Issue preclusion is something that is rarely, if ever, discussed when being told about the importance of conducting a trademark search. The heavily discussed consequence of not conducting a trademark search is the threat of having to rebrand your business, product, or service. And while this is a real threat, sometimes it seems too remote.
Many small businesses will decide to try to get a federal registration, and if the Trademark Office refuses the registration of their mark on likelihood of confusion grounds, then they will simply abandon the application, but will continue to use the mark in their current geographic location. Unbeknownst to the small business, the decision to abandon a trademark application that was refused on likelihood of confusion grounds could be a big mistake.
Issue preclusion prevents the re-litigation of questions of fact decided by a court or an administrative agency like the United States Patent and Trademark Office. The U.S. Judicial Circuits are split on whether issue preclusion applies to unappealed USPTO registration refusals based on a likelihood of confusion. Therefore, the Judicial Circuits continue to apply different amounts of deference to unappealed USPTO registration refusals.
The Second and Fourth Judicial Circuits, which include New York, Vermont, Rhode Island, Connecticut, West Virginia, Virginia, Maryland, North Carolina, and South Carolina, give substantial weight to the USPTO’s likelihood of confusion findings. The Third, Eighth, and Ninth Judicial Circuits, which include Pennsylvania, New Jersey, Delaware, Minnesota, North Dakota, South Dakota, Nebraska, Iowa, Missouri, Arkansas, Montana, Idaho, Washington, Oregon, Nevada, California, Arizona, Alaska, and Hawaii, does not give much, if any, deference to the USPTO’s findings. The remaining Judicial Circuits have not squarely addressed the issue.
If you are in one of the states in the Second or Fourth Judicial Circuits, taking a shot at trying to register your mark and not succeeding can result in a big problem if you intend to continue using the mark. Make sure the trademark search is clear or be prepared with a strategy for overcoming a registration refusal should the USPTO issue one