Note: This blog post is part of a series that reviews and discusses a number of significant trademark-related decisions handed down in 2015, including two from the U.S. Supreme Court and several from the U.S. Court of Appeals for the Federal Circuit and other Circuit Courts. Going forward, these rulings will impact how parties protect their trademark assets, including in particular the strategies that parties will need to employ to maximize their likelihood of success in litigation. To follow the entire blog series, click here. For more information, contact Kevin O'Shea.
1. Background
In Hana Financial, Inc. v. Hana Bank, 135 S.Ct. 907 (2015), Hana Financial sued Hana Bank, alleging that Hana Bank's use of the mark "HANA BANK" infringed Hana Financial's "HANA FINANCIAL" trademark. Id. at 910. Hana Bank responded by invoking the "tacking" doctrine to argue that it had priority based on its early use of the marks "HANA OVERSEAS KOREAN CLUB" and "HANA BANK." Id. The earlier "HANA BANK" mark was stylized and similar, though not identical, to the "HANA BANK" mark at issue in the litigation.
The doctrine of "tacking" allows a party to "clothe a new mark with the priority position of an older mark" when the marks are "legal equivalents" – i.e., the marks create the same, continuing commercial impression. Id. at 909. The district court's jury instruction, which the Supreme Court quoted, provides a useful explanation of the "tacking" doctrine:
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.
Id. at 910. The jury found in favor of Hana Bank.
On appeal, the Ninth Circuit affirmed, explaining that "although tacking applies only in 'exceptionally narrow circumstances' ... it 'requires a highly fact-sensitive inquiry' that is 'reserved for the jury.'" Id. (internal citations omitted). However, the Ninth Circuit acknowledged that the issue of whether tacking should be decided by a judge or a jury is the subject of a split among the Circuits, with the Federal and Sixth Circuits evaluating tacking as a matter of law. Id.
The Supreme Court initially considered that the general rule regarding tacking is whether the two marks – i.e., the allegedly infringing mark and the earlier mark to which the later mark is to be tacked – "'create the same, continuing commercial impression' so that consumers 'consider both as the same mark.'" Id. (citations omitted). The Court recognized that application of such a test "falls comfortably within the ken of a jury." Id. at 911. Accordingly, the Court affirmed the Ninth Circuit's holding that whether two marks may be tacked for purposes of determining priority is a question for the jury. Id. at 913.1
2. Strategic Issues In View Of Hana Financial
The Ninth Circuit and the Supreme Court correctly noted that tacking arises only in a narrow set of circumstances. However, it does come up from time to time, and the Circuit split regarding whether tacking is permissible in a given situation has now been resolved in favor of this being a fact issue. Thus, this ruling provides clarity for trademark owners considering whether to revise a trademark. To the extent that a trademark owner anticipates needing to rely on tacking to claim priority to an earlier version of its trademark, we now know that the availability of tacking is a fact, rather than legal question. This presents uncertainty insofar as juries deciding fact questions are typically less predictable than judges deciding legal issues, yet it also provides flexibility for the same reason. A jury may be more willing to accept that a revision is not so substantial as to cleave priority, whereas a judge considering the same issue as a matter of law may have been more rigid and allowed only a narrower range of revisions before cutting off priority. On balance, Hana Financial likely will result in a somewhat broader application of the tacking doctrine, though, as the Supreme Court noted, this remains a narrow issue.
Footnotes
1 Of course, as the Court noted, when it is warranted a judge may decide the issue on a motion for summary judgment or for judgment as a matter of law. Id. at 911.
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