Hana Financial, Inc. v. Hana Bank: U.S. Supreme Court to Decide Whether Tacking Trademarks to Gain Earlier First Use is a Question for the Court or the Jury

By: Kollin J. Zimmermann

“Priority of use” is a key issue in any case involving a trademark ownership dispute. As the Ninth Circuit has explained, “To acquire ownership of a trademark it is not enough to have invented the mark first or even to have registered it first; the party claiming ownership must have been the first to actually use the mark in the sale of goods or services.” Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1047 (9th Cir. 1999).

But determining the date of first use of a trademark is not as straightforward as it might seem. The “tacking” doctrine allows a trademark user to “tack” the date of the user's first use of a mark onto a subsequent mark where the “two marks are so similar that consumers generally would regard them as essentially the same.” The fact that the new mark contains a portion of the earlier mark is not alone sufficient to establish tacking; a tacking analysis must consider the marks in their entirety to determine whether each conveys the same “commercial impression” such that they “possess the same connotation in context.” The standard to establish tacking is exceptionally narrow and exceedingly strict, but if the trademark user can satisfy it, then the user will gain the advantage of the earlier first use date, which could mean the difference between success and defeat in a trademark infringement case.

On December 3, 2014, the U.S. Supreme Court held oral argument in the case of Hana Financial, Inc. v. Hana Bank to determine whether the trial court or the jury should decide the often case-dispositive issue of tacking. The case is on appeal from the Ninth Circuit’s decision in Hana Fin., Inc. v. Hana Bank, 735 F.3d 1158 (9th Cir. 2013) cert. granted, 134 S. Ct. 2842 (2014).

The facts of the case involved a quintessential tacking issue. The defendant, Hana Bank, is a well-known Korean financial services entity established in 1971 as “Korea Investment Finance Corporation”. In 1991, it adopted its current name, “Hana Bank” (written in Korean). In 1994, in an attempt to expand to the United States and reach the Korean American market, it established the “Hana Overseas Korean Club.” In advertisements for the Hana Overseas Korean Club, the name “Hana Bank” (in Korean) would often be included, as well as Hana Bank’s logo. In 2002, Hana Bank begin operating a financial agency in New York under the name “Hana Bank” (in English).

The plaintiff, Hana Financial, Inc., filed a trademark infringement suit against Hana Bank, claiming that “Hana Bank” is confusingly similar to “Hana Financial”. Hana Financial also alleged that it was the senior user because it had been using its “Hana Financial” trademark since 1995, well before Hana Bank started using its “Hana Bank” (in English) mark in 2002.

But the case went to trial and Hana Bank was able to establish priority of use based on the doctrine of tacking. The jury found that the “Hana Overseas Korean Club” trademark, in combination with the Hana Bank logo, created the same commercial impression to consumers as the “Hana Bank” (in English) trademark. Therefore, the first use date of Hana Bank’s “Hana Overseas Korean Club” trademark could be tacked on to its “Hana Bank” (in English) trademark, thus giving Hana Bank the earlier first use date of 1994, one year prior to Hana Financial’s first use date. Accordingly, judgment was entered in favor of defendant Hana Bank.

Hana Financial appealed to the Ninth Circuit, arguing that whether Hana Bank had satisfied the tacking standard should have been decided by the court, not the jury. Hana Financial had support for its position because other circuit courts of appeal, such as the Federal Circuit and the Sixth Circuit, have held that tacking is a question of law to be decided by the court. But the Ninth Circuit disagreed, holding that tacking “requires a highly fact-sensitive inquiry generally reserved for the jury.” Accordingly, the Ninth Circuit affirmed the decision from the trial court.

Now on appeal to the U.S. Supreme Court, this issue will be resolved once and for all. Whether tacking is decided by a court or a jury will have a significant effect on future trademark infringement litigation. Having the court decide the issue will allow many cases to be resolved at the summary judgment stage, rather than at the end of trial, which would substantially reduce the cost of ligating such matters. On the other hand, having the issue decided by a jury, which is arguably better suited to make a determination based on the average consumer’s “commercial impression” of the marks at issue, could lead to more accurate results based on the facts of each particular case, which could be beneficial to a party’s position.

With oral argument having just occurred, the Supreme Court’s decision is expected to be issued this coming Spring session. Glaser Weil will monitor the ruling and provide an updated analysis as soon as it comes out.