On June 23, 2014, the U.S. Supreme Court granted a writ of certiorari in the case of Hana Financial, Inc. v. Hana Bank to decide whether the issue of trademark “tacking” should be determined by a jury as a question of fact, or if it is a matter of law for the trial court. A split between U.S. Courts of Appeals on this issue was the primary basis on which the petitioners sought certiorari, and this split is likely to be resolved by the Supreme Court’s eventual decision.

The U.S. Court of Appeals for the Ninth Circuit upheld a jury verdict that found that a party’s earlier use of HANA WORLD CENTER and HANA OVERSEAS KOREAN CLUB established priority of use for the mark HANA Bank. See 9th Cir. Opinion. The appeals court reached this conclusion despite the fact that the opposing party obtained a federal registration in 1996 for a design mark in the shape of a pyramid which included HANA FINANCIAL, which technically had an earlier date of first use.

Hana Bank sought to register the following mark in 2001:

A current version of Hana Bank’s design mark and logo in English, below, is also the subject of a pending application:

Trademark “tacking” standards

The legal concept applied by the Ninth Circuit is known as trademark “tacking.” If tacking is allowed, a trademark owner may modify or refresh a mark over time but still retain its original date of first use. The date of first use for the modified mark is added or “tacked” onto the date of first use for the original mark. The opinion of the Ninth Circuit was noteworthy in part because—to the extent any trend can be observed—tacking has been curtailed in recent years. Indeed, the Ninth Circuit commented in this opinion that tacking is only allowed in “exceptionally narrow” circumstances, and must pass an “exceedingly strict” standard.

The standard of review applied by the Ninth Circuit was the first and perhaps most important issue addressed, and currently appears to be the only issue to be reviewed by the Supreme Court. Specifically, likelihood of confusion and tacking are issues of fact, rather than issues law, in the Ninth Circuit. In contrast, these questions are decided as matters of law by a judge in the Sixth Circuit and the Federal Circuit.[i] Appellate courts grant significant deference on issues of fact to the determinations of the judge and/or jury who heard all of the evidence and evaluated the credibility of the witnesses. Issues of law are reviewed de novo on appeal with no deference to the lower court’s ruling.

The jury found in favor of Hana Bank on the issue of tacking. As the party seeking to overturn a jury verdict, Hana Financial was required to establish that the verdict was not supported by substantial evidence. Additionally, all of the evidence was reviewed in the light most favorable to Hana Bank because it was the prevailing party at trial. The verdict could not be overturned simply because a different conclusion could have been reached based on the evidence presented, or if Hana Financial had a reasonable alternative interpretation.

Commentary

The decision of the U.S. Supreme Court should end the split among U.S. circuit courts, but the result in the case may not necessarily change. Specifically, the lower courts could decide on remand that tacking should be allowed regardless of whether the issue is one of law or fact. For example, the Ninth Circuit cited and relied upon cases from jurisdictions in which tacking is decided as a matter of law in its opinion upholding the jury verdict for Hana Bank. Depending on how far the Supreme Court goes in its decision, the wide range of outcomes and fact-intensive inquiry present in cases decided under both standards could still result in divergent and unpredictable conclusions in tacking cases for many years to come under either standard.

This article was prepared by Ashley Callahan (ashley.callahan@nortonrosefulbright.com / +1 512 536 5218) of Norton Rose Fulbright’s United States’ Intellectual property group.

[i] The standard of the Federal Circuit is applied by the U.S. Patent & Trademark Office, including the Trademark Trial and Appeal Board.