n January 21, 2015, in its first substantive trademark ruling in more than a decade, the United States Supreme Court unanimously held that the question of “tacking” – a doctrine by which a brand owner may modify its mark overtime without disrupting its priority of rights – is a factual one, more appropriately suited for juries to decide, rather than judges. In reaching its decision in Hana Financial, Inc. v. Hana Bank et al., No. 13-1211, the Supreme Court affirmed the Ninth Circuit’s refusal to overturn a jury verdict, squarely rejecting the petitioner’s arguments that “tacking” was a question of law that can only be resolved by a judge, and settling a split amongst several circuit courts across the nation.
Under U.S. trademark law, brand owners have superior rights over subsequent adoptees of identical or confusingly similar marks. The “tacking” doctrine permits owners to give their brands a minor facelift without losing their place in line, as long as the newly modified mark creates the same “commercial impression” as the earlier mark “when viewed through the eyes of a consumer.”
In this case, a Korean financial services provider by the name of Hana Bank (formerly known as Korean Investment Finance Service Corporation) began advertising its services in the United States in 1994 under the name “Hana Overseas Korean Club” using the Korean equivalent of “Hana Bank” in its advertising materials. In 2000, Hana Bank changed its name to “Hana World Center” and ultimately opened a “Hana Bank” bank in the United States in 2002. Meanwhile, petitioner Hana Financial Group began using its name in 1995 and obtained a federal registration for “Hana Financial” for use in connection with financial services in 1996. In 2008, Hana Financial sued Hana Bank in the Central District of California, claiming Hana Bank infringed its “Hana Financial” trademark. In its defense, Hana Bank invoked the “tacking” doctrine to claim that it was the one with senior rights to the Hana mark, based on its prior use of the name Hana Overseas Korean Club, beginning in 1994. On this basis, Hana Bank counterclaimed seeking to cancel Hana Financial’s registration. The jury returned a verdict in favor of Hana Bank, which was later affirmed by the Ninth Circuit.
Siding with the Ninth Circuit, the Supreme Court rejected all four of petitioner’s arguments in support of the position that tacking is a question of law that should have been posed to the judge, not the jury. In particular, Hana Financial argued that: (1) because tacking necessarily requires courts to determine whether marks are “legal equivalents,” the application of a legal standard should be done by a judge; (2) tacking decisions will necessarily create “new law” and precedent, which should be the role of a judge, not a jury; (3) jury verdicts will lead to unpredictable results; (4) the question of tacking has historically been resolved by judges. The Supreme Court was unpersuaded. As, Justice Sotomayor explained, juries are generally accustomed to making mixed applications of law and fact, and any confusion as to the appropriate legal standard can be resolved with proper jury instructions. More importantly, in cases like these, which hinge on “how an ordinary person or community would make an assessment, the jury is generally the decisionmaker who ought to provide a fact-intensive answer.” Notably, Court’s decision does not require all tacking cases to go to a jury. In some cases, the decision of whether two marks create the same “commercial impression” can be resolved by a judge on a motion for summary judgment or during the course of a bench trial. However, “when a jury trial has been requested and when the facts do not warrant entry of summary judgment or judgment as a matter of law, whether tacking is warranted must be decided by a jury.”
Brand owners looking to update their trademarks should take stock of the Supreme Court’s decision in Hana Financial. To avoid the enormous cost and unpredictability of jury trials – or the loss in priority of trademark rights – brand owners must take care to ensure that their marks retain their core commercial impression throughout the years.
The Supreme Court is slated to rule on yet another trademark case, B&B Hardware, Inc. v. Hargis Industries, Inc., which will address whether findings by the Trademark Trial and Appeal Board on the question of likelihood of confusion can have a preclusive impact in related infringement actions in federal court. Stay tuned to the CDAS Legal Blog for the latest coverage.