January 22, 2015
On January 21, 2015, the U.S. Supreme Court decided its first substantive trademark case in nearly a decade. The decision resolves a longstanding circuit split over the issue of how to try cases where a key issue is whether a trademark owner should be given credit for earlier versions of its trademark in determining who has “priority of use” and thus a superior claim to exclude others from using the mark. In Hana Financial, Inc. v. Hana Bank et al., 13-1211 (U.S. Jan. 21, 2015), a unanimous Court held that a jury–not the judge–should decide the factual question of whether the current trademark creates the “same, continuing commercial impression” as the earlier version of the mark. Slip op. at 3-4.
Generally, a trademark user’s right to exclude others from using a similar mark is determined from the first date that the owner begins to use the trademark to identify the source of its goods or services to consumers. Where two users have competing claims to a mark, the user who used the mark in commerce first will generally have superior rights. Under the doctrine of tacking, however, courts have allowed trademark users to claim priority back to the first use of the mark in commerce even if the owner (or its predecessor) made minor alterations to the mark over time. This tacking doctrine allows trademark holders some flexibility in responding to market forces and consumer preferences. As articulated by the Court of Appeals for the Ninth Circuit in the case that was the subject of the appeal, the doctrine only applies in “exceptionally narrow circumstances” where “the two marks are so similar that consumers would generally regard them as being the same.” Hana Fin., Inc. v. Hana Bank, 735 F.3d 1158, 1160 (9th Cir. 2013).
In Hana Financial, both parties were financial services corporations serving the Korean-American community. Hana Bank, the respondent in the Supreme Court, was first established in Korea in 1971 and adopted the name “Hana Bank” in 1991. In 1994, it established the Hana Overseas Korean Club to provide financial services in America; its advertisements in America included its “dancing man” logo and featured the name “Hana Bank” in Korean. It changed its name to Hana World Center in 2000, and began operating a bank called “Hana Bank” in the United States in 2002. Hana Financial, Inc., the petitioner, was established in California in 1994, and obtained a registered trademark for its “pyramid logo,” which included the name “Hana Financial,” in 1995.
Hana Financial brought suit against Hana Bank in 2007, alleging the Bank was infringing Hana Financial’s trademark by using the word “Hana” in connection with a financial services company. Hana Fin., Inc., 735 F.3d at 1162. The Bank defended, in part, by arguing that it had superior rights to the name “Hana,” which it had been using in America since at least 1994. The Bank’s claim to priority over the trademark depended on whether it could tack its previous use of “Hana” in connection with the Hana Overseas Korean Club to its use of the name “Hana Bank” beginning in 2002.
In 2008, the district court granted summary judgment to the Bank on the issue of trademark priority. The Ninth Circuit reversed on the issue of priority and remanded the case for trial. A jury subsequently found that the Bank had continually used its mark in commerce since at least April 1995, when Hana Financial’s trademark had been registered. Hana Financial appealed to the Ninth Circuit, which affirmed that the district court had properly instructed the jury, and allowed it to decide the issue of tacking, which was a question of fact under Ninth Circuit precedent. Id. at 1168.
The Supreme Court affirmed the judgment of the Ninth Circuit in a decision written by Justice Sotomayor, holding that the availability of tacking was a question of fact to be determined by a jury. Slip. op at 5.
In relevant part, the Court concluded that the prevailing legal test for whether the use of two marks could be tacked – whether the two marks “create the same, continuing commercial impression so that consumers consider both as the same mark” – was one that was appropriately applied by a jury rather than a judge. Slip op. at 3-4 (citations and internal quotation marks omitted). The Court found that “[a]pplication 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” and that “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.” Id. at 4. The Court clarified, though, that a judge could still determine whether two marks could be tacked in a context where it would be otherwise appropriate for a judge to make a factual determination, such as in a bench trial, or where there is no dispute as to the material facts. Id. at 5.
The Court rejected Hana Financial’s argument that allowing juries to decide questions of tacking would undermine the predictability central to the functioning of the trademark system, as Hana Financial had presented no reasons why the trademark system would be more impeded in its operation than would any area of law where mixed questions of law and fact are decided by juries. See Slip op. at 5-8. The Court also disputed Hana Financial’s argument that judges have historically resolved tacking disputes, as the cases relied on by petitioners were primarily ones where a judge had decided a tacking question in the context of a summary judgment motion, a bench trial, or similar circumstances. Id.
While the Supreme Court’s decision in Hana Financial resolves a circuit split on the issue of “tacking,” its application is, by its nature, limited to cases where the trademark at issue was changed around the same time that a third party commenced using a similar mark. The decision would not be applicable in a more typical fact pattern where there is a clear “senior” and “junior” user of the mark in question. The Supreme Court has not finished addressing trademark law this term, though. In the Court’s much-anticipated decision in B&B Hardware, Inc. v. Hargis Industries, Inc., 130352 (argued Dec. 2, 2014), the Court is expected to address what level of deference lower courts should afford to findings of the U.S. Patent and Trademark Office on the critical issue of the likelihood of confusion.
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