On November 22, 2013, the 9th Circuit Court of Appeal published an opinion discussing the priority in trademark use as affected by “tacking.” Hana Fin., Inc. v. Hana Bank, 11-56678, 2013 WL 6124588 (9th Cir. Nov. 22, 2013) – online here. The opinion is interesting because it covers claims of priority through “tacking” – an issue not often discussed in detail. Tacking allows a party to “tack” the date of the user’s first use of a mark onto a subsequent mark to establish priority where the two marks are so similar that consumers would generally regard them as being the same.
The dispute was between Hana Financial, Inc. (“HFI”) a California entity incorporated on August 15, 1994, and defendant Hana Bank (“Bank”), a Korean bank that adopted the name in 1991. The Bank had established “Hana Overseas Korean Club” in May of 1994, to extend its services to Korean ex-pats in the U.S. In July of 1994, the Bank published advertisements for the Club in several Korean language newspapers in major cities throughout the United States. HFI began using its trademark on April 1, 1995, and on July 16, 1996, obtained a federal trademark registration. In 2000, the Bank changed the Club’s name to the “Hana World Center.” The parties knew of each other’s existence during the entire time.
Fast forward to March of 2007 and HFI filed trademark infringement and other claims against the Bank. HFI contended that the Bank’s use of “Hana” within its “Hana Bank” mark infringed HFI’s “Hana Financial” mark in connection with financial services. The Bank responded by seeking cancellation of HFI’s trademark based on HFI’s alleged awareness of the Bank’s superior rights, and asserted equitable defenses of laches and unclean hands.
In 2008, the district court granted the Bank’s motion for summary judgment on trademark priority. The district court also granted HFI’s motion for summary judgment on the Bank’s cancellation counterclaim. Both parties appealed.
In October 2010, the 9th Circuit reversed the summary judgment on priority and remanded the trademark infringement claims for trial, finding that the Bank’s advertisements and other exhibits purportedly demonstrating priority were “relevant,” but were also subject to competing inferences or were not presented in admissible form. The 9th Circuit also affirmed summary judgment on the Bank’s cancellation counterclaim, noting that HFI’s alleged knowledge of the Bank’s mark was insufficient to establish the requisite element of fraudulent intent.
The trademark infringement claims were tried to a jury and the court also submitted the Bank’s laches and unclean hands defenses to the jury for an advisory verdict.
The jury found that the Bank had “used its mark…prior to April 1, 1995, and continuously since that date.” It also found, in its advisory capacity, that the Bank had proven its laches defense, but not its unclean hands defense. The court subsequently issued findings of fact and conclusions of law, determining, among other things, that HFI’s claims were barred by both laches and unclean hands.
On appeal, the 9th Circuit identified the tacking issue as follows: “the priority issue turns on whether 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.”
After an fairly comprehensive review of the law of tacking for purposes of determining trademark priority, the 9th Circuit held “the jury could reasonably conclude that throughout the time period at issue, the ordinary purchasers of these services had the continuous impression that the advertised services were being offered by the Bank and that there were no material differences between the marks. In other words, viewing the marks in context and in their entirety, the ordinary purchasers could perceive them as conveying the same idea or meaning or evoking the same mental reaction. Consequently, there was sufficient evidence to support the jury’s verdict on trademark priority.”
Bullet Points on use of tacking to establish trademark priority include:
● Tacking allows a party to “tack” the date of the user’s first use of a mark onto a subsequent mark to establish priority where the two marks are so similar that consumers would generally regard them as being the same.
● Tacking applies in “exceptionally narrow” circumstances.
● Tacking typically “requires a highly fact-sensitive inquiry” generally reserved for the jury.
● The jury was properly instructed on tacking as follows:
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. This is called “tacking.” The marks must 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.
● Tacking is permitted because without tacking, a trademark owner’s priority in his mark would be reduced each time he made the slightest alteration to the mark, which would discourage him from altering the mark in response to changing consumer preferences, evolving aesthetic developments, or new advertising and marketing styles.
● Giving the trademark owner the same rights in the new mark as he has in the old helps to protect source-identifying trademarks from appropriation by competitors and thus furthers the trademark law’s objective of reducing the costs that customers incur in shopping and making purchasing decisions.
● The fact that a mark contains a portion of an earlier mark is not sufficient to establish tacking; a tacking analysis must consider the marks “in their entirety to determine whether each conveys the same commercial impression [i.e., the meaning or idea it conveys or the mental reaction it evokes]” such that they “possess the same connotation in context.”
● Commercial impression should be determined from the perspective of the ordinary purchaser of these kinds of goods or services.
● In determining whether the marks have the same commercial impression, the visual or aural appearance may be instructive, but commercial impression should be resolved by considering a range of evidence, ideally including consumer survey evidence.
● Whether consumers would consider the two marks as being essentially the same is a question of fact.
● The marks must 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. In other words, the previously used mark must be the legal equivalent of the mark in question or indistinguishable therefrom, and the consumer should consider both as the same mark. This standard is considerably higher than the standard for likelihood of confusion.