The key litigated issue before the US Court of Appeals for the Eighth Circuit in B&B Hardware, Inc. v. Hargis Industries, Inc. was whether an earlier Trademark Trial and Appeal Board (TTAB) decision concluding there is a likelihood of confusion between marks should be given preclusive, collateral estoppel effect in the current trademark infringement action.

The parties have been litigating for more than 15 years concerning the plaintiff B&B's, mark "Sealtight" for a fastener product in the aerospace industry and the defendant Hargis's, mark "Sealtite" for a self-drilling and self-taping screw used in the construction of metal buildings. In 2007, the TTAB denied Hargis's registration application for "Sealtite," finding that its use presented a likelihood of confusion with B&B's mark.

On earlier remand, the US District Court for the Eastern District of Arkansas conducted a jury trial on B&B's claim of trademark infringement and unfair competition, and Hargis Industries' false advertising and false designation of origin counterclaims. The jury returned a verdict in favor of Hargis, finding no likelihood of confusion. After rejecting B&B's claim that the 2007 TTAB decision should be given preclusive effect on the issue of likelihood of confusion, the district court entered judgment on the jury's verdict and awarded Hargis attorney fees and costs. The district court also rejected B&B's attempt to admit the TTAB decision into evidence, reasoning that it would confuse and mislead the jury. B&B appealed the district court's judgment.

In its May 1, 2013 opinion, the US Court of Appeals for the Eighth Circuit:

On appeal, B&B argued that the district court:

In arguing that the 2007 TTAB decision should be given preclusive, collateral estoppel effect on the issue of likelihood of confusion, B&B relied on Flavor Corp. of America v. Kemin industries, Inc.. In Flavor Corp., the Eighth Circuit affirmed the district court's decision that the Court of Customs and Patent Appeals' (CCPA) decision on the question of likelihood of confusion collaterally estopped the defendant from challenging that decision in the trademark infringement action. However, the Eighth Circuit reasoned that at the time the CCPA issued its decision, the CCPA was an Article III court, a fact that distinguishes Flavor Corp. because the TTAB is not an Article III court. The Eighth Circuit ruled, therefore, that B&B's reliance on Flavor Corp. was misplaced in the present case.

The Eighth Circuit also decided not to apply collateral estoppel effect to the TTAB decision because the TTAB and the district court did not decide the same likelihood of confusion issues. For issue preclusion to apply, the issue sought to be precluded must be the same as the issue in the prior action. The Eighth Circuit held that the TTAB's assessment of likelihood of confusion for purposes of trademark registration is not the same as a determination of likelihood of confusion for purposes of trademark infringement. Specifically, the TTAB and the Eighth Circuit each have different likelihood of confusion tests. In this case, to reach its determination of likelihood of confusion, the TTAB relied on six of the 13 DuPont likelihood of confusion factors, while in the Eighth Circuit, courts apply the SquirtCo six-factor test. The court ruled that issue preclusion was therefore inappropriate because these tests are different and the "same issue" requirement for issue preclusion was not met.

The court also rejected B&B's argument that the TTAB's factual findings were entitled to deference by the district court or should have been admitted into evidence because:

On the remaining issue of attorney's fees, the Eighth Circuit affirmed the district court's award, ruling that the court had not abused its discretion in finding this an exceptional case within the meaning of Section 35(a) of the Lanham Act (15 U.S.C. § 1117(a)) based on its findings that B&B manufactured groundless and unreasonable trademark infringement by:

However, the Eighth Circuit remanded the case for the district court's recalculation of its award of attorney's fees, ruling that the district court erred by including in its award the attorney's fees Hargis incurred in opposing B&B's earlier appeal. Observing that this earlier appeal was neither groundless nor unreasonable and, in fact, resulted in a ruling in B&B's favor, the court remanded the case with directions to deduct from the award the fees Hargis expended in opposing B&B on that appeal.

This case underscores to trademark infringement litigants that TTAB decisions on the issue of likelihood of confusion are based on the TTAB's likelihood of confusion factors under In re E.I. DuPont DeNemours & Co., 476 F.2d 1357 (CCPA 1973) and might not be accorded deference or given effect for purposes of collateral estoppel or issue preclusion in infringement litigation.