On January 21, 2015, in a unanimous decision, the U.S. Supreme Court in Hana Financial, Inc. v. Hana Bank et al. (No. 13-1211) held that determining whether a prior version of a trademark may be "tacked" on to a later version of the mark for purposes of determining priority is a question for a jury. As the tacking inquiry depends on the perspective of an ordinary consumer, the Court reasoned that it is properly resolved by a jury.
The tacking doctrine allows trademark owners to make slight modifications to their marks over time without an attendant loss of rights. Specifically, owners can claim priority in a mark based on the first use date of a previously used mark, as long as the prior mark creates the same, continuing commercial impression as the mark currently in use. In other words, for two marks to be deemed "legal equivalents," consumers must consider the marks the same.
Hana Financial Inc. had alleged that Hana Bank's use of the mark HANA BANK for financial services infringed Hana Financial's rights in its registered trademark HANA FINANCIAL. In response, Hana Bank argued that it had priority under the tacking doctrine, claiming that because it began using the mark HANA OVERSEAS KOREAN CLUB before Hana Financial began using the mark HANA FINANCIAL, that prior use should be tacked on to its later use of HANA BANK. The District Court initially granted summary judgment to Hana Bank, but the Ninth Circuit reversed, citing unresolved material issues of fact relevant to the issue of priority. On remand, a jury found for Hana Bank, concluding that it had priority over Hana Financial based on the tacking doctrine. The Ninth Circuit affirmed, holding that tacking is an issue for a jury. Hana Financial appealed to the U.S. Supreme Court.
The Court affirmed the Ninth Circuit's holding that tacking is a factual question for a jury. Determining whether two marks create the same, continuing commercial impression demands the assessment of an ordinary consumer and, a jury, as a representation of the community, is uniquely well suited to make this determination. In support of its conclusion, the Court cited analogous instances that present fact-intensive questions for a jury, such as applying the reasonable person standard in tort and criminal cases.
Despite concluding that tacking is a jury question, the Court left open the possibility that the issue could be properly resolved by a judge in some circumstances. Specifically, a judge could make the decision in a bench trial when acting in his or her capacity as factfinder, or when the facts warrant resolution of a tacking issue on a motion for summary judgment or judgment as a matter of law. The Court did not comment, however, on what sort of facts would warrant a judge deciding the tacking issue on a dispositive motion.
The Court rejected several of petitioner Hana Financial's arguments in reaching its decision. For instance, the Court was unpersuaded by the argument that tacking should be decided by a judge merely because the "legal equivalents" test involves application of a legal standard. The Court framed tacking as a mixed question of law and fact, and noted that such questions are typically resolved by juries. Further, the Court addressed Hana Financial's concern about juries applying the wrong legal standard by explaining that litigants can carefully craft jury instructions to guard against this risk.
The Court was also unconvinced by Hana Financial's plea that leaving the tacking question to a jury would create unpredictability in the trademark dispute resolution process. Leaving dispositive factual questions to juries, the Court reasoned, might make the process unpredictable; but this has not stopped the judicial system from relying on juries to answer such questions in other areas of law — tort, contract, and criminal cases, for example — and the same should be true in trademark cases. Furthermore, the Court noted that assigning the tacking question to a judge would no more guarantee certainty than if the question were assigned to a jury.
Notably, the Court made no mention of likelihood of confusion in its brief opinion despite inquiring extensively during oral argument about whether likelihood of confusion is a question of law or fact.
The important takeaway for trademark owners is that while an owner can modify its mark over time to avoid loss of trademark rights, the new version of the mark must create the "same, continuing commercial impression" as the prior version of the mark in the minds of consumers. Further, because tacking involves fact-intensive questions for a jury (or judge acting as a factfinder) to resolve, demonstrating that two marks create the same commercial impression may require consumer survey or other evidence rather than mere legal arguments.
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