Power to the People: In Trademark Law, Consumer is King

The Supreme Court recently ruled in Hana Financial, Inc. v. Hana Bank that the relatively little-known trademark concept of “tacking” is a factual issue that should be decided by a jury, not a legal question for the judge. While the decision may seem unremarkable, it has important implications for your brand protection.

A little background: Trademark rights in the United States are determined by the date the mark is first used in commerce. The company that uses the mark first has “priority” over anyone else who later attempts to use the same or similar mark. Under the doctrine of trademark “tacking,” you can modify your mark without losing priority of use so long as the original and revised marks are “legal equivalents.” This means that the two marks “create the same, continuing commercial impression” such that consumers “consider both as the same mark.”

The Hana case involved a dispute between two banks. One—Hana Financial—began using its name in 1995. The other—Hana Bank—did not start using its name in the United States until 2002. Hana Financial sued Hana Bank for trademark infringement. Looks like a pretty straightforward win for Hana Financial, right? Not so fast. Trademark “tacking” complicates things. Hana Bank argued that it didn’t infringe Hana Financial’s mark because it had used other “Hana” variations, including “Hana Overseas Korean Club” and “Hana World Center,” as far back as 1994. In essence, Hana Bank had used tacking to extend their brand.2015-02-24_Hana TM Tacking_Kandis

A jury sided with Hana Bank, and the U.S. Court of Appeals for the Ninth Circuit affirmed, noting that tacking “requires a highly fact-sensitive inquiry” that is “reserved for the jury.” But, as the Ninth Circuit pointed out, not all appellate courts agree. The Federal Circuit, for example, held that tacking should be decided by judges as a question of law, not fact. Hana Financial appealed to the Supreme Court, giving the Court the opportunity to resolve this split in opinion.

Referring to the substantive legal standard for “tacking” (which was not questioned), the Court stated that “[t]he commercial impression that a mark conveys must be viewed through the eyes of a consumer.” In other words, the consumer’s viewpoint is the most important consideration, and determining the ordinary consumer’s understanding “falls comfortably within the ken of a jury.”

The Court reinforced the power of the jury in trademark law. So what does that mean for you?

  • Be aware of trademark tacking in developing your brand portfolio. As your brands are refreshed over time, remember that you may be able to take advantage of tacking to maintain your priority, and you should consider that before you allow any of your older brand versions to lapse.
  • Recognize that “consumer-focused concepts” are key. Tacking may not be a common issue, but other consumer-focused concepts are, including likelihood of confusion, descriptiveness, and acquired distinctiveness. This decision further emphasizes the importance of consumer perception in the marketplace, and when it comes to protecting and enforcing your brands, decisions will most likely be in the hands of a jury.
  • Understand that the cost of trademark litigation is increasing. If you find yourself in litigation where trademark tacking or other consumer-focused concepts are an issue, it’s less likely that you will obtain a summary judgment before trial. Instead, you will probably go before a jury and work with (expensive) experts to develop, administer, and analyze consumer surveys.
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