By: Brianna Nassif 

The Supreme Court granted certiorari in 2014 in the Ninth Circuit case Hana Fin., Inc. v. Hana Bank.[1] The case involves two Korean-based financial institutions.[2] It addressed a circuit split on the question of whether trademark priority established by trademark tacking is a question for the jury.[3] This article will examine the court’s discussion of the appropriate legal standard to be applied in tacking cases, and the potential broader implications of this decision in other trademark matters.

Legal Background:

Questions of trademark rights and priority are generally settled by determining which party was the first to use the mark. This analysis can be complicated, though, by trademark tacking. Trademark tacking allows a mark owner to “tack” its use of a revised mark to its use of its original mark for purposes of establishing priority.[4] This narrow doctrine requires the court to determine whether the original and revised marks create a “continuing commercial impression” and are thus “legal equivalents.”[5] Neither party in this case disputes the tacking doctrine or its legal standard; rather, the issue is whether the judge or the jury should determine whether tacking applies.

Facts and Procedural History:

Hana Financial, the petitioner, was established in 1994 and registered its mark in 1996. Hana Bank, the respondent, was established in Korea in 1971 as the Korea Investment Finance Corporation. It changed its name to Hana Bank in 1991. The American branch of the company was established in 1994 and was named Hana Overseas Korean Club. US advertisements used the Hana Overseas Korean Club name in both Korean and English. They also used the words “Hana Bank” in Korean. In 2000, the name was changed to Hana World Center before being established as Hana Bank in 2002. In 2007, Hana Financial sued Hana Bank for trademark infringement. Hana Financial contended that the word “Hana” used by two financial entities was likely to cause confusion.[6]

Hana Bank’s defense in the infringement case was that it had established priority through trademark tacking. Under this theory, Hana Bank argued that it could “tack” the Hana Bank mark to its original Hana Overseas Korean Club mark established in 1994, thus establishing priority over the Hana Financial mark.[7] The District Court agreed and granted Hana Bank’s motion for summary judgment. On appeal, the Court of Appeals for the Ninth Circuit found that there were questions of fact in the case and reversed and remanded it. In a jury trial in the District Court, the jury determined that the tacking defense applied and decided for Hana Bank. The Ninth Circuit Court of Appeals affirmed and Hana Financial appealed to the Supreme Court of the United States.

Ninth Circuit Appeal:

The Ninth Circuit opinion provided an overview of the tacking defense and its applications. The court relied on its previous decision in Brookfield Commc’ns, Inc. v. W. Coast Entmt. Corp. to explain the tacking analysis.[8] The court reiterated that tacking is permitted so as to encourage mark owners to apply minor alterations to their marks to reflect changing consumer demands and preferences.[9] Without this doctrine, mark owners would be punished for even slightly changing their marks because the clock would reset and they could lose priority.

In determining whether there is a commercial impression, the court explained that the perspective of the ordinary consumer of these kinds of goods and services should be used.[10] The main tools used to establish this standard are consumer surveys and the specific facts of the case.[11]

Before getting into the specific facts of this case, the court finally discussed the narrowness of the doctrine and its limited application. It pointed to the higher standard to be applied for legal equivalency compared to the standard used for likelihood of confusion and works through many examples where the doctrine did not apply.[12] Despite this narrow interpretation of the doctrine, the court concluded that “here, reasonable minds could disagree on whether the Bank’s marks were materially different.”[13] However, because the case was on appeal, Hana Financial, as the losing party in the lower court, would have to show that the evidence would only reasonably support their interpretation. Hana Financial did not reach this high standard.[14] The court properly instructed the jury, and the evidence was sufficient to support a verdict for Hana Bank on tacking.[15]

Supreme Court Appeal:

