‘A
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`4'
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`'5
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`2007-1432
`(Cancellation No. 92/045,050)
`
`NASALOK COATING CORPORATION,
`
`Appellant,
`
`V.
`
`NYLOK CORPORATION,
`
`Appellee.
`
`J udgment
`
`'Uh'ifé'd Sfétéé 'C'6Ui'f Of Appeails "fOl"' tfié ’F’édé'i‘a|' Ci'i'(":'Uif A
`
`ON APPEAL from the
`
`_ United States Patent and Trademark Office, Trademark Trial
`and Appeal Board
`Cancellation No. 92/045,050
`in CASE NO(S).
`This CAUSE having been heard and considered, it is
`ORDERED and ADJUDGED:
`A
`
`AFHRMED
`
`ENTERED BY ORDER OF THE COURT
`
`DATED APR 1 4 2003
`
`_
`E
`
`Jan Horbaly, Clerk
`
`»
`_ MD
` __?__; JUN 2 7 2003
`
`Cemmgguggggcuiasm
`' H§”p§1$\i§i?raEg\?l§YC}5RRECT cow
`OF THE OR|GlNAL ON FILE.
`UNITED STATES COURT OF APPEALS
`FOR THE'=FEQERALClRCU
`y7
`By: aTe3 _
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`United States Court of Appeals for the Federal Circuit
`
`2007-1432
`
`(Cancellation No. 92/045,050)
`
`NASALOK COAT|NG CORPORATION,
`
`Appellant,
`
`NYLOK CORPORATION,
`
`Appellee.
`
`Erik M. Pelton, Erik M. Pelton, Attorney at Law, of Arlington, Virginia, argued for
`appellant.
`
`Richard B. Megley, Jr., Niro, Scavone, Haller & Niro, of Chicago, Illinois, argued
`for appellee. With him on the brief was Thomas G. Scavone ,
`
`Appealed from:
`
`United States Patent and Trademark Office
`Trademark Trial & Appeals Board
`
`

`
`United States Court of Appeals for the Federal Circuit
`
`2007-1432
`
`(Cancellation No. 92/045,050)
`
`NASALOK COATING CORPORATION.
`
`NYLOK CORPORATION,
`
`Appellant,
`
`Appellee.
`
`Appeal from the United States Patent and Trademark Office, Trademark Trial and
`Appeal Board.
`
`DECIDED: April 14, 2008
`
`Before NEWMAN, GAJARSA, and DYK. Circuit Judges.
`
`Opinion for the court filed by Circuit Judge DYK. Circuit Judge NEWMAN concurs in the
`judgment.
`
`DYK. Circuit Judge.
`
`Appellant Nasalok Coating Corporation (“Nasalok") appeals from a decision of
`the Trademark Trial and Appeal Board ("Board").
`The Board granted summary
`
`judgment in favor of appellee Nylok Corporation (“Nylol<") in a cancellation proceeding
`
`brought by Nasalok. The Board held that Nasalok's claims were barred by res judicata
`
`(claim preclusion). We affirm.
`
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`..-,..-...a.........._.,.................,...._............,...._. I
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`

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`BACKGROUND
`
`Both parties in this case are engaged in business related to self-locking fasteners
`
`using nylon locking elements. A nylon element, such as a patch or strip of nylon,
`
`is,
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`applied to the threads of such a fastener, and prevents the fastener from loosening
`
`when exposed to vibration, stress, or temperature extremes. Appellant Nasalok, a
`
`Korean corporation, applies nylon coatings to self-locking fasteners for use in industrial
`
`applications. Although Nasalok does business primarily in Korea and other parts of
`
`Asia,
`
`its products are purchased by many companies based in the United States, or
`
`whose product end users are located in the United States. Appellee Nylok, a US.-
`
`corporation, manufactures and sells a variety of fasteners,
`
`including self-locking
`
`fasteners. Nylok is the owner of federal trademark Registration No. 2,398,840 ("'840
`
`Registration"). The registered mark consists of “a patch of the color blue on a selected
`
`number of threads of an externally threaded fastener, with the blue patch extending
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`more than 90 degrees and less than 360 degrees around the circumference of the
`
`fastener."
`
`'840 Registration. The mark is designated for use on “metal externally
`
`threaded fasteners." . l§l_.
