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SUPREME COURT RULES TRADEMARK TACKING IS A QUESTION FOR THE JURY

■ Andrew R. Swanson

In Hana Financial, Inc. v. Hana Bank, 135 S.Ct. 907 (2015), a unanimous Supreme Court held that the determination of whether two trademarks may be “tacked” for the purpose of determining priority is a question for the jury.   Prior to Hana, circuit courts were split as to whether tacking was a question of law for the judge, or a question of fact for the jury. While the Court determined that the jury is in the best position to determine if the tacking doctrine applies, the Court did leave open the judge’s ability to determine the tacking issue at various points during litigation, such as on summary judgment or motions for judgment as a matter of law.

The rights to a trademark are determined based on the mark’s use in commerce. While the first date of use in commerce establishes the priority date of a mark, a party may sometimes clothe a new mark with the priority granted to an old mark. Clothing the new mark with the old mark’s priority is known as “tacking.” The tacking doctrine evolved to allow trademark users to make slight, insubstantial changes to an existing mark without risking the loss of an established priority date. Tacking is available in very limited circumstances, where the new mark is considered to be the “legal equivalent” of the original mark. To be legal equivalents, trademarks must “create the same, continuing commercial impression,” such that an ordinary consumer would consider the old mark and the new mark as the same mark.

While tacking is generally available to allow a new mark to claim an earlier priority date, courts apply tacking in “exceptionally narrow circumstances.” As such, the tacking doctrine is an exceedingly narrow doctrine, such that even the use of a mark that contains portions of the earlier mark may not qualify for tacking. It is not the similarity of the old mark and the new mark when viewed in the abstract that determines whether the new mark is entitled to the priority date of the old mark; instead, it is the impression that the mark creates within the ordinary consumer that controls. For example, in One Industries, LLC v. Jim O’Neal Distributing, 578 F.3d 1154, 1161 (9th Cir. 2009), the Ninth Circuit compared a “Rounded O’” graphical mark, shown below on the left, with an “Angular O’” graphical mark, shown below on the right, to determine if the “Angular O’” could tack to the earlier priority date of the “Rounded O’”.

In comparing the two marks, the Ninth Circuit noted thinner top and bottom lines on one “O” versus the other, the visual differences between the two apostrophes, and that one “O” was boxy while the other “looks like the outline of a lemon.” These differences led the Ninth Circuit to refuse to allow tacking between the “Angular O’” and the “Rounded O’” marks. Similarly, the Federal Circuit refused to allow the word mark CLOTHES THAT WORK to obtain the priority date of the earlier word mark CLOTHES THAT WORK. FOR THE WORK YOU DO, even though the later mark was simply a shortened version of the earlier mark. Van Dyne-Crotty, Inc. v. Wear-Guard Corp., 926 F.2d 1156 (Fed. Cir. 1991). There, the Federal Circuit determined tacking as a matter of law, and the court concluded that the two marks were not legal equivalents because the two did not create the same commercial impression. However, the Federal Circuit decision shows the difficulty involved when determining tacking as a matter of law, because it is unclear how or why the two phrases would evoke differing commercial impressions when viewed by the ordinary consumer in the context that trademarks are generally viewed.

