TTAB Denies Summary Judgment Motion in Hollywood Casinos v. Zarco Hotels: A Question of Claim Preclusion
In a pending opposition proceeding (Opposition No. 91282993), the United States Patent and Trademark Office’s (USPTO) Trademark Trial and Appeal Board (TTAB) addressed a question of claim preclusion. The Board issued a precedential decision in the dispute between Hollywood Casinos, LLC and Penn Entertainment, Inc. (collectively the “Opposers”) on the one hand and Zarco Hotels Incorporated (“Zarco” or “Applicant”) on the other. Applicant has applied to register the mark HOLLYWOOD HOTEL.
Background of the Case
The decision focused on claim preclusion, which the Applicant asserted in a Rule 12(b)(6) motion to dismiss. Because the motion concerned matter outside of the Opposers’ notice of opposition, the motion was treated as a motion for summary judgment. Although the motion was filed before the Opposers served their initial disclosures, the motion was not premature. See TBMP § 503.04 (noting two exceptions: 1) a motion asserting lack of jurisdiction by the Board; or 2) a motion asserting claim or issue preclusion). Claim preclusion—if applicable and properly asserted—prevents parties from relitigating the same claim after it has been resolved in a previous case. Here, the Applicant argued that this doctrine should bar the current opposition because of a previous opposition involving the same trademark for the same services.
TTAB Test for Claim Preclusion
The Board restated the elements of claim preclusion: “A second suit is barred by claim preclusion if (1) the parties (or their privies) are identical; (2) there has been an earlier final judgment on the merits of a claim; (3) the second claim is based on the same set of transactional facts as the first. See Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360 (Fed. Cir. 2000). See also Daimler Chrysler Corp. v. Maydak, 86 USPQ2d 1945, 1948 (TTAB 2008) (citing Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322, 326 (1955); Chromalloy Am. Corp. v. Kenneth Gordon, Ltd., 736 F.2d 694, 222 USPQ 187, 189 (Fed. Cir. 1984)); Flowers Indus., Inc. v. Interstate Brands Corp., 5 USPQ2d 1580, 1583 (TTAB 1987).
Zarco’s Arguments
Zarco argued several points to support its claim preclusion defense:
Privity with Chateau Celeste: The Applicant argued it was in privity with Chateau Celeste, the party in the prior opposition (i.e., Opposition No. 91203686), because both entities are closely held, family-owned businesses with the same CEO and shared interests. Applicant argued that these facts established that the entities were aligned in the subject matter of both proceedings.
Final Judgment in Prior Opposition: Applicant asserted that there was a final judgment on the merits in the previous opposition, which should preclude the Opposers from bringing up certain claims again.
Same Transactional Facts: Applicant contended that the current opposition arose from the same set of transactional facts as the previous earlier opposition, thus triggering claim preclusion.
The Opposers’ Counterarguments
The Opposers responded by arguing several important facts:
No Final Judgment on Specific Claims: Opposers argued that the prior opposition did not have a final judgment on the merits of the claims being asserted in the current case, particularly the likelihood of confusion and geographic descriptiveness claims.
Lack of Privity: The Opposers maintained that the Applicant and Chateau Celeste were not in privity, as they were not related companies; and that the Applicant had a right to defend the prior opposition but no proprietary rights in the subject trademark during the prior opposition.
Different Transactional Facts: Opposers also argued that the current proceeding was based on a different set of transactional facts than the previous opposition.
The decision does not explain each side’s arguments regarding the third element. The decision merely states that the party argued the transactional facts were the same/different, as appropriate.
TTAB’s Analysis and Decision
The Board focused its analysis on the second element. It concluded that even if privity existed between the Applicant and Chateau Celeste, the Applicant failed to show that there was an earlier final judgment on the merits of the claims in the present dispute.
The Board expanded by pointing out that Opposer Hollywood Casinos obtained all requested relief in the prior opposition (i.e., the opposition was sustained). The Board held in the prior opposition that Opposer established its claim of non-ownership. The Federal Circuit affirmed. Because the Board in the earlier opposition did not reach the questions of likelihood of confusion and geographic descriptiveness, there was no final decision on those claims. Moreover, Opposer could not cross-appeal those questions when Applicant appealed the Board’s decision on the non-ownership claim.
As a result, the questions of the likelihood of confusion and geographic descriptiveness were not addressed, and no final judgment was entered as to those questions. Accordingly, the Board found in the pending opposition that Opposers’ additional claims in the current opposition, including the likelihood of confusion and the geographic descriptiveness claim, were not precluded because they had not been fully litigated in the prior opposition.
The summary judgment was denied and Opposers were permitted to proceed with their claims.
Conclusion
This decision underscores the careful consideration required in applying claim preclusion to ensure that potentially meritorious claims are not barred unjustly and highlights the importance of each party’s opportunity to fully litigate its claims.
If you are considering an opposition or cancellation proceeding and have questions about claim preclusion or other issues, you should contact an experienced trademark attorney to discuss. You can schedule a meeting here.
