HANA FINANCIAL AND THE TACKING DOCTRINE

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1 HANA FINANCIAL AND THE TACKING DOCTRINE By Rebecca R. Younger 1 Earlier this month, the Supreme Court issued its first substantive trademark opinion in over a decade. In Hana Financial, Inc. v. Hana Bank, the Court considered whether the doctrine of trademark tacking should be an issue of fact or law. What is Tacking? Generally, in the United States, ownership of an inherently distinctive mark belongs to the first party to use a particular designation in commerce. The party that first uses a mark is said to have priority the right to use the mark and to exclude others from using confusingly similar marks. Trademark owners often modify the appearance or format of a mark over time to maintain marketability and generate renewed interest in their goods or services. The doctrine of tacking allows a trademark owner to maintain priority by tacking on the use of an old version of a mark to the new version. Test for Tacking Courts permit an owner to tack on prior use of an old form of a mark when the new form creates the same, continuing commercial impression. Courts have stated that tacking should only be allowed in rare instances, when two versions of a mark are legal equivalents or indistinguishable from one another. 2 While courts have not promulgated a specific 1. Rebecca R. Younger is an Associate at Pirkey Barber, PLLC an Austin based firm specializing in trademark, copyright law, and unfair competition law. 2. See, e.g., Pro-Cuts v. Schilz-Price Enters., Inc., 27 U.S.P.Q.2d 1224, (T.T.A.B. 1993).

2 percentage of measure, the similarity required for tacking is greater than that required to find two marks confusingly similar. 3 The continuing commercial impression test became more rigorous (at least in rhetoric) in the late 1980s. However, a review of various decisions arguably shows inconsistency in the application of the test during both time periods. Examples of Pre-1980s Tacking Decisions: Tacking Permitted Tacking not Permitted THIRST-AID FIRST AID FOR YOUR THIRST THIRST-AID ALTER EGO EGO Joseph & Feiss Co v. Tempco Quilters, Inc., 171 U.S.P.Q. 378 (T.T.A.B. 1971). Viviane Woodward Corp. v. Roberts, 181 U.S.P.Q. 840 (T.T.A.B. 1974). S-LON ESLON UNYUMS ONYUMS Humble Oil & Refining Company v. Sekisui Chemical Company Ltd. of Japan, 165 U.S.P.Q. 597 (T.T.A.B. 1971). General Mills, Inc. v. Frito-Lay, Inc., 176 U.S.P.Q. 148 (T.T.A.B. 1972). CREDIT BUREAU OF GREATER MIAMI MIAMI CREDIT BUREAU HOME PROTECTION HARDWARE HOME PROTECTION CENTER Miami Credit Bureau, Inc. v. Credit Bureau, Inc., 276 F.2d 565, 568 (5 th Cir. 1960). Ilco Corp. v. Ideal Sec. Hardware Corp., 527 F.2d (C.C.P.A. 1976). 3. Van Dyne-Crotty, Inc. v. Wear-Guard Corp., 926 F.2d 1156 (Fed. Cir. 1991). 2

Examples of Post-1980s Tacking Decisions: Tacking Permitted Tacking not Permitted Paris Glove of Canada, Ltd. v. SBC/Sporto Corp., 84 U.S.P.Q.2d 1856 (T.T.A.B. 2007). One Industries, LLC v.

Servicemaster Co., 181 F. Supp. 2d 821 (S.D. Ohio 2002). Van Dyne-Crotty, Inc. v. Wear-Guard Corp., 926 F.2d 1156 (Fed. Cir. 1991). In re Umax Data System, Inc., 40 U.S.P.Q.

Darden Restaurants, Inc., 106 U.S.P.Q.2d 1809, 1813 (S.D. Tex. 2013). Importance of Tacking in Hana Financial, Inc. v.

3 Examples of Post-1980s Tacking Decisions: Tacking Permitted Tacking not Permitted Paris Glove of Canada, Ltd. v. SBC/Sporto Corp., 84 U.S.P.Q.2d 1856 (T.T.A.B. 2007). One Industries, LLC v. Jim O Neal Distributing, Inc., 578 F. 3d 1154, 1161 (9 th Cir. 2009). SERVICE MASTER SERVICE MASTER CLEAN CLOTHES THAT WORK FOR THE WORK YOU DO CLOTHES THAT WORK D & J Master Clean, Inc. v. Servicemaster Co., 181 F. Supp. 2d 821 (S.D. Ohio 2002). Van Dyne-Crotty, Inc. v. Wear-Guard Corp., 926 F.2d 1156 (Fed. Cir. 1991). In re Umax Data System, Inc., 40 U.S.P.Q.2d 1539, 1541 (Com'r Pat. & Trademarks 1996). Louangel, Inc. v. Darden Restaurants, Inc., 106 U.S.P.Q.2d 1809, 1813 (S.D. Tex. 2013). Importance of Tacking in Hana Financial, Inc. v. Hana Bank Background: Hana Bank started in Korea in 1971 under the name Korea Investment Financial Corporation, and changed its name to Hana Bank in In May 1994, Hana Bank extended its financial services to the United States using the name HANA OVERSEAS KOREAN CLUB and HANA BANK in Korean characters. An example of Hana Bank s use during this time is reproduced below with Korean references to HANA BANK shown in yellow. 3