`
`On November 18. 2003, Nylok filed a complaint against Nasalok (and four other
`
`companies that are not parties in the present case) in the United States District Court
`
`for the Northern District of Illinois, alleging infringement of several trademarks, including
`
`the '840 Registration. Although properly served with the complaint, Nasalok failed to
`
`enter an appearance, and the district court entered a default judgment of trademark
`
`infringement in favor of Nylok on May 12, 2005. On May 31, 2005, the district court
`
`entered an injunction against Nasalok prohibiting the company from “selling within or
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`2007-1432
`
`2
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`

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`-»——.-»--««—.—‘.-.v.~..........«..-..-..~...—....-.~.......-....—._.,.......~.»........,.........,......._....-............,.,......»....._...._...,.,,...,....,.—..........,........_........_.........t_..........-
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`importing to the United States of America any self-locking fastener having a nyion
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`locking element .
`.
`. having the color blue, or any color confusingly similar to the color
`blue," and from "promoting or advertising the color blue in the United States of America
`
`on or in association with any self-locking fastener, except when Nasalok has received
`
`express and written permission by Nylok."
`
`J.A. at 79. The district court's order also
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`stated that Nylok is the proper owner of the '840 Registration and that the trademark is
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`valid and enforceable. Nasaiok did not appeal the district court's order.
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`in October 2005, five months after the default judgment, Nasalok filed a petition
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`to cancel the '840 Registration with the Board. The petition alleged that the registered
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`mark is invalid because it
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`is functional, a phantom mark, descriptive, generic, not
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`distinctivejand ornamental; that Nylok's use has not been substantially exclusive; and
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`that Nylok fraud.-lently obtained the '840 Registration by stating in its amended
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`application that the mark had become distinctive of Nylok's goods through substantially
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`exclusive and continuous use in interstate commerce for five years. Nylok moved for
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`summary judgment, arguing that Nasalok was barred, under the doctrine of res judicata,
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`from claiming that the ’840 Registration was invalid because it could have asserted, but
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`did not assert, a claim of invalidity in the earlier infringement action brought by Nylok_.'
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`On March 28, 2007. the Board granted summary judgment in favor of Nylok. The
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`Board held that the doctrine of claim preclusion barred Nasalok’s cancellation petition.
`
`Applying the three-part test for claim preclusion set out by this court in Jet.
`
`inc. v.
`
`Sewage Aeration Systems, 223 F.3d 1360 (Fed; Cir. 2000),
`
`the Board determined that
`
`indeed 15 U.S.C. § 1119 specifically authorizes cancellation claims in
`1
`district court proceedings.
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`2007-1432
`
`3
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`

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`the infringement action and the cancellation petition involved the same parties, that the
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`infringement action had been a final judgment on the merits, and that the cancellation
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`petition “ar[o]se out of the same transactional facts as those present in the civil action,"
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`because it was “an attack on the registration that was adjudicated in the prior case."
`
`J.A. at 6; sci get, 223 F.3d at 1362. Nasalok timely appealed. We have jurisdiction
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`pursuant to 28 U.S.C. § 1295(a)(4)(B) (2000).
`
`DISCUSSION
`
`The Board's determination that Nasalok's claims are barred by res judicata_ and
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`its grant of summary judgment. are questions of law which we review without deference.
`
`E Sharp Kabushiki Kaisha v. Thinksharg, lnc., 448 F.3d 1368, 1370 (Fed. Cir. 2006);
`
`it-3_t, 223 F.3d at 1362.
`
`I
`
`This case involves the doctrine of res judicata, which includes the two related
`
`concepts of claim preclusion and issue preclusion.
`
`_S_e_g Restatement (Second) of
`
`Judgments, ch. 3, introductory Note (1982). Claim preclusion refers to “the effect of
`
`foreclosing any litigation of matters that never have been litigated. because of a
`
`determination that they should have been advanced in an earlier suit." 18 Charles Alan
`
`Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4402
`(2d ed. 2002); see also Nevada v. United States, 463 U.S. 110, 129-30 (1983) (a final
`
`judgment is “a finality as to the claim or demand in controversy .
`
`.
`
`. not only as to every
`
`matter which was offered and received to sustain or defeat the claim or demand, but as
`
`to any other admissible matter which might have been offered for that purpose" (quoting
`
`Cromwell v. Counm of Sac, 94 U.S. 351, 352 (1877))).
