High court finds 'tacking' to be issue of fact in Hana

By Brian Cox
Legal News

Your tried and true trademark is in need of a facelift, so you give it a tweak here and there to give it a more modern look.

No problem, right? Well, that may be for a jury to decide.

The U.S. Supreme Court ruled unanimously this month in Hana Financial, Inc. v. Hana Bank, et al., that a jury - not a judge - should decide any question of whether your trademark upgrade is an accepted practice known as "tacking" or a trademark infringement.

"Trademark tacking" is the doctrine by which a trademark owner is allowed to slightly change or tweak a trademark, while keeping the original first-use date associated with the old mark, thereby maintaining the mark's priority, according to Miller Canfield attorney Kimberly Berger.

The legal test to determine whether a trademark can be "tacked" is whether the two marks are so similar that consumers consider both as the same mark, she explained.

The decision settles a split among federal circuit courts, some of which considered tacking a question of fact for the jury, and others that considered it an issue of law for the judge to decide.

In the case before the court, Hana Financial sued Hana Bank for trademark infringement after Hana Bank changed its name from Hana Overseas Korean Club. In defense, Hana Bank invoked the tacking doctrine.

Hana Bank was established in 1971 as a Korean company called Korea Investment Finance Corp. It changed its name to Hana Bank in 1991 and three years later opened a branch in the United States to provide financial services to Korean expatriates. It advertised its service as Hana Overseas Korean Club. In 2002, it began operating a physical bank in the U.S. under the name Hana Bank.

Hana Financial sued for infringement on its 1996 federal trademark registration and the claim was tried before a jury, which found in favor of Hana Bank.

The Ninth Circuit Court of Appeals upheld the verdict, concluding that "tacking inquiry was an exceptionally limited and highly fact-sensitive matter reserved for juries, not judges."

Hana Financial argued before the U.S. Supreme Court that tacking determinations should be a task reserved for judges, saying that decisions by juries "will create new law that will guide future tacking disputes."

But the justices were not persuaded, rejecting all four of Hana Financial's arguments. Justice Sonia Sotomayor, who authored the unanimous opinion, found that the tacking question "falls comfortably within the ken of a jury."

As part of its argument, Hana Financial contended that relying on jury decisions would introduce a degree of unpredictability into the trademark system.

But the justices rejected that outright, with Sotomayor writing, "The fact that another jury, hearing the same case, might reach a different conclusion may make the system 'unpredictable,' but it has never stopped us from employing juries in" the context of the tort, contract, and criminal justice systems.

Berger, a Wayne Law grad who specializes in domestic and international trademark prosecution and intellectual property litigation, said the decision likely relieves tacking of some risk for a trademark owner.

"A jury may be less likely than a federal judge to appreciate certain nuances in the updating of a trademark and be more likely to find in favor of tacking," she said. "If you're a trademark owner looking to tweak your trademark, you are probably happy with the Hana decision because you may fare better with the tacking and priority decisions being in the hands of a jury, as opposed to a judge."

Berger agreed that the decision may also result in tacking cases becoming more expensive to litigate, since parties are more likely to rely on survey evidence, and that in early post-Hana-Bank cases, parties are likely to bicker over jury instructions that address tacking.

Berger also wonders in the wake of this decision if it might affect a more important, parallel issue in trademark law known as "likelihood of confusion analysis."

Similar to the tacking issue, the circuit courts are split on whether "likelihood of confusion" is a factual question, according to Berger.

"The Court's tacking decision in Hana may give creative attorneys a basis to claim that likelihood of confusion should be treated the same as trademark tacking, as a purely factual issue better left to the jury," Berger said.

Published: Thu, Jan 29, 2015

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