While the tacking doctrine is narrow, there is a circuit split on whether it is a question of law or fact, with the Federal and Sixth Circuits evaluating the doctrine as a question of law.[16] Justice Sotomayor’s opinion clearly stated that the commercial impression of the mark is a question of fact for the jury because it relates to the perspective of the ordinary consumer.[17]  She specified that a judge can still rule on tacking when cases are being decided for summary judgment or for judgment as a matter of law, but cannot be the decision-maker in a jury trial.[18]

Hana Financial raised four main arguments, each of which was rejected by the unanimous court. The first was that the “legal equivalents” test requires the application of a legal standard, which is usually reserved for the judge. The court recognized Hana Financial’s argument, but explained that mixed questions of law and fact, like this one, generally go to the jury for resolution.[19] The second argument was that tacking decisions “create new law,” which is also usually reserved for judges. Hana Financial did not offer support for this argument, and so the court dismissed it.[20] Its third contention was that allowing juries to answer the tacking question sacrifices predictability of the system. There was no evidence, however, to explain how the decreased level of predictability in tacking is any different from that in a tort, contract or criminal case, so the argument was rejected.[21] The final argument raised by Hana Financial was that judges traditionally were the ones to resolve tacking questions. However, it relied on precedent in which judges decided on summary judgment or judgment as a matter of law, which judges would still retain the authority to decide.[22] For these reasons, the Supreme Court affirmed the Ninth Circuit’s decision for Hana Bank and resolved the circuit split by defining trademark tacking as a question of fact for the jury to decide.

Implications:

Trademark tacking is a narrow doctrine with limited application. While the Supreme Court did not discuss the impact of its decision on other trademark questions, the ordinary consumer impression standard is frequently used in trademark law.[23] For instance, the court applies a similar analysis when determining the likelihood of confusion in infringement cases.[24] Because the Federal, Second, and Sixth Circuits do not treat likelihood of confusion as a pure question of fact, trademark owners in future cases in those courts may argue that the Hana standard should apply and that the question should go to the jury. The Hana Financial case may therefore have broader implications than the narrow tacking doctrine it decided on specifically.

 


 

[1] Hana Fin., Inc. v. Hana Bank, 135 S. Ct. 907, 907 (2015).

[2] Id.

[3] Id.

[4] See generally 1 J. McCarthy, McCarthy on Trademarks and Unfair Competition § 17:26 (4th ed. 2013).

[5] Hana Fin., Inc., 135 S. Ct. at 908.

[6] Hana Fin., Inc. v. Hana Bank, 735 F.3d 1158, 1162 (9th Cir. 2013) cert. granted, 134 S. Ct. 2842, 189 L. Ed. 2d 805 (2014) and aff’d, 135 S. Ct. 907 (2015).

[7] Hana Fin., 735 F.3d at 1163.

[8] See Hana Fin., 735 F.3d at 1164 (citing Brookfield Commc’ns, Inc. v. W. Coast Entmt. Corp., 174 F.3d 1036 (9th Cir. 1999)).

[9] See Hana Fin., 735 F.3d at 1164.

[10] See id.

[11] See id.

[12] See id. at 1165.

[13] Id. at 1166.

[14] Hana Fin., 735 F.3d at 1166.

[15] Id.

[16] Hana Fin., Inc., 135 S. Ct. at 907 (2015).

[17] See id. at 911.

[18] Id.

[19] Id.

[20] Id. at 912.

[21] Id. at 909.

[22] Id.

[23] See Carlo F. Van den Bosch, Supreme Court Update – Hana Financial v. Hana Bank, The National Law Review (Feb. 5, 2015), http://www.natlawreview.com/article/supreme-court-update-hana-financial-v-hana-bank.

[24] See Supreme Court’s Trademark Tacking Decision: Possible Impact on Likelihood of Confusion, Morgan, Lewis & Bockius (Jan. 22, 2015), http://www.morganlewis.com/pubs/supreme-court-s-trademark-tacking-decision-possible-impact-on-likelihood-of-confusion?p=1#_ftn8.