`
`Issue preclusion, also called
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`2007-1432
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`V
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`4
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`............_.....................,_x«.._...........,..._.__...-;.-......_.......--i--«.......-..a......-.-._._....._.........~........_....,,.............\,._.........__.....,...._............‘........_.......,........................_..._.............._..,.._...,_................_............__......-.._._-..._._..,....,
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`
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`
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`collateral estoppel, refers to “the effect of foreclosing relitigation of matters that have
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`once been litigated and decided." Wright, Miller & Cooper § 4402. Only the doctrine of
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`claim preclusion is relevant in this case since the issues in the earlier case were not
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`actually litigated .2
`
`Typically, claim preclusion is applied against a plaintiff who brings a second
`
`action related to an earlier action. The test employed by the Board here is the test
`
`applied to determine whether such a second action by the earlier plaintiff is precluded.
`
`For example. in gr, the appellant had brought a trademark infringement action against
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`the appellee in district court, alleging that the appe|lee’s use of its own registered mark
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`was likely to cause confusion in the marketplace. The district court entered judgment
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`for the appellee, holding that there was no likelihood of confusion. The appellant also
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`had brought a cancellation proceeding at the Board, which was resolved after the
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`judgment in the district court infringement suit. The Board held that the cancellation
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`was barred by claim preclusion, because both the infringement action and the
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`cancellation proceeding were based on the likelihood of confusion between the two
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`marks, and therefore the Board considered them the same claim.
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`J_e_t, 223 F.3d at
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`1361-62.
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`in reversing the Board's decision, we set out the three-part test for claim
`
`preclusion: “(1) there is identity of parties (or their privies); (2) there has been an earlier
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`final judgment on the merits of a claim; and (3) the second claim is based on the same
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`set of transactional facts as the first." gl_. at 1362. Applying this test, we concluded that
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`the third requirement was not met because the infringement claim and the cancellation
`
`The fact that the district court stated in its decision that “Nylok’s color blue
`2
`trademark is valid and enforceable in the United States,” J.A. at 135, does not invoke
`
`collateral estoppel because that issue was not litigated.
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`2007-1432
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`5
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`

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`proceeding were not based on the "same set of factual allegations.” Q at 1363. We
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`found four significant differences between an infringement claim and a petition to
`
`cancel:
`
`(1) a plaintiff asserting an infringement claim must have a valid registered mark,
`
`while a petitioner in a cancellation proceeding need not; (2) infringement requires that
`
`the defendant have used the mark in commerce, while cancellation does not; (3) a
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`respondent to a cancellation proceeding must hold a federally registered mark, while an
`
`infringement defendant need not; and (4) cancellation, but not infringement, requires
`
`inquiry into the registrability of the mark in question.
`
`ld_. at 1364.
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`The test used in @ cannot be used as the exclusive test for preclusion against a
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`defendant in the first action.
`
`In such circumstances, the somewhat different rules of
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`“defendant preclusion” apply. See generally Wright, Miller & Cooper § 4414 (discussing
`
`rules and application of defendant preclusion). A defendant is precluded only if (1) the
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`claim or defense asserted in the second action was a compulsory counterclaim that the
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`defendant failed to assert in the first action. or (2) the claim or defense represents what
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`is essentially a collateral attack on the first judgment.
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`_S__e§ Baker v. Gold Seal Liguors,
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`l_n_c;, 417 U.S. 467, 469 n.1 (1974) (“A counterclaim which is compulsory but is not
`
`brought
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`is thereafter barred .
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`.
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`.
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`.”); Restatement (Second) of Judgments § 18(2)
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`(defenses raised, or which could have been raised, in first action are not precluded in
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`subsequent action, except when used to attack the judgment
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`in the first action);
`
`id_.§ 22(2) (defendant who fails to interpose counterclaim in first action is precluded
`
`from maintaining action on the claim if counterclaim was compulsory in first action or if
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`“successful prosecution of the second action would nullify the initial judgment or would
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`impair rights established in the initial action").
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`2007-1432
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`6
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`ll
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`Nylok urges that Nasalok was required to raise the invalidity issue as a
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`counterclaim in the district court action. We first consider whether trademark invalidity,
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`the basis of Nasalok’s petition to cancel
`
`the ‘840 Registration, was a compulsory
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`counterclaim in the trademark infringement action brought by Nylok. Federal Rule of
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`Civil Procedure 13(a)(1) provides:
`
`A pleading must state as a counterclaim any claim that—at the time of its
`service—the pleader has against the opposing party if the claim:
`(A)
`arises out of the transaction or occurrence that is the subject matter of the
`opposing party’s claim; and (B) does not require adding another party over
`whom the court cannot acquire jurisdiction.
