On January 21, 2015, the Supreme Court ruled in Hana Financial, Inc. v. Hana Bank that the issue of whether two trademarks may be “tacked” for purposes of determining a priority claim is a question of fact for the jury.
Tacking is a doctrine recognized under trademark law that allows the owner of a mark, in certain circumstances, to rely on its earlier use of an older and slightly different mark for priority purposes, provided the original and revised marks create the same continuing commercial impression. The doctrine recognizes that trademark owners can make slight modifications or changes to their marks over time to modernize them without abandoning their rights in the original mark.
The case involved two financial institutions, Hana Financial and Hana Bank. Hana Financial, which began using the HANA FINANCIAL mark in commerce in the U.S. in 1995, sued Hana Bank for trademark infringement in 2007. The HANA BANK mark was first used in U.S. commerce in 2002, but Hana Bank argued that its previous use of the mark HANA OVERSEAS KOREAN CLUB, dating back to 1994, could be tacked onto its HANA BANK mark to give it priority of use over Hana Financial.
The case was tried to a jury at the district court, which returned a verdict in favor of Hana Bank. The district court denied Hana Financial’s subsequent motion for judgment as a matter of law, and Hana Financial appealed. The U.S. Court of Appeals for the Ninth Circuit affirmed on appeal, holding that there was sufficient evidence to support the jury’s verdict on trademark priority. The appeals court held that tacking was a question of fact for the jury in the Ninth Circuit, while acknowledging that some other federal circuits treated tacking as a question of law.
The Supreme Court sided with Hana Bank, affirming the Ninth Circuit’s decision that tacking was a question of fact for the jury. “Application 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,” reasoned the court in a unanimous decision authored by Justice Sotomayor.
The court noted that a judge may still decide tacking questions in certain situations, such as on a motion for summary judgment or for judgment as a matter of law, or where the parties opt to try their case before the bench.
The Supreme Court rejected a number of arguments raised by Hana Financial as to why tacking should be a question of law resolved by a judge. That tacking may involve a mixed question of law and fact did not take it out of the jury’s domain, and careful jury instructions can avoid the improper application of the legal standard. Concerns about juries creating new legal precedents involving tacking that will guide future disputes, or that jury decisions would render the system unpredictable, were not well founded. The court noted that the same could be said for jury verdicts in any tort, contract, or criminal case. Finally, the Supreme Court distinguished cases cited by Hana Financial in which judges had resolved tacking disputes, as they involved bench trials, summary judgment rulings, and the like.
In a footnote, the Supreme Court explained that its decision on tacking was consistent with its 1996 decision in Markman v. Westview Instruments, Inc., in which it held that the task of construing patent claims falls to judges and not to juries. The court explained that the trademark tacking inquiry involves a factual judgment as to whether two marks convey the same continuing commercial impression to consumers, while the construction of written instruments, i.e., patent claims, is something that judges often do better than jurors.
As a practical matter, the law versus fact distinction is important because it dictates the standard of review that an appeals court will apply, and the level of deference, if any, that will be given to the lower ruling.
Significantly, the Supreme Court’s decision does not appear to impact the current circuit split as to whether likelihood of confusion is a question of fact for the jury, or a question of law for the judge. Courts in jurisdictions that treat likelihood of confusion as a matter of law may reconcile this decision by analogizing the tacking inquiry to the “similarity of the marks” factor in the confusion analysis. Those circuits still treat the individual likelihood-of-confusion factors as questions of fact for the jury, even though the balancing of the factors is a question of law.
The International Trademark Association, American Intellectual Property Law Association, and the U.S. Patent & Trademark Office all filed amicus curiae briefs before the Supreme Court supporting the position that tacking is a question of fact for the jury.