## Facts

- Jean Alexander Cosmetics, Inc. used the “EQ System” mark for hair-care products beginning in 1990 and obtained a federal registration in 1993.
- L’Oréal USA, Inc. (through predecessors) used “Shades EQ” beginning in 1988 and later adopted a “modernized” “Shades EQ” mark in 1992.
- In 1996, the PTO refused registration of the modernized “Shades EQ” mark as likely to cause confusion with Jean Alexander’s registered “EQ System” mark.
- L’Oréal petitioned the Trademark Trial and Appeal Board (TTAB) to cancel the “EQ System” registration, asserting (1) priority based on its 1988 use and (2) “tacking” based on legal equivalence between the original and modernized “Shades EQ” marks.
- The TTAB denied cancellation, finding (1) no legal equivalence for tacking (so no priority for the modernized mark) and (2) as an independent basis, no likelihood of confusion between “EQ System” and either version of “Shades EQ.”
- After the TTAB loss, L’Oréal obtained registration of the modernized “Shades EQ” mark; when Jean Alexander opposed, the TTAB and a district court treated Jean Alexander as barred from relitigating likelihood of confusion due to the earlier TTAB decision.
- Jean Alexander then filed a federal trademark infringement suit; the district court dismissed on issue preclusion, and Jean Alexander appealed.

## Issues

1. Whether a TTAB finding of no likelihood of confusion can preclude relitigation of that issue in a later federal trademark infringement action.
2. Whether a determination that is one of two alternative, independently sufficient grounds for a prior judgment is “necessary” for collateral-estoppel purposes.
3. Whether the party against whom preclusion is asserted had a full and fair opportunity to litigate, even if it prevailed in the earlier proceeding’s ultimate outcome.

## Decision

- The Third Circuit affirmed dismissal of the infringement action.
- The court held that issue preclusion applied to the TTAB’s no-likelihood-of-confusion determination.
- The court ruled that an issue decided as an alternative, independently sufficient ground for judgment may be treated as “necessary” and given preclusive effect when actually litigated.
- The court rejected arguments that the TTAB determination was nonbinding or unfairly unappealable, finding the TTAB proceeding sufficiently adjudicative and the party had both incentive and ability to litigate and appeal the adverse alternative finding.

## Legal Principles

- Issue preclusion applies when (1) the identical issue was previously decided, (2) the issue was actually litigated, (3) the determination was necessary to the prior judgment, and (4) the party had a full and fair opportunity to litigate.
- A prior tribunal’s alternative holdings—each sufficient by itself to support the judgment—can be “necessary” for collateral-estoppel purposes and can preclude relitigation.
- TTAB decisions can have preclusive effect in later federal court litigation when the administrative proceeding is adversarial, final, and the relevant issue (including likelihood of confusion) was fully litigated.
- Because likelihood of confusion is an element of trademark infringement, a prior final determination of no likelihood of confusion can foreclose a subsequent infringement claim between the same marks.

## Conclusion

The Third Circuit held that the TTAB’s fully litigated no-likelihood-of-confusion finding, though an alternative ground for denying cancellation, precluded Jean Alexander from relitigating likelihood of confusion in a later infringement suit, requiring dismissal of the federal action.


Jean Alexander Cosmetics, Inc. v. L'Oréal USA, Inc., 458 F.3d 244 (3d Cir. 2006)