## Facts

- Nasalok Coating Corp. applied nylon coatings to self-locking fasteners, primarily outside the United States, with products purchased by U.S.-based companies or for U.S. end users.
- Nylok Corp. manufactured and sold self-locking fasteners and owned U.S. Trademark Registration No. 2,398,840 for a color mark.
- The registered mark covered “a patch of the color blue” on selected threads of an externally threaded fastener, extending more than 90 degrees and less than 360 degrees around the fastener, for “metal externally threaded fasteners.”
- In 2003, Nylok sued Nasalok in the Northern District of Illinois for trademark infringement, including infringement of the ’840 Registration.
- Nasalok was served but failed to appear; the district court entered a default judgment of infringement (2005) and a permanent injunction barring Nasalok from selling or importing into the United States self-locking fasteners with a blue (or confusingly similar) nylon locking element and from advertising such use in the United States without Nylok’s written permission.
- The district court’s order expressly stated that Nylok owned the ’840 Registration and that the trademark was valid and enforceable; Nasalok did not appeal.
- Nasalok later filed a TTAB petition to cancel the ’840 Registration, asserting invalidity and fraud in procurement.
- The TTAB granted summary judgment to Nylok on claim preclusion grounds, treating the cancellation petition as an impermissible collateral attack on the district court judgment.

## Issues

1. Whether claim preclusion barred Nasalok’s TTAB cancellation petition challenging the validity of, and alleging fraud in obtaining, the ’840 Registration after an unappealed default judgment and injunction that declared the registration valid and enforceable.
2. Whether trademark invalidity must be brought as a compulsory counterclaim under Federal Rule of Civil Procedure 13(a) in an earlier infringement action, such that failure to assert it waives a later invalidity challenge.

## Decision

- The Federal Circuit affirmed the TTAB’s summary judgment for Nylok.
- The court held that Nasalok’s cancellation claims were barred by claim preclusion because they sought to relitigate, and undermine, the prior federal court judgment adjudicating ownership, validity, and enforceability of the ’840 Registration.
- The court clarified that trademark invalidity is not a compulsory counterclaim under Rule 13(a) in an infringement action and is not automatically waived by failure to assert it there.
- Despite Rule 13(a), the court held that ordinary claim preclusion principles still bar a later invalidity-based action when it functions as a collateral attack on a final judgment between the same parties concerning the same mark.

## Legal Principles

- Claim preclusion applies when there is (1) a final judgment on the merits, (2) by a court of competent jurisdiction, (3) involving the same parties or privies, and (4) the later claim arises from the same transactional facts.
- A default judgment can be a final judgment on the merits for claim preclusion purposes, including as to issues expressly adjudicated in the judgment.
- A party may not use a TTAB cancellation proceeding to collaterally attack a prior federal court judgment that determined trademark ownership and upheld validity and enforceability of the registration.
- Trademark invalidity is not a compulsory counterclaim under Fed. R. Civ. P. 13(a) in a trademark infringement action; nonassertion does not itself create waiver.
- Even when not compulsory under Rule 13(a), a later challenge may still be barred if it would negate or contradict an earlier final judgment on the same mark between the same parties.

## Conclusion

The Federal Circuit held that Nasalok’s TTAB attempt to cancel Nylok’s registered blue-patch trademark was claim-precluded because an earlier, unappealed default judgment and injunction had already declared the registration valid and enforceable, and the cancellation petition would improperly attack that final determination.


Nasalok Coating Corp. v. Nylok Corp., 522 F.3d 1320 (Fed. Cir. 2008)