Hana Financial, Inc. v. Hana Bank, 574 U.S. ____ (2015).

The United States Supreme Court has announced its decision in one of two recently argued cases involving substantive trademark issues. Argued before the Court on December 3, 2014, the root of the dispute between the two financial companies related to the issue of priority.  See Hana Financial., Inc. v. Hana Bank, 735 F.3d 1158, 1163-64 (9th Cir. 2013).

U.S. trademark rights are often established by the first to lawfully use a particular name or mark in commerce. This concept of rights through first lawful commercial use is known as priority. Over the life of a mark, and in recognition that customers’ and society’s tastes and values change over time, trademark owners are permitted to make certain modifications to the mark, under certain circumstances, without losing priority so long as the commercial impression of the original mark is carried through to the modified version, i.e., the two versions of the mark are legal equivalents. Consider, for example, the evolution of the familiar marks below. 

See marks in PDF version of this alert.

This doctrine, commonly known in the practice as “tacking,” allows a trademark owner to continue to claim the benefit of the earlier first use date of the older mark for its new version. In Hana Financial v. Hana Bank, the Supreme Court was asked to decide whether trademark tacking is a legal question to be determined by a judge or a question of fact to be determined by the jury. Courts in different areas of the country have been divided on the issue. The Supreme Court has now settled the question affirming the Ninth Circuit’s position that trademark tacking is a question of fact for the jury. 

Justice Sotomayor delivered the Court’s opinion holding that the determination of whether tacking is available in a particular case is a question for the jury given that the inquiry necessarily “operates from the perspective of an ordinary purchaser or consumer.” Whenever the application of a test involves a determination of how the public makes an assessment, the issue has historically been placed in the hands of the jury to make the fact-intensive decision. The Court notes, however, that there are occasions where decision by a judge on the issue of tacking would still be appropriate. For example, in cases where the question of tacking is the subject of a motion for summary judgment or a motion for judgment as a matter of law, and the facts so support it, a judge may decide the issue. Also, if the parties have opted to forego a jury trial, the judge would then decide the issue.

A copy of the Court’s decision can be found here.

The full transcript of the oral arguments can be found here.

The Supreme Court’s decision in the second case, B&B Hardware, Inc. v. Hargis Industries, Inc., is expected soon.  Stay tuned.