OWE’s Emily Poole published an article in The Recorder on May 12, 2015, Is the Supreme Court’s Stance on Trademark Tacking at Odds With the Marketplace? (subscription required). The full text of the article is set out below.
Is the Supreme Court’s Stance on Tacking at Odds with the Marketplace?
It’s been ten years since a trademark case has found its way to the Supreme Court, which explains why the Hana Financial Inc. v. Hana Bank, 574 U.S. __ (2015) decision was received with such anticipation. On January 21, 2015, a unanimous Supreme Court confirmed that a jury, as opposed to a judge, should determine whether two trademarks can be “tacked” together to determine when use of the mark commenced.
What Is Tacking?
Generally, the first party to use a trademark in commerce owns the rights in that mark. This senior user has “priority” over subsequent users who adopt an identical or confusingly similar mark. One way to establish priority is through tacking. If a trademark owner slightly alters its mark, perhaps to adapt the mark to new technology or try out a new marketing aesthetic, the owner may tack the revised mark onto its original mark and maintain the same priority date for the revised mark. Tacking is permitted so long as the original mark and revised mark are “legal equivalents,” meaning they create the same, continuing commercial impression for consumers—essentially, consumers must recognize the marks as the same.
Background of Hana v. Hana
In 1994, Hana Bank, the fourth largest bank in Korea, began using the mark HANA OVERSEAS KOREAN CLUB in reference to financial services offered to Korean expatriates in the United States. When the company established its first physical bank in the United States in 2002, it began operating under the name HANA BANK. The other party to the case, Hana Financial, began using the mark HANA FINANCIAL in connection with financial services in 1995.
In 2007, Hana Financial sued Hana Bank for trademark infringement. In defense, Hana Bank asserted priority, arguing that it could tack the HANA BANK mark to the earlier HANA OVERSEAS KOREAN CLUB mark, which would result in a priority date of 1994. At trial, a jury determined that Hana Bank’s original mark and revised mark were legal equivalents, permitting Hana Back to tack the two marks together for priority purposes, and returned a verdict of non-infringement. In an unsuccessful appeal to the Ninth Circuit, Hana Financial argued that the question of whether two marks create the same “commercial impression” is a question for a judge, not a jury. Seeking to resolve a split in decisions among a number of federal appeals courts on the matter, the Supreme Court granted certiorari to rule definitively.
At the Supreme Court
Justice Sotomayor, writing a unanimous opinion for the entire Supreme Court, affirmed the Ninth Circuit’s judgment and found that whether two marks create the same continuing commercial impression is a factual question appropriate for a jury. The Court pointed out that the applicable test for legal equivalency is based on an “ordinary consumer’s” impression of a mark, and the application of such a test “falls comfortably within the ken of a jury,” just as in other areas of law when the matter at issue concerns how an ordinary person would assess a fact-based question.
The Court emphasized, however, that its holding does not preclude judges from ever determining whether two marks can be tacked. For instance, it would still be appropriate for a judge to make such a determination on a motion for summary judgment or during a bench trial.
Effect on Trademark Law
The Hana decision brings tacking into the national spotlight at a time when fluid trademarks, or marks that continually change their appearance, are gaining in popularity. The gradual evolution of trademarks is not new: over the years, we’ve seen classic logos, such as the Sun-Maid Raisin girl and Betty Crocker, slowly evolve into newer depictions of their historic selves. However, with the advent of the Internet and the rapid pace of a globalized economy, the modern approach to branding has for several years fully embraced the use of “fluid” trademarks that vary in appearance and presentation from place to place, more or less at the same time.
The Google Doodle is a prime example of a fluid mark. On any given day, a visit to the Google homepage will reveal a playful variation of Google’s standard character logo, which often corresponds to a historical event that occurred on the same day. Vodka drinkers might also note the fluidity of Absolut’s logo. Using its iconic bottle shape as a canvas, Absolut consistently reimagines the colors and shapes that adorn the bottle’s surface. Other fluid trademarks include Pixar’s “Luxo, Jr.” logo, the lamp character that jumps around the screen at the start of each Pixar film, and Louis Vuitton’s classic LV logo, which now often appears in bright multi-color patterns.
As more brand owners join the fluid mark trend, tacking could become an increasingly relied upon doctrine to retain priority. But just how fluid can a mark be before it no longer conveys the same commercial impression to ordinary consumers? Hana drives home the importance of this question because a jury, selected at random from the general public, will make the determination. Beyond that, the Supreme Court also affirmed the Ninth Circuit’s position that tacking applies only in “exceptionally narrow circumstances.” Moving forward, fluid brand owners will thus have to be highly conscious of how their modifications affect the commercial impressions their marks convey so that they can continue to rely on tacking to retain priority and protect their established marks. And, for trademark lawyers arguing for the application of tacking, more and better information about consumer perception of continuity will be required.
Although some commentators have characterized the Supreme Court’s decision in Hana as self-evident and of limited significance, in fact the ruling may become especially significant precisely because it appears to set in stone a narrow and rigorous test that limits the use of the tacking doctrine at the very moment when many brand owners are purposefully “changing up” their brands, and thus will be relying on the tacking doctrine to maintain superior rights in their brands. The tensions between the rule in Hana and the reality in the marketplace will at least lead to more legal decisions interpreting and applying the legal tests for tacking.
By Emily Poole