Supreme Court: application of "tacking" doctrine in trademark cases should be resolved by a jury



January 22, 2015

Intellectual Property Alert

Author(s): Gina M. McCreadie

Yesterday, in Hana Financial, Inc. v. Hana Bank, et al., No. 13-1211, the Supreme Court held that a jury should decide whether to apply the trademark doctrine of “tacking” to determine priority of rights in a mark. This decision, which highlights the importance and role of the ordinary consumer in trademark disputes, will impact companies in a wide range of industries including food and beverage, consumer products, financial services and many others that may be considering modification to their mark.

Hana Financial and Hana Bank (unaffiliated entities) both provide financial services to customers in the U.S. Hana Bank began using “Hana Bank” in Korea in 1991. In 1994, Hana Bank began advertising financial services in the U.S. under “Hana Overseas Korean Club,” which was changed to “Hana World Center” in 2000. In 2002, Hana Bank opened its first bank in the U.S. under “Hana Bank.” Hana Financial began using the name “Hana Financial” in the U.S. in 1995 and obtained a federal trademark registration for HANA FINANCIAL in 1996.

In 2007, Hana Financial sued Hana Bank for infringement of its HANA FINANCIAL mark. Hana Bank denied infringement by invoking the tacking doctrine to claim priority of rights in “Hana Bank” based on its prior uses of “Hana.” The district court granted summary judgment of infringement in favor of Hana Financial, which the Ninth Circuit reversed based on there being genuine issues of material fact as to priority.

On remand, the infringement claim was tried to a jury. The jury was instructed to decide whether the tacking doctrine should apply in this case. The jury found in favor of Hana Bank and the district court denied Hana Financial’s motion for judgment as a matter of law. The Ninth Circuit affirmed the decision finding that application of tacking “requires a highly fact-intensive inquiry” that is “reserved for the jury.” In contrast, the Federal and Sixth Circuit consider the tacking question as a question of law. The Supreme Court granted certiorari to resolve this circuit split.

The Supreme Court began its analysis by looking at the purpose of the tacking doctrine. In general, a party who first uses its mark in commerce has priority over other users of the same or similar mark. Acknowledging that a party should be permitted to make modifications to its mark without losing priority, priority of the original mark may extend to the modified mark in limited circumstances. Two marks may be “tacked” together when the original and modified marks are “legal equivalents,” which occurs when the two marks “create the same, continuing commercial impression” such that consumers “consider both as the same marks.” Based on the doctrine’s reliance “upon an ordinary consumer’s understanding of the impression that a mark conveys,” the Supreme Court found that this tacking determination reasonably falls within a jury’s purview. The Supreme Court held that “when a jury is to be empaneled and when the facts warrant neither summary judgment nor judgment as a matter of law, tacking is a question for the jury.”

In reaching this decision, the Supreme Court rejected Hana Financial’s arguments. First, the Supreme Court was not persuaded by the argument that the “legal equivalents” test involved the application of a legal standard to be decided by a judge. Rather, the Supreme Court noted that this test was a mixed question of law and fact, which questions are typically resolved by juries. Hana Financial also argued that a judge must make the tacking determination because it will result in the creation of new law and that such law will necessarily be relied upon in deciding future tacking cases. The Supreme Court squarely rejected this argument finding no support for the proposition that a tacking case must be resolved based on precedent. The Supreme Court was also not persuaded by Hana Financial’s concern that allowing a jury to decide tacking questions will result in unpredictability in decisions and rejected the argument that tacking decisions have historically been resolved by judges.

When a trademark issue depends on a consumer’s perception of a mark in the marketplace, this decision suggests that resolution of that issue is properly within the hands of a jury rather than a judge. This decision also reminds companies that as they consider modifications to their mark, the modification should leave an ordinary consumer—or a juror—with the same commercial impression as the original mark.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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