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Intellectual Property

Supreme Court To Tackle Trademark Tacking Doctrine

 WASHINGTON, D.C. — (Mealey’s) A case presenting the question of whether a judge or a jury is responsible for determining when use of an older trademark may be tacked to a newer one will be decided by the U.S. Supreme Court in an upcoming term, thanks to a grant of certiorari today (Hana Financial Inc. v. Hana Bank, No. 13-1211, U.S. Sup.; See 12/2/13, Page 17) [ subscribers may access Supreme Court briefs for this case].

In its petition filed in April, plaintiff Hana Financial Inc. (HFI) notes that interpretation of the so-called “tacking doctrine” has “divided the courts of appeal.”

“This petition presents a significant and recurring question that has divided the circuits:  whether the doctrine of trademark tacking is a question of law, to be resolved by a court, or a question of fact, to be resolved by the jury,” HFI states.

No Overlap

At issue in the dispute is a November ruling by the Ninth Circuit U.S. Court of Appeals, which upheld a California federal judge’s determination that a jury properly deemed respondent-defendant Hana Bank entitled to priority as the first to use the “Hana” trademark.  In reaching their verdict, jurors relied on the tacking doctrine.

HFI is a California entity incorporated in 1994, while Hana Bank is a Korean entity established in 1971. Although initially named Korea Investment Finance Corp., in 1991 Hana Bank adopted its current name.  The Korean word pronounced as “hana” means “number one,” “first,” “top” or “unity.”  Both parties at one time entertained the idea of a “strategic alliance,” but the deal never materialized, and in 1994, the bank extended its services to Korean expatriates living in the United States.  One month after the bank established its “Hana Overseas Korean Club,” HFI came into existence.  In 1996, HFI obtained a federal trademark registration for a pyramid logo with the words “Hana Financial,” but HFI’s articles of incorporation indicated that it could engage in lawful acts “other than the banking business.”  When the bank expressed concern about HFI’s use of the “Hana” trademark, HFI maintained that its business would be engaged only in factoring and would not provide banking services, so there would be no overlap in the parties’ services.

In 2001, the bank sought to register its trademark but was unable to do so, at least in part because of HFI’s mark.  The bank contacted HFI about the issue, but they were unable to resolve it.  In 2002, the bank began operating an agency in New York under its own name.  In response, HFI filed the instant trademark infringement lawsuit in 2007 before U.S. Judge Percy Anderson of the Central District of California, who in 2008 granted the bank’s motion for summary judgment on trademark priority.  The Ninth Circuit reversed that holding in 2010 and remanded on grounds that although the bank’s advertisements and other exhibits purportedly demonstrating priority were relevant, they also were subject to competing inferences or were not presented in admissible form.

Important Legal Question

Judge Anderson at a May 2011 trial instructed jurors that pursuant to the tacking doctrine, “a party may claim priority in a mark based on the first use date of a similar but technically distinct mark where the previously used mark is the legal equivalent of the mark in question or indistinguishable therefrom such that consumers consider both as the same mark.”  To prevail under the tacking doctrine, the bank was required to demonstrate that “the marks at issue create the same, continuing commercial impression, and the later mark should not materially differ from or alter the character of the mark attempted to be tacked,” the instruction continued.  Jurors sided with the bank, granting the defendant priority of use based on findings that the defendant began using its mark in commerce before April 1, 1995.  Judge Anderson later confirmed the verdict, leading HFI to appeal.

In its 2013 ruling, the Ninth Circuit agreed that it was permissible for the jury to find that the bank could “tack” its use of its present “Hana Bank” mark to its use of the Club mark beginning in 1994.  HFI responded with a petition for certiorari, in which it argues that the bank’s request for priority actually “turns on double trademark tacking.”

“Respondents argue that they can tack the mark ‘Hana Overseas Korean Club’ to the later mark ‘Hana World Center,’ and further that ‘Hana World Center’ may be tacked to ‘Hana Bank.’  Following the Ninth Circuit’s precedent that trademark tacking is a question of fact, the district court submitted this contention to a jury, which returned a verdict in favor of respondents.  The court of appeals affirmed.  Although the court acknowledged that a circuit that views this as a question of law would likely reverse the jury’s determination here, it held that circuit precedent, which treats tacking as a question of fact, required affirmance.  Because the circuit courts are split on an important legal question, and because the court below erred in a way that controlled the outcome of this case, review by this Court is warranted,” HFI argues.

The case was distributed for conference twice, on May 27 and June 16, 2014.

HFI is represented by Charles A. Rothfeld of Mayer Brown in Washington.  Carlo Frank Van Den Bosch and Michelle LaVoie Wisniewski of  Sheppard Mullin Richter & Hampton in Costa Mesa, Calif., represent the bank.

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