4 Hana Financial began using the mark HANA FINANCIAL in April 1995, and has provided financial services under the mark ever since. Hana Financial also obtained a federal trademark registration for a pyramid logo incorporating the words HANA FINANCIAL in Meanwhile, in 2000, Hana Bank renamed HANA OVERSEAS KOREAN CLUB to HANA WORLD CENTER, and in 2002 renamed HANA WORLD CENTER to HANA BANK. 4

5 In 2007, Hana Financial sued Hana Bank for trademark infringement and related claims. Hana Bank denied infringement, claiming that its 1994 use of HANA OVERSEAS KOREAN CLUB and HANA BANK in Korean characters gave it priority over Hana Financial under the tacking doctrine. The Central District of California initially granted summary judgment to Hana Bank, but the Ninth Circuit reversed, holding there were genuine issues of material fact as to priority. On remand, the infringement claim was tried before a jury, which found in favor of Hana Bank. The Ninth Circuit affirmed and found that tacking requires a highly fact-sensitive inquiry, a task reserved for the jury. The Supreme Court granted certiorari. The Court s Opinion in Hana Financial: The Court unanimously held that the determination as to whether two trademarks should be tacked for purposes of priority is a question of fact, not a question of law. The Court reasoned that the continuing commercial impression test relies on an ordinary consumer s understanding of the impression of a mark, and thus comfortably falls within the ken of a jury (when tasked as the finder of fact). Specifically, the Court found that tacking is a mixed question of law and fact, application of which is typically assigned to juries. The Court dismissed Hana Financial s argument that tacking cases must be resolved by comparing two marks in a given case against those in prior cases. Additionally, the Court found no support for Hana Financial s claim that tacking cases decided by juries will be more unpredictable than those decided by judges. The Court s ruling does not prohibit a judge from determining whether two marks may be tacked on a motion for summary judgment, for judgment as a matter of law, or in a bench trial. 5

6 Impact of Hana Financial and Residual Questions Companies will still risk loss of priority by modernizing their marks. The holding in Hana Financial should not have a significant impact on the current approach to counseling a client seeking to modify its mark. Even if Hana suggests that juries will be more lenient than a judge in applying the continuing commercial impression test 4, there is still risk that a jury will reject the doctrine, compromising a client s priority. Moreover, judges will still determine tacking in the Trademark Trial and Appeal Board, on a motion for summary judgment 5, for judgment as a matter of law, or if the parties elect in a bench trial. Thus, practitioners should continue to remind clients of the risks involved with modifying a mark and encourage them to maintain the core elements of the prior version when making upgrades. Attorneys may also want to provide clients with examples of cases where modifications have been found to create a continuing commercial impression. For new brands, when possible, practitioners should encourage clients to obtain standard character registrations which provide broader coverage and protect rights regardless of stylization or design. Moreover, practitioners may consider advising a client to make use of the prior version of mark as a form of insurance. Should tacking be allowed between foreign equivalents? In Hana, the jury found that Hana Bank used its mark in commerce in the United States beginning prior to April 1, 1995, and continuously since that date. This finding provides little guidance on how the jury determined Hana Bank s priority. Did the jury tack onto Hana Bank s prior use of HANA OVERSEAS KOREAN CLUB (in English) or its use of HANA BANK in 4. For example, the Ninth Circuit found that [i]n isolation, the words Hana Overseas Korean Club, Hana World Center, and Hana Bank seem aurally and visually distinguishable. It is not necessarily clear from their names that these entities offer the same services. Hana Financial, Inc. v. Hana Bank, 735 F.3d 1158, 1166 (9th Cir. 2013). Regardless, under the applicable standard of review, Hana Financial had to establish that its interpretation of the evidence was the only reasonable interpretation. 5. A question of fact may be resolved as a matter of law if reasonable minds cannot differ and the evidence permits only one conclusion. See One Industries, LLC v. Jim O'Neal Distributing, Inc., 578 F.3d 1154 (9th Cir.2009). 6

7 Korean characters? No court of appeals has considered the use of the foreign-language equivalents doctrine in the context of tacking, and the Court did not weigh in here. Thus, it is conceivable that parties will point to Hana to support the position that consumers can find a continuing commercial impression between foreign equivalents. Will Hana spill-over into likelihood of confusion jurisprudence? Like tacking, there has been a circuit split as to whether likelihood of confusion is a question of fact or law, with the minority the Second, Sixth, and Federal Circuits considering it either partially or entirely legal. Before Hana, courts treated the application of tacking and likelihood of confusion in lockstep. While there is no firm rule that tacking and likelihood of confusion must be treated in this manner, it will be difficult for the minority to reconcile differing treatment of the two doctrines, particularly in light of the Court s reasoning that a test relying on an ordinary consumer s understanding of the impression a mark falls comfortably within the ken of a jury. 7

UNITED STATES PATENT AND TRADEMARK OFFICE. Trademark Trial and Appeal Board. In re Tokutake Industry Co., Ltd. Serial No

THIS OPINION IS A PRECEDENT OF THE TTAB Mailed: 14 May 2008 UNITED STATES PATENT AND TRADEMARK OFFICE Trademark Trial and Appeal Board In re Tokutake Industry Co., Ltd. Serial No. 79018656 Diane Michelle