`
`The test for whether a counterclaim is compulsory is very similar to the test set out in
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`get for determining when a subsequent claim by the plaintiff in the first action is
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`precluded. The third factor of the get test asks whether both claims are based on the
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`“same set of transactional facts,” while Rule 13(a) applies when the counterclaim arises
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`out of the same “transaction or occurrence" that forms the subject matter of the
`
`plaintiff's claim.
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`in response to an action for infringement, a defendant may assert a counterclaim
`
`of invalidity. District courts have the -authority,
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`in any action involving a registered
`
`trademark,
`
`to “determine the right
`
`to registration" and "order the cancellation of
`
`registrations, in whole or in part.” 15 U.S.C. § 1119. This statute allows a trademark
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`infringement defendant to assert a counterclaim to cancel the registration. but the
`
`question remains whether
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`such a counterclaim is compulsory or permissive.
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`Surprisingly, we have been unable to locate any court of appeals decisions,
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`in our
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`circuit or any other circuit, directly addressing the question of whether a claim of
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`2007-1432
`
`7
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`

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`trademark invalidity is a compulsory counterclaim to a claim of trademark infringement.3
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`For several reasons we conclude that it is not.
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`The subject matter of the plaintiffs infringement claim in the first proceeding and
`
`the subject’ matter of the invalidity claim in the cancellation proceeding do not arise out
`
`of the same “transaction or occurrence." Fed. R. Civ. P. 13(a)(1)(A). The Supreme
`
`Court has explained the “transaction or occurrence" test in discussing former Equity
`
`Rule 30, on which current Rule 13(a) is based.
`
`_$_e;e_: Fed. R. Civ. P. 13 advisory
`
`committee's note 1 (“This is substantially [former] Equity Rule 30 .
`
`.
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`. broadened to
`
`include legal as well as equitable counterclaims.”); Moore v. N.Y. Cotton Exch., 270
`
`U.S. 593 (1926). The plaintiff in Moore had sought permission to receive quotations of
`
`cotton prices from the defendant's exchange, and its application had been refused. The
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`plaintiff then brought an antitrust claim against the exchange based on this refusal, and
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`the exchange counterclaimed, asserting that the plaintiff was stealing the quotations
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`and seeking an injunction against continued misappropriation.
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`The district court
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`dismissed the plaintiff’s claim. and entered the injunction sought by the defendant. The
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`Supreme Court affirmed the judgment, holding that because the counterclaim was
`
`compulsory the district court retained jurisdiction to rule on the counterclaim after the
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`plaintiff’s claim was dismissed. The Court noted that the basis of the counterclaim was
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`“one of the links in the chain which constitutes the transaction upon which appellant
`
`here bases its cause of action," that the common ground between the claim and
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`The Board's rules_of procedure in trademark casesprovide that invalidity
`3
`of a registration pleaded in an opposition or cancellation proceeding is a compulsory
`counterclaim.
`_S§§_ 37 C.F.R. §§ 2.106(b)(2)(i), 2.114(b)(2)(i) (2007). However, these
`rules of course do not apply to an infringement action brought in a district court.
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`2007-1432
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`8
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`_,___,_,__‘,“,,_‘____,W_w‘_,,V,_,..,....,.,.._...................................,......_._.__...........w...,...,u.._......,.,,......‘.............,,....,..,_
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`counterclaim was “the one circumstance without which neither party would have found it
`
`necessary to seek relief,” and that "[e]ssential facts alleged by appellant enter into and
`
`constitute in part the cause of action set forth in the counterclaim.” Moore, 270 Us. at
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`610.
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`Following the Moore decision, our court has utilized three tests to determine
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`whether the "transaction or occurrence" test of Rule 13(a) is met:
`
`(1) whether the legal
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`and fsctual
`
`issues raised by the claim and counterclaim are largely the same;
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`(2)
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`whether substantially the same evidence supports or refutes both the claim and the
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`counterclaim; and (3) whether there is a logical relationship between the claim and the
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`counterclaim. §e_e Polymer lndus. Prods. Co. v. Brldgestone/Firestone lnc., 347 F.3d
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`lnc., 200 F.3d 795,
`935. 937 (Fed. Cir. 2003); Vivid Techs., lnc.iv. Am. Sci. & Eng’g,
`801 (Fed. Cir. 1999); see also 6 Charles Alan \.I\.In'ght, Arthur R. Miller & Mary Kay Kane,
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`Federal Practice and Procedure § 1410 (2d ed. 1990).“ In each of the three tests for
`
`what constitutes the same “transaction or occurrence," the question is the extent of
`
`factual overlap between what the plaintiff m_i;s_t_ establish to prove its claim and what the
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`defendant mtg; establish to prove its counterclaim. The mere possibility that, as a
`
`result of affirmative defenses, the first suit might involve additional issues does not
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`obligate the defendant to assert those affirmative defenses as a counterclaim.
