The key issue on appeal in Georgia-Pacific Consumer Products LP v. Four-U-Packaging, Inc., was whether the district court erred in granting summary judgment to the defendant Four-U on Georgia-Pacific's various trademark, unfair competition and related claims on the basis of issue preclusion, in particular whether:

In 2002, the plaintiff Georgia-Pacific, a well-known manufacturer of paper-towel dispensers and paper towels, introduced a new branded dispenser with compatible paper towels. Georgia-Pacific leased these dispensers to distributors who subleased them to end users, like restaurants. Under the usage agreements, the dispensers were required to be stocked with Georgia-Pacific paper towels. The defendant in this case, Four-U, was a distributor of off-brand paper towels, including one that fit in Georgia-Pacific's dispensers.

Based on Four-U's distribution of off-brand paper towels for use in Georgia-Pacific's dispensers, Georgia-Pacific filed suit against Four-U, asserting among other claims:

Four-U moved for summary judgment on all claims arguing that Georgia-Pacific's claims were barred, under principles of issue preclusion, by the decision in an earlier case Georgia-Pacific brought in Arkansas against a different company that also distributed off-brand paper towels for use in Georgia-Pacific's dispensers, Georgia-Pacific v. Myers Supply, Inc. The district court granted Four-U's summary judgment motion, based on issue preclusion.

In Myers Supply, Georgia-Pacific alleged largely similar claims against Myers Supply. There, the Arkansas district court granted summary judgment in part to Myers Supply and dismissed all of Georgia-Pacific's claims, except for contributory trademark infringement, which was later dismissed following a bench trial where the district court found no likelihood of confusion. On appeal, the Eighth Circuit affirmed the case, agreeing that the trademarks on the dispensers were not "source identifying" so as to create a likelihood of confusion concerning whether the trademark on the dispensers indicated the source of the towels inside.

In its December 13, 2012 opinion, the Sixth Circuit held that all of the elements of the Sixth Circuit's issue preclusion standard were met and barred Georgia-Pacific from asserting its claims against Four-U. In the appeal, Georgia-Pacific only disputed the first factor of the issue preclusion analysis, whether the issues in Myers Supply and in this case were identical, and whether they were actually litigated and determined.

The Sixth Circuit rejected Georgia-Pacific's argument that the two cases differed factually, finding that claimed factual differences in the identity of the defendants, geographic regions and the defendants' intent were not sufficient to bar the application of issue preclusion, and did not rise to the level of materially changed conditions that supported a new cause of action. Further, the Sixth Circuit rejected Georgia-Pacific's argument that its new consumer confusion survey showed changed circumstances, as the new survey did not cover the geographic region where Four-U operated. The Sixth Circuit noted that accepting Georgia-Pacific's argument on this point would allow future plaintiffs to avoid issue preclusion merely by conducting new surveys in each case.

The Sixth Circuit also rejected Georgia-Pacific's argument that the law in this case was distinct from that in Myers Supply. The court noted that the Eight Circuit and the Sixth Circuit's likelihood of confusion tests were “largely identical” in substance. The court noted that its test analyzes two additional factors, the marketing channels used and the likelihood of product line expansion, but found that their inclusion did not alter the likelihood of confusion analysis from that conducted in Myers Supply.

The Sixth Circuit also rejected Georgia-Pacific's argument that the different state law claims asserted in the two cases should bar the application of issue preclusion, noting that the relevant state claims, tortious interference with contractual relationships and business relationships, were nearly identical under Arkansas and Ohio state law. Also, even though the Myers Supply district court did not separately analyze the trademark dilution claim, the Sixth Circuit found that the Myers Supply court did analyze the relevant dilution factors, in particular mark similarity. As such, the Sixth Circuit found that claim was also litigated and decided in the earlier action.

Potential plaintiffs and defendants in trademark actions should consider the potential preclusive effect of any previous decisions where similar infringement and related claims were litigated under similar facts. Even if the defendants in the suits are different, issue preclusion may bar the new suit if the facts and claims are substantially the same as in the previous litigation.

To avoid issue preclusion, a plaintiff in a trademark action may need to show materially changed conditions, for example, a significant change in marketplace conditions because of a long time period between the two suits. If a plaintiff introduces a consumer survey in the second action as evidence of changed conditions it should ensure that the survey does not merely repeat a survey used in the previous case but should address variables unique to the second action, for example, the impact on consumer confusion of products sales in a different geographic location.

To assess the viability of an issue preclusion defense, defendants facing trademark actions should consider investigating whether the plaintiff has brought similar actions against other defendants.