The Supreme Court’s decision that juries should decide whether consumers would consider two marks to be the same for the purpose of trademark tacking may help resolve a split in the circuits as to whether the likelihood of confusion in trademark cases is purely factual, a question of law, or one that is a mixed question of fact and law.

In its January 21 opinion in Hana Financial, Inc. v. Hana Bank,[1] the U.S. Supreme Court held that “when a jury is to be empanelled and when the facts warrant neither summary judgment nor judgment as a matter of law, [trademark] tacking is a question for the jury.” If this decision is limited to the relatively unusual issue of trademark tacking, then its significance will be modest. On the other hand, if the Supreme Court’s reasoning is applied to the likelihood of confusion analysis, then this decision could change who decides the key issue in several important jurisdictions.  

Background

Trademark rights are determined by the date of the mark’s first use in commerce. The party that first uses the mark in commerce has priority over subsequent users. In limited circumstances, courts have permitted a party to make certain modifications to its marks without losing priority. This doctrine is called tacking, and courts have permitted tacking when the original and revised marks are “legal equivalents,” meaning that the marks create the same, continuing commercial impression among ordinary consumers.

The Hana Financial Decision

In Hana Financial, Justice Sonia Sotomayor, writing on behalf of a unanimous Court, addressed the issue of whether a judge or jury should determine whether tacking is available in a particular case.

Hana Bank was established in 1971 as an entity called Korea Investment Financial Corporation. In 1991, it changed its name to Hana Bank and began using this name in Korea. In 1994, Hana Bank began advertising in the United States using the name Hana Overseas Korean Club and the name Hana Bank in Korean. In 2000, it changed the name of Hana Overseas Korean Club to Hana World Center. Then, in 2002, it began operating a bank in the United States under the name Hana Bank.

Hana Financial was established in 1994, and it began using the name Hana Financial in commerce in 1995. In 2007, Hana Financial sued Hana Bank for trademark infringement. Hana Bank denied infringement, invoked the tacking doctrine, and claimed that it had priority. The district court granted summary judgment to Hana Bank (finding, as a matter of law, that it did have priority), but the U.S. Court of Appeals for the Ninth Circuit reversed, holding that there were material issues of fact as to priority. On remand, the infringement claim was tried before a jury, which returned a verdict in favor of Hana Bank. The Court of Appeals for the Ninth Circuit affirmed. The court recognized that there was a circuit split regarding whether tacking should be decided by juries or judges, but it concluded that tacking “requires a highly fact-sensitive inquiry” that is “reserved for the jury.”[2] On June 23, 2014, the Supreme Court granted certiorari to consider the issue.

The Supreme Court noted that the general rule adopted by lower courts is that two marks may be tacked when they are “legal equivalents,” which refers to marks that create the same, continuing commercial impression so that consumers consider both as the same mark.[3] In analyzing whether this decision should be made by judges or juries, the Court held that “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.” The Court explained that “we have long recognized across a variety of doctrinal contexts 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.”[4]Therefore, the Court concluded that trademark tacking ordinarily should be decided by a jury.

The Court was quick to note, however, that it was not holding that a judge may never determine whether two marks should be tacked. For example, the Court recognized that a judge may continue to decide tacking questions on a motion for summary judgment or for judgment as a matter of law where there are no material questions of fact. Similarly, if the parties have opted to try their case before a judge, the judge certainly can decide tacking in his or her fact-finding capacity. However, “when a jury is to be empanelled and when the facts warrant neither summary judgment nor judgment as a matter of law, tacking is a question for the jury.”[5]

Practical Implications of Hana Financial

Trials regarding trademark tacking are relatively rare. As a result, if Hana Financial is narrowly interpreted to apply solely to tacking issues, then it will have limited impact on future trademark disputes.

However, if courts extend the reasoning and analysis of the Hana Financial decision to other trademark issues, then the decision could have broader implications, at least in the minority of jurisdictions in which the likelihood of consumer confusion is not already treated as a pure question of fact. The Court’s decision was based, in large part, on the notion that “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.” Like tacking, other trademark issues turn on an ordinary consumer’s impression of a trademark, including whether an ordinary consumer is likely to be confused by the similarity between a junior user’s and a senior user’s mark.[6] Although the Supreme Court’s decision in Hana Financial suggests that a test based on an ordinary consumer’s impression of a mark is a question of fact that should ordinarily be decided by a jury, the U.S. Court of Appeals for the Federal Circuit has deemed the likelihood of confusion to be a question of law to be decided by the judge.[7] Two other circuits, the Second and Sixth, have ruled that likelihood of confusion is a mixed question of fact and law.[8] Going forward in situations where summary judgment is not appropriate, trademark holders will no doubt argue that Hana Financialmandates that these three courts adopt the existing majority view that likelihood of confusion is a pure question of fact. It remains to be seen whether such efforts will be successful, thereby resolving this existing split of authority between the circuits.