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`in this case, Nylok‘s trademark infringement claim was based on Nylok‘s alleged
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`ownership of a registered mark, Nasalok's alleged use of the color blue in nylon patches
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`on the external threads of self-locking fasteners, its promotion of those fasteners in
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`Sometimes a fourth test has also been used: whether res judicata would
`4
`bar a subsequent suit on defendant's claim absent the compulsory counterclaim rule.
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`2007-1432
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`9
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`advertisements in publications distributed in the United States, and the likelihood of
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`confusion of the consuming public as a result of Nasalok’s activities.
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`invalidity of the
`
`mark was an affirmative defense that could have been raised, not part of the plaintiffs
`
`cause of action. E Packman v. Chi. Tribune Co., 267 F.3d 628, 639 (7th Cir. 2001)
`
`(defendant may attack validity of mark by asserting various defenses); 6 J. Thomas
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`McCarthy, McCarthy on Trademarks and Unfair Competition § 34:5 (4th ed. 1996)
`
`(listing defenses to trademark infringement,
`
`including “Attack on Validity of US.
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`Trademark Registration”); see also 15 U.S.C. § 1l15(a) (registration of mark that has
`
`not yet become incontestable is prima facie evidence of validity). Nasa|ok’s cancellation
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`petition, by contrast, was based on alleged attributes of Nylok's registered mark that
`
`rendered it subject to cancellation,
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`including allegations that the mark was functional
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`and was a phantom mark, and on Nylok's allegedly fraudulent actions in obtaining
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`registration of the mark.
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`In this case, therefore, the “essential facts” alleged by Nylok in
`
`its
`
`infringement action—related to Nylok's ownership of the mark and Nasalok's
`
`allegedly infringing behavior-do not form the basis of the cancellation claim now
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`asserted by Nasalok, which is based on attributes of Nylok's mark and on Nylok's
`
`actions in obtaining registration of that mark. The two claims raise different legal and
`
`factual issues, will not be supported or refuted by substantially the same evidence, and
`
`are not “logically related” in the sense described by the Supreme Court
`
`in wgrg.
`
`Therefore, the claims do not arise out of the same “transaction or occurrence," and the
`
`petition to cancel was not a compulsory counterclaim in the infringement action.
`
`
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`§_e_e Wright, Miller & Kane § 1410 8. n.8. That test is circular, however. and we think it is
`not a useful way of determining whether a counterclaim is compulsory under Rule 13(a).
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`2007-1432
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`10
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`While we have not previously directly decided whether a claim of invalidity is a
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`compulsory counterclaim in an action for infringement, we have explicitly held that a
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`determination of patent
`
`infringement
`
`in an infringement suit, or even an explicit
`
`determination of patent validity, does not preclude the assertion of an invalidity defense
`in a second action involving different products.
`in Foster v. Hallco Manufacturing C0,,
`
`947 F.2d 469 (Fed. Cir. 1991), the first infringement action had resulted in a consent
`
`judgment of infringement as to particular products.
`
`i_d_. at 472. The alleged infringer
`
`also acknowledged that the patents in suit were “valid and enforceable in all respects.”
`
`ld_. Nonetheless, we held that claim preclusion would not bar defendant's later
`
`declaratory judgment action challenging those patents’ validity if the devices involved in
`
`the two suits were not “essentially the same.” Q: at 480.
`
`In Hallco Manufacturing Co. v. Foster, 256 F.3d 1290 (Fed. Cir. 2001), the first
`
`infringement suit was resolved by the parties in a settlement agreement that did not
`
`address the patent's validity. The defendant later brought a declaratory judgment action
`
`seeking a determination that the same patent was invalid. We reached the same
`
`conclusion in figlgg as we had in Eel:
`
`if both suits involved devices that were
`
`“essentially the same or only colorably different,” the invalidity claim would be
`
`precluded, but not otherwise. Q, at 1298. We explained that the plaintiff and defendant
`
`should be treated equally as to res judicata.
