The two iconic brands faced off recently in the Court of Appeals Federal Circuit over stitching. The appeal resulted from the Trademark Trial and Appeals Board “TTAB’s” decision to throw out Levi’s Opposition and Cancellation Proceedings against Abercrombie & Fitch “A&F” based upon “been there, done that” litigation at the District Court for the Northern District of CA in December ’08 and April ’09. Levi alleged that A&F’s “mirror image” stitching design (top mark) both infringed upon and diluted its historic Arcuate stitching design (bottom mark) that dated back to 1873. Levi holds a number of valid federal registrations with regard to this mark. In ’08, the District Court jury found in favor of A&F with regard to the infringement claim. In ’09 the District Court held that there was no dilution failing to find any blurring of its Arcuate mark. Levi appealed the dilution decision.
In the interim, A&F basking in the glow of its District Court victory filed a new trademark registration application with the Patent & Trademark Office “PTO”, which is not part of the present appeal, seeking to register its mirror-image design on “clothing, namely bottoms,” and disclosing use of the design on denim shorts sold under a different Abercrombie brand name, Gilley Hicks. The price-point of this brand was similar to clothing of the same type sold by Levi. When Levi objected to the TTAB decision, A&F claimed both issue and claim preclusion based upon the earlier District Court and Jury verdict. Issue preclusion occurs when (1) identical issues with those 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. Whereas Claim preclusion per the US Supreme Court “prevents litigation of all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding.” In other words, both prevent “re-litigation.” The focus of this post is the claim preclusion aspect of the Levi Strauss v. Abercrombie & Fitch decision.
The Court of Appeals Federal Circuit found neither issue nor claim preclusion. Finding that the facts to be addressed in the PTO proceeding were not the same as those in the District Court, the Court stated this “array of differences in transactional facts conclusively demonstrates that claim preclusion cannot serve to bar” such proceedings. The dilution claim in the District Court litigation was limited in scope. Whereas before the PTO, an opposition or cancellation proceeding “requires consideration not only of what the applicant has already marketed or has stated the intention to market, but of all the items for which registration is sought.” Because Abercrombie seeks to register a broad class of goods— “clothing, namely, jeans, skirts, shorts, pants and jackets” —without providing further limitations, the scope of the registrations at issue exceeds what the parties litigated in the District Court, where the Jury considered evidence and rendered its verdict relating to a discontinued brand, the Ruehl-line, by providing product specific answers about that line. Those answers cannot also be construed as negative answers to the broader questions in the PTO proceedings.
Therefore, the “pragmatic” approach to the “transactional facts” inquiry should not treat the dilution claim here as involving the same set of transactional facts as the full range of facts involved in the PTO proceedings. Such treatment would prejudice the famous mark owner, who in order to avoid the claim-preclusion bar on claim splitting, would be required to litigate in the initial dilution case the full range of existing and even potential but yet-unknown uses that are now pertinent to the PTO inquiry. Such would also encourage, per the Appeals Court, “a two-stage strategy by a rival hoping to dilute a famous mark —start with a use that is hardest to prove dilutive, defeat the famous mark owner’s challenge to that use, and then introduce more obviously dilutive uses of the very same mark with an impunity given by claim preclusion.”
Therefore, the TTAB’s decision was reversed and remanded back to the TTAB for further proceedings and another chapter to be written in this trademark war.