusion because it is not reasonable to expect an applicant to litigate their word mark’s likelihood of confusion during an opposition for a word-and-design mark. Thus, the word mark claim was not one that ‘should have been litigated’ in the other opposition. Therefore, the Court affirmed the Board’s decision, and preserved ThinkSharp’s right to litigate the merits of their word mark.This case illustrates that the Court applies res judicata with restraint and in limited circumstances. Res judicata will rarely be invoked to prevent a trademark applicant from having their day in court to litigate their disputes, since they are entitled to choose which marks they defend in oppositions.To read the complete decision, log on to http://fedcir.gov/opinions/05-1220.pdf.