The Supreme Court of the United States Leaves Question of Trademark Tacking to Jury

The United States Supreme Court has not decided many trademark cases in the last past ten years. Recently, however, the high court was asked to end the debate amongst the federal Circuit Courts whether the judge or the jury should determine the question of trademark tacking. The issue of trademark tacking relates to the change or evolution in a trademark’s appearance over time and whether the new appearance of the mark creates the same commercial impression for consumers as the original mark first did.

When a business or individual begins using a trademark in commerce, rights immediately attach to the mark that prevent others from using a similar trademark in order to avoid confusion as to the source of goods or services. The individual or company who first uses the mark establishes and receives what is known as “priority” over all following, or “junior,” users of potentially similar marks. Sometimes, a company that has been in business for a long time decides to modernize the appearance of a trademark that it used for many years. Consumers have witnessed this in brands like Dunkin Donuts, Coca-Cola, Nike, Apple and Lego, to name just a few. If consumers in 2015 perceive the Dunkin Donuts trademark the same way a consumer perceived the mark in 1950 when it first appeared, then the trademark is said to have the same “commercial impression” amongst consumers and the trademark rights that initially vested in the mark in 1950 tack on to each subsequent re-dressing of the mark’s appearance; as Justice Sotomayor artfully stated in the Court’s opinion, “a party may clothe a new mark with the priority position of an older mark.” This is referred to the doctrine of tacking in Trademark Law.

However, if a company or individual’s mark changes its form so that it substantially differs from the original form, the issue becomes whether the rights that vested with the priority of the original mark tack onto the revised form of the mark. If the two marks create the same commercial impression, then the priority established with the use of the original mark tacks onto the newer, revised form of the mark. Conversely, if the revised mark no longer conveys the same commercial impression as the original mark, then the priority established by the use of the original mark is lost. This opens the door for a junior user to lawfully begin using a mark that is similar to the first user’s original mark without becoming a trademark infringer. This would not be the case if a junior user begins using a mark that is similar to a first user’s original mark whose priority has tacked onto a revised form of the mark. In this situation, the junior user may be a trademark infringer.

The above scenario was presented to the Supreme Court in Hana Financial Inc. v. Hana Bank. Hana Bank began operating under the trade name “Hana Bank” in Korea in 1991. Starting in 1994, Hana Bank began advertising its “Hana Overseas Korean Club,” in the United States. The club purported to provide financial services to Korean expatriates and the Hana Bank’s advertisements included the name of the services and featured the Hana Bank trademark and “dancing man” logo. This was followed by Hana Bank’s operation of a Hana Bank in the United States in 2002.

In 1995, Hana Financial, a California corporation, began using its Hana Financial trademark and pyramid logo in commerce. The Hana Financial trademark received federal trademark registration in 1995, and the pyramid logo in 1996. In 2007, Hana Financial sued Hana Bank for trademark infringement of its Hana Financial mark. Hana Bank denied any infringement, claiming priority under the doctrine of trademark tacking. Hana Bank asserted that its use of the mark in the United States in 2002 tacked onto its original use of the mark in Korea in 1994, thereby establishing its priority to use the mark.

The District Court in California agreed with Hana Bank and granted summary judgment, which was reversed by the Ninth Circuit. The Ninth Circuit held there were genuine issues of fact regarding the priority of the Hana Bank mark. The case was then tried in the District Court before a jury, which found in favor of Hana Bank. Hana Financial appealed the decision, arguing that it was the judge’s job, and not the jury’s, to determine the issue of tacking. The Ninth Circuit affirmed the decision, acknowledging that the Sixth Circuit and Federal Circuit disagree and find tacking to be a question for the judge. The Supreme Court heard the case to settle the discord among the Circuits.

The Supreme Court held that when a jury trial is requested, the question of tacking is to be decided by the jury. The Court reasoned that the commercial impression test must be viewed through the eyes of the consumer, and that the jury, which is made up of ordinary purchasers of goods and services, is most representative of the average consumer. However, the Court limited its holding to specific instances when a jury trial is requested. A judge may still determine the issue of tacking when deciding a summary judgment motion or a motion for judgment as a matter of law.

What is interesting to note about this decision is that the Supreme Court offered no commentary on trademark law or about whether the doctrine of tacking should exist at all. Instead, it gave deference to the lower courts’ “general rule” that “two marks may be tacked when the original and revised marks are ‘legal equivalents;’” meaning when the original and junior mark share the same commercial impression.

If you have any intellectual property needs, including trademark, copyright or patent registration or infringement litigation, the attorneys at Korngut Paleudis LLC have the experience and expertise necessary to advise you of your rights. To address any of your intellectual property concerns, please contact the firm either through our website or at (212) 949-0138 in New York City, (914) 220-8270 in White Plains, or (203) 355-3635 in Stamford, Connecticut.