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`If the plaintiff would not be barred from
`
`bringing a second infringement suit. the defendant also should not be precluded from
`
`challenging patent validity in the second suit.
`
`§_e<_e_ it; at 1297.
`
`in Ecolab inc. v.
`
`Paracligse,
`
`lnc., 285 F.3d 1362 (Fed. Cir. 2002), a consent judgment of infringement
`
`was entered in the first action, and the consent judgment also determined that the
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`2007-1432
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`11
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`........w..,....,................a.-».~....t.......v.-...i..._..-...._.,........i_......,--.t....-...,--;.-w............r.~.......lw»...m........-.......,.....,.........,...,,-.«....._.....h.._..a..........«.......-...............-...............N.._..V'FF
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`patent was valid. Q at 1367. We reaffirmed that preclusion as to validity applies only
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`“if the accused product in the second suit [is] ‘essentially the same’ as the specific
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`device that was before the court in the first suit."
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`l_c_i_. at 1376.5 These patent cases
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`necessarily assume that an invalidity defense is not a compulsory counterclaim,
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`because in each of these cases a counterclaim of invalidity could have been asserted,6
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`and we refused to find general preclusion of the invalidity defense.
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`Moreover,
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`the policy considerations driving those decisions are equally
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`applicable here. At the time of an infringement suit.
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`it will be difficult to anticipate the
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`new products and future disputes that may later arise between the two parties. A
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`plaintiff who brings an infringement suit as to one allegedly infringing use of a mark
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`would not be precluded from later bringing a second infringement suit as to another use;
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`similarly, a defendant in the first infringement suit should not be precluded from raising
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`invalidity of the mark in the second action simply because it was not raised as a
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`counterclaim in the first action.
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`Finally, treating challenges to trademark validity as compulsory counterclaims to
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`infringement actions would violate the well—established policy of
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`freely allowing
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`challenges to the validity of claimed intellectual property protection.
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`In Lear
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`lnc. v.
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`Adkins, 395 U.S. 653 (1969), the Supreme Court repudiated the rule of patent licensee
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`However, where the first action results in a consent judgment of patent
`5
`validity in which the alleged infringer affirmatively agrees not to "directly or indirectly aid,
`assign, or participate in any action contesting the validity" of the patents, the defendant
`is precluded from asserting a claim or defense of patent invalidity in a subsequent
`action, even where the second action involves a new device. Diversey Lever,
`lnc. v.
`Ecolab lnc.. 191 F.3d 1350, 1352 (Fed. Cir. 1999).
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`In Foster, a counterclaim of invalidity was originally asserted but was
`dismissed in light of the consent judgment. 947 F.2d at 472 8. n.1_
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` 6
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`2007-1432
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`12
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`estoppel, under which a licensee is prohibited from challenging the validity of the patent
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`that is the basis of the license agreement. The Court found that, among other reasons,
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`“the strong federal policy favoring the full and free use of ideas in the public domain,” i_d_.
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`at 674, outweighed the contract law principle “that forbids a purchaser to repudiate his
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`promises simply because he later becomes dissatisfied with the bargain he has made.”
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`lcl_. at 668.
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`Severe: courts, including our predecessor court, have applied the Leg balancing
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`test to trademarks as well as patents,
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`recognizing the public interest
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`in ensuring
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`trademark validity. E Idaho Potato Comm’n v. M & M Produce Farm &'Sales, 335
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`F .3d 130, 136 (2d Cir. 2003) (“Even when courts have not expressly applied the 3
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`test [to trademark actions], they have recognized that agreements related to intellectual
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`property necessarily involve the public interest and have enforced such agreements
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`only to the extent that enforcement does not result in a public injury.”); MWS Wire
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`lndus., lnc. v. Cal. Fine Wire C0,, 797 F.2d 799, 803 (9th Cir. 1986); Wells Cargo, Inc. v.‘
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`Wells Cargo, |nc., 606 F.2d 961, 965 (CCPA 1979); Beer Nuts, Inc. v. King Nut Co., 477
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`F.2d 326, 329 (6th Cir. 1973). We have in particular recognized that the public policy in
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`favor of allowing challenges to invalid marks weighs in favor of cabining the doctrine of
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`res judicata at
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`the Patent and Trademark Office. gee lVlayerlBerkshire Corp. v.
