CAFC reverses TTAB in Levi Strauss v. Abercrombie & Fitch. Claim preclusion. Issue preclusion.
Since 1873, Levi Strauss has stitched the back pocket
of its jeans with two connecting arches that meet in the
center of the pocket. Levi Strauss holds multiple federally
registered trademarks on this “Arcuate” (bow-shaped)
design and has extensively advertised products displaying
the trademark for over a hundred years. Levi Strauss
actively monitors use of competing stitching designs and
enforces its trademark rights against perceived infringers.
In 2005, Abercrombie sought to register a “mirror image
stitching design” for use on “[c]lothing, namely, jeans,
skirts, pants and jackets.” U.S. Trademark Application
Serial No. 78766368 (filed Dec. 5, 2005). The registration
stated no other limitations on the goods’ nature, type,
channels of trade, or class of purchasers.
As to dilution:
Levi Strauss did not appeal the 2009 Judgment on Infringement,
which therefore became the final judgment on
infringement in the case. Levi Strauss did appeal the
2009 Judgment on Dilution. In 2011, the Ninth Circuit
“reversed” that judgment, and remanded the case. Levi
Strauss & Co. v. Abercrombie & Fitch Trading Co., 633
F.3d 1158, 1175 (9th Cir. 2011). The Ninth Circuit held
that dilution by blurring does not require identity or near
identity of the marks at issue (id. at 1162-73) and that the
district court’s reliance on that erroneous requirement
“affected its dilution determination” and so was not
harmless (id. at 1174).
Of issue preclusion:
Neither party identifies a disputed underlying issue of
fact that is material to the preclusion questions presented.
Whether preclusion applies to bar a particular action
is an issue of law, which this court decides de novo. See
Foster v. Hallco Mfg. Co., 947 F.2d 469, 475 (Fed. Cir.
1991). We hold that neither issue nor claim preclusion
bars Levi Strauss’s challenges to Abercrombie’s registrations
in the PTO.
Both doctrines preclude certain attempts at second litigation
chances, but only in defined circumstances, reflecting
the need to avoid depriving litigants of their first
chances. For purposes of this case, we recite only certain
necessary conditions for preclusion. Because we find
certain necessary conditions not to be satisfied, we have
no occasion to address any other matter regarding preclusion
law, including what conditions would suffice for
Issue preclusion serves, in certain circumstances, “to
bar the revisiting of ‘issues’ that have been already fully
litigated.” Jet, Inc. v. Sewage Aeration Sys., 223 F.3d
1360, 1366 (Fed. Cir. 2000). We have stated four preconditions
for a second suit to be barred by issue preclusion:
(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.
Id. (citing numerous authorities).
What is key here is
that, in order for issue preclusion to bar litigation of an
issue raised in a second suit, there must be an earlier
determination of that issue in a first suit and the earlier
determination must have been necessary to the resulting
judgment in that suit.
Claim preclusion does not depend on an earlier court’s
resolution of a particular issue, but prevents a litigant, in
certain circumstances, from pressing issues in a second
suit that it could and should have raised in earlier litiga
tion even if it did not. Claim preclusion, where it applies,
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.” Brown v. Felsen, 442 U.S. 127, 131
(1979). For that bar to apply, certain essential preconditions
must be met, as stated in this formulation: “a judgment
on the merits in a prior suit bars a second suit
involving the same parties or their privies based on the
same cause of action.” Parklane Hosiery Co. v. Shore, 439
U.S. 322, 326 n.5 (1979). Explaining that the crucial
“same cause of action” precondition requires the “same set
of transactional facts” in the two suits, we have summarized
the overall preconditions:
“(1) there is identity of
parties (or their privies); (2) there has been an earlier
final judgment on the merits of a claim; and (3) the second
claim is based on the same set of transactional facts as
the first.” Jet, 223 F.3d at 1362. We have added that “a
common set of transactional facts is to be identified
‘pragmatically.’” Id. at 1363 (quoting Restatement (Second)
of Judgments § 24(2)).
There is reference to "bedrock"--
Dating back at least to Butler v. Eaton, 141 U.S. 240, 242-
44 (1891), a bedrock principle of preclusion law has been
that a reversed judgment cannot support preclusion;
indeed, “a second judgment based upon the preclusive
effects of the first judgment should not stand if the first
judgment is reversed.” 18A Charles A. Wright, et al.,
Federal Practice and Procedure § 4433 (2d ed. 2002)
(footnote omitted); see id. § 4427 at 5 (“Should the judgment
be . . . reversed on appeal, however, res judicata [in
the sense covering both preclusion doctrines] falls with
the judgment.”); United States Postal Serv. v. Gregory,
534 U.S. 1, 15-16 (2001) (Ginsburg, J., concurring in the
judgment); In re Hedged-Investments Assocs., 48 F.3d 470,
472-73 (10th Cir. 1995); South Carolina Nat. Bank v.
Atlantic States v. Atlantic States Bankcard Ass’n, 896
F.2d 1421, 1430-31 (4th Cir. 1990); Erebia v. Chrysler
Plastics Prods. Corp., 891 F.2d 1212, 1215 (6th Cir. 1989);
Ornellas v. Oakley, 618 F.2d 1351, 1356 (9th Cir. 1980);
DiGaetano v. Texas Co., 300 F.2d 895, 897 (3d Cir. 1962).
Rather, it is because the
PTO and district-court proceedings do not involve the
same transactional facts, pragmatically judged.