By Beverly A. Marsh, Partner, Standley Law Group LLP
Last month the Supreme Court issued its first trademark decision for 2015. In Hana Financial, Inc. v. Hana Bank, No. 13-1211, in an opinion delivered by Justice Sotomayor, the Court unanimously held that the determination of whether two trademarks may be "tacked" for purposes of determining priority is a question of fact, not law, and therefore is a proper question for the jury.
In trademark disputes the parties often argue over who was the first to use the mark. The party who can establish "priority" (prior use) of the mark is often going to be declared the victor, other things being equal. One way a party can establish priority is through tacking. The tacking doctrine allows trademark owners to make certain modifications to their marks over time without losing their priority rights. Under the doctrine, if a new version of a mark and an older version of a mark, although different, are close enough that they create the same commercial impression to consumers, the new mark may enjoy the priority of the older mark. Although the tacking doctrine is only supposed to be applied in limited circumstances, it can be a game changer when it is used successfully.
This case involved two financial companies offering services to Korean Americans ("hana" is a Korean word that translates to "No.1," "first," "top," etc.). Hana Bank is based in Korea and began using the mark "Hana Overseas Korean Club" in 1994 for offering financial services to customers in the U.S. Hana Bank did not have a federal registration. In 1996, Hana Financial obtained a federal registration for "Hana Financial" for use in connection with financial services. Later in 2001, Hana Bank tried to obtain a registration for "Hana Bank" but was unsuccessful due to Hana Financial’s registration. Hana Financial brought suit in 2007, claiming that the Hana Bank mark was likely to cause confusion with the Hana Financial mark. Hana Bank counterclaimed on the grounds that its mark was being infringed by Hana Financial.
The determination of whether two trademarks may be "tacked" for purposes of determining priority is a question of fact, not law, and therefore is a proper question for the jury.
Hana Bank invoked the tacking doctrine, claiming that its mark deserved the priority of the 1996 "Hana Overseas Korean Club" mark. The District Court granted summary judgment on the infringement claim in favor of Hana Bank. The Ninth Circuit reversed, holding that genuine issues of material fact existed as to priority. The case was remanded and a jury found for Hana Bank. The Plaintiff, Hana Financial, moved for judgment as a matter of law, which was denied by the trial court. The Ninth circuit affirmed, finding that tacking was an issue for the jury. As recognized by the Ninth Circuit, there was a split among the circuit courts as to whether tacking was an issue of law to be decided by judges or was an issue of fact for the jury. Because of this, the Supreme Court granted certiorari and affirmed. The Supreme Court’s affirmance was based on the recognition that tacking is based on consumer perception, and juries, not a judge, are in the best position to determine consumer perception. As stated by the Court "when the relevant question is how an ordinary person or community would make an assessment, the jury is generally the decisionmaker that ought to provide the fact-intensive answer."
While certain Circuits (the Federal and Sixth Circuits) previously evaluated tacking as a question of law, all courts in the country will now uniformly be applying this issue as a matter of fact. This does not mean that a judge cannot decide the issue on summary judgment or in bench trials, but if a case does go to trial the jury will be the one making the decision. This case shows that the tacking doctrine, although only applying in limited circumstances, still remains very powerful. When faced with an infringement suit it is worthwhile for a defendant to investigate whether they have any prior trademark rights that they can tack in order to obtain priority. In some circumstances this can be done by purchasing or licensing the rights to a third party’s mark, but the purchaser must be sure to properly acquire the related assets.
If you wish to read the Supreme Court’s Hana decision you can find it at supremecourt.gov. If you have any questions about this decision or what it might mean for your business, please feel free to reach out to SLG.