The U.S. Supreme Court doesn’t frequently take on trademark cases, so yesterday’s release of its decision in Hana Financial, Inc. v. Hana Bank should have been pretty exciting (available here). We discussed the case back in June when the Court granted certiorari, in a tone that may have suggested that the case didn’t involve the most thrilling of issues. In Hana, the Supreme Court was tasked with deciding if the issue of trademark tacking constitutes a question of law or a question of fact. Grab your popcorn.
The admittedly rare doctrine of “tacking” affects how the issue of priority is determined. Trademark rights are a bit like musical chairs: first person to sit gets the chair (except for intent-to-use applications, which are more like calling “shotgun” in your parents’ car, but you get the picture). Generally, the first person to use the mark gets priority over any subsequent, junior users.
Hana Financial first used its HANA FINANCIAL GROUP mark in the U.S. in 1994, it would normally have priority over Hana Bank, who began using the mark HANA BANK in the U.S. 2002. However, Hana Bank had been using HANA WORLD CENTER since 2000, and HANA OVERSEAS KOREAN CLUB since 1994, all in the U.S. The company had been using the name Hana Bank in Korea (and in Korean) since 1991, but because trademark rights are territorial in nature, such use did not establish rights in the U.S.
The proposed jury instruction cited in the Supreme Court’s decision succinctly summarizes the legal standard for tacking:
A party may claim priority in a mark based on the first use date of a similar but technically distinct mark where the previously used mark is the legal equivalent of the mark in question or indistinguishable therefrom such that consumers consider both as the same mark. This is called ‘tacking.’ The marks must create the same, continuing commercial impression, and the later mark should not materially differ from or alter the character of the mark attempted to be tacked.
In crib-note form, tacking is allowed where the marks are the legal equivalents of the other and create the same, continuing commercial impression.
The jury concluded that Hana Bank could tack its use of HANA BANK, HANA WORLD CENTER, and HANA OVERSEAS KOREAN CLUB all back to 1994, establishing priority over Hana Financial Group. The Ninth Circuit affirmed. It noted that other courts could reach a different conclusion on the same facts, but that because the Ninth Circuit treats the issue as a question of fact, it was bound by the jury’s determination.
The Supreme Court quickly dismissed most of Hana Financial’s arguments simply by comparing tacking to the other issues that we task juries with deciding. Juries frequently apply law to fact in all types of criminal and civil cases. In fact, the Court reasoned, the issue of tacking falls uniquely within the scope of a jury’s knowledge. The Court concluded 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.” Accordingly, in a brief 7 and 1/2 page decision, the Court resolved a 24-year circuit split.
Many commentators (ourselves included) wondered whether the Supreme Court would take the opportunity to resolve the related circuit split of whether the overall question of a likelihood of confusion is a question of fact or a question of law. The Court made no mention of the issue. However, it is hard to argue the Court’s reasoning does not apply with equal force to at least most of the factors considered in the likelihood of confusion analysis. The similarity of the marks, the relatedness of the goods, the likelihood of expansion, and the majority of the other factors all, in some way, are dependent upon how an ordinary consumer would see the marks and the goods. If the lower courts interpret the Hana decision as being persuasive for this issue too, then perhaps the Hana decision is more interesting than it first seems.
And if you’re still not sold, make sure to come back for the Supreme Court’s sequel, B&B Hardware: the Board Strikes Back (with res judicata). It’ll be a good one.