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`Berkshire Fashions lnc., 424 F.3d 1229, 1234 (Fed. Cir. 2005) ("Caution is warranted in
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`the application of preclusion by the PTO. for the purposes of administrative trademark
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`procedures include protecting both the consuming public» and the purveyors”). This
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`interest further supports ourconclusion that challenges to the validity of a trademark
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`2007-1432
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`1 3
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`registration should not be treated as compulsory counterclaims
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`to trademark
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`V
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`infringement actions.
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`Ill
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`We turn then to the second basis for applying claim preclusion against
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`defendants—-where the effect of the later action is to collaterally attack the judgment of
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`the first action. Here, the order entered by the district court in the infringement action
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`enjoined Nasalok from selling or importing into the United States any self-locking
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`fastener with a blue (or similarly colored) nylon locking element, and from promoting or
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`advertising the color blue in connection with its self‘-locking fasteners. Allowing Nasalok
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`to challenge the validity of the '84O Registration, which grants Nylok rights in the use of
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`“a patch of the color blue on a selected number of threads of an externally threaded
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`fastener,” would effectively undo the relief granted by the district court
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`in
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`the
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`infringement action.
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`Section 18(2) of the Restatement (Second) of Judgments makes clear that a
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`defense that could have been interposed cannot later be used to attack the judgment of
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`the first action. When a former defendant attempts to undermine a previous judgment
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`by asserting in a subsequent action a claim or defense that was or could have been
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`asserted in the earlier case, the rules of defendant preclusion will apply. See also id_.
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`§22(2)(b) (defendant who fails to assert counterclaim in the first action may not later
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`maintain an action on that claim if “successful prosecution of the second action would
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`nullify the initial judgment or would impair rights established in the initial action”). “The
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`clearest need for these rules is shown by cases that have involved a variety of direct
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`attacks on the original judgment based on defenses or claims that could have been
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`2007-1432
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`14
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`advanced in the first action." Wright, Miller & Cooper § 4414; see also 18 James Wm.
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`Moore et al., Moore's Federal Practice § 131.02(2) (3d ed. 1999) ("A collateral attack on
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`a judgment or order will fail if the party making the attack could have raised the issue in
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`the other action"). We have recognized that the doctrine of claim preclusion bars a
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`collateral attack on an earlierjudgment.
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`_S_e_g Faust v. United States, 101 F.3d 675, 678
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`(Fed. Cir. 1996). Specifically, as noted earlier, in the patent context we have held that a
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`defendant to an infringement suit that results in a judgment of infringement is "precluded
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`from challenging validity in a suit for infringement of any device that is the same as the
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`[alleged infringing device in the first suit], because invalidity was a defense that was or
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`could have been raised in the prior litigation."
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`fla_Il_g, 256 F.3d at 1297; see also
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`gcgajg, 285 F.3d at 1377; E_o_s_t_e_r, 947 F.2d at 480.
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`In other words, preclusion is
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`necessary to protect the effect of the earlierjudgment.
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`in this case, allowing Nasalok to proceed on its cancellation petition would
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`undoubtedly impair Nylok's rights as established in the infringement action, in particular
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`its rights under the injunction, and would constitute a collateral attack on the district
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`court's judgment.
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`in its petition to cancel the ’840 Registration, Nasalok alleged that it
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`was likely to be damaged by Nylok’s continued use of "the design registered as a
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`trademark by" Nylok, because it “for some time has been involved in the manufacture
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`and sale of fasteners and screws which are of a related nature to [Nylok’s] goods," and
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`for which it had “a valid and legal right use of the [registered] design." J.A. at 128-29.
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`In" addition, the cancellation petition specifically stated that Nasalok" had been damaged
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`by the '84O Registration “because [Nylok] ha[d]
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`relied on its ownership of said
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`2007-1432
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`15
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`..‘.-.,..,....,,................_...,..._...............,......_....,.,..._.t._....~...\._.........................t.......................,........,._..........,._........................-......,.—»-.__.._..-_._.,,._......_..._..._........,......,...._.._.._............___...._...._.._....__..__,l
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`registration in. another proceeding between the parties," referring to the infringement
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`suit. Q at 129.
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`Nasalok correctly points out that the district court judgment in that suit was based
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`on a determination that Nasalok had infringed “one or more" of the seven federally
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`registered trademarks at issue in thesuit, without specifying that Nasalok had infringed
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`the _’840