In Hana, Hana Financial, Inc. (HFI) sued Hana Bank for infringement of the HFI registered mark, a pyramid logo with the words HANA FINANCIAL, when Hana Bank used the mark HANA BANK. Hana Bank was established in 1971 in Korea, and the evolution of the allegedly infringing HANA BANK mark began when Hana Bank started using the name “Hana Bank” in Korea in 1991. Hana Bank did not begin providing financial services in the United States until May 1994, when it specifically targeted those services at Korean expatriates under the name “Hana Overseas Korean Club.” Hana Bank began using the name “Hana Bank” in advertisements in the United States in 1994, though the advertisements contained the name “Hana Overseas Korean Club” in both English and Korean and contained the name “Hana Bank” in only Korean. In 2000, Hana Bank then changed the name of its overseas club to “Hana World Center.” In 2002, Hana Bank began operating a bank in the United States using the name Hana Bank. HFI was established in June 1994 in California, and began using the name “Hana Financial” in commerce in 1995. HFI obtained a federal trademark registration for a pyramid logo with the words HANA FINANCIAL in 1996.   HFI sued Hana Bank for trademark infringement in 2007, alleging infringement of the HANA FINANCIAL mark. As such, to prevail on its tacking claim, Hana Bank needed to establish a pre-1995 priority date for a mark that Hana Bank did not begin using until 2002. To establish that the two marks are “legal equivalents,” Hana Bank needed to prove that the later mark, HANA BANK, created the same, continuing commercial impression as the earlier mark, HANA OVERSEAS KOREAN CLUB, such that “consumers ‘consider both as the same mark.’”

After a jury trial in the district court, the jury found that Hana Bank’s use of HANA BANK was the legal equivalent of marks that it was using continuously since a time prior to HFI’s first use in 1995. As such, Hana Bank’s use of the HANA BANK mark was found to be non-infringing. It thus appears that the jury considered the use of “Hana” as the most relevant portion of the mark, and that Hana Bank’s continuous use of that term, which actually translates to “‘number one,’ ‘first,’ ‘top,’ or ‘unity,’” in Korean, created the same impression in consumers regardless of whether it was followed by “Overseas Korean Club” or “Bank.”

HFI put forth four arguments as to why the Court should find that a determination of tacking is a legal, and not a factual, determination. First, HFI argued that the tacking standard requires legal equivalency, which necessarily involves the application of a legal standard. While the Court acknowledged

“Application of a test that relies upon an ordinary consumer’s understanding of the impression that a mark conveys falls comfortably within the ken of a jury.”

 

that the tacking doctrine requires the application of a legal standard, the Court viewed the tacking test as a “mixed question of law and fact,” of the kind typically decided by juries.

Second, HFI argued that tacking determinations necessarily create new law, the creation of which is reserved for judges, not juries. In a related third argument, HFI argued that leaving tacking determinations to the jury will undermine the trademark system by removing predictability. The Court dismissed both of these arguments by analogizing trademarks to torts, contracts, criminal, and various other areas of the law where juries may reach differing decisions based on similar facts. Interestingly, the Court noted that tacking cases are rarely decided based upon similar legal precedent, and that precedent is usually relied upon only to define the relevant legal standard. Instead, the facts of each particular case, and the commercial impression created by the marks, are determinative. Thus, even if there is a previous case where two marks that seem similar in the abstract were found not to tack, that has no bearing on the relatedness of the marks at issue in any other case.

Two trademarks cannot be assessed in a vacuum when making a tacking determination

Finally, HFI argued that judges have historically resolved tacking issues. However, the precedent relied upon by HFI involved tacking disputes resolved by bench trials or on summary judgment, and was thus unpersuasive. The Court did state that though tacking is a question for the jury, judges do have the power to resolve tacking issues when the facts “warrant entry of summary judgment or judgment as a matter of law.” Therefore, a litigant that wishes to keep the tacking determination from the jury may still do so; however, such opportunities are limited.

Two trademarks cannot be assessed in a vacuum when making a tacking determination. No matter how similar the two marks look or sound, it is the overall commercial impression made upon the consumer that determines whether tacking applies. The Supreme Court’s decision in Hana Bank has placed any trademark tacking determination squarely in the hands of the jury, except in those instances where the issue is so clear that summary judgment or judgment as a matter of law is warranted. Hana Bank confirmed the majority interpretation of trademark tacking as a question for the jury. The Supreme Court also confirmed that each trademark tacking inquiry is highly fact-sensitive and regardless of the similarity or difference of the two marks when viewed in the abstract, whether tacking applies depends upon the commercial impression both marks have on an ordinary consumer.

 

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