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Article: March 2015: Trademark/Copyright Litigation Update

Business Litigation Reports

Supreme Court Confirms Jury Role in Trademark “Tacking.” Issuing its first substantive trademark decision in a decade, the Supreme Court unanimously held in January 2015 that the question of whether two trademarks are legal equivalents under the “tacking” doctrine is one for a jury. Hana Financial, Inc. v. Hana Bank, No. 13-1211, 574 S.Ct. ___(2015) (“Op.”). Resolving a split among appellate courts, the Court affirmed the holding of the Ninth Circuit Court of Appeals that, since the tacking doctrine assesses the similarity of two trademarks’ commercial impressions from the perspective of an ordinary consumer, this evaluation is squarely within the competence of a jury. Id. at 3-4. Though the doctrine is not frequently invoked, the decision indicates that the Court may be poised to empower juries in other trademark determinations that are also evaluated with consumers’ perceptions in mind.
The tacking doctrine recognizes that, in some cases, trademark owners should be able to modify their trademark without losing priority status. Id. at 1, 3-4. Priority status can be important because the right to use a mark in many cases, such as where a trademark is inherently distinctive, flows from actual use of the mark in commerce, and seniority in such use may establish an ownership right. Blisscraft of Hollywood v. United Plastics Co., 294 F.2d 694, 700 (2d Cir. 1961). Unless the seniority of the subsequent modified mark “tacks” to that of the original mark, a trademark owner who has modified its mark is vulnerable to a claim that it abandoned the original mark, giving up its priority status. Op. at 1. Under such circumstances, the seniority of the modified mark yields to that of a mark created by another party prior to the modification. Id.

The tacking doctrine resolves this quandary in favor of the initial owner in the narrow circumstances where both the original and modified marks create a continuing commercial impression such that the consuming public would regard the marks as the same. Id. Where so, the modified mark is “clothe[d]” with the original mark’s priority status. Id. In Hana, for example, the defendant initially used the mark “Hana Bank,” then modified the mark to “Hana Overseas Korean Club,” then again modified it to “Hana World Center,” and finally reverted back to “Hana Bank.” Id. at 2-3. The plaintiff, however, began use of its mark, “Hana Financial,” after the defendant’s first use of “Hana Bank,” but before the defendant ultimately returned to using the same mark. On appeal, the question was whether the determination of a modified mark’s commercial impression is a question of fact for a jury to decide, or whether it is a legal question for the court.

Writing for the Court, Justice Sotomayor reasoned that a jury, not a judge, must determine whether a modified mark creates the same commercial impression as the original to ordinary consumers, and thus may “tack” to the earlier mark’s priority. Id. at 1. Though tacking involves mixed questions of law and fact, it requires a fact-intensive inquiry. Id. at 5. More importantly, because the inquiry requires the perspective of an ordinary consumer, the “‘mixed’ analysis” is no different from that undertaken by juries deciding tort or contract claims through the lens of an ordinary person or community. Id. at 6-7. Further, the Court rejected the argument that allowing juries to make the tacking determination would deprive the public of precedential decisions to “guide future tacking disputes,” reasoning again that it was “not at all clear . . . why a tacking determination in a particular case will ‘create new law’ any more than will a jury verdict in a tort case, a contract dispute, or a criminal proceeding.” Id. at 6. The Court’s decision underscores that the “commercial impression that a mark conveys must be viewed through the eyes of a consumer.” Id. at 4.

Importantly, the Court acknowledged that judges may still decide tacking when warranted on summary judgment or where parties forfeit a jury trial. Nevertheless, this decision reinforces that in trademark cases, factual issues like tacking—even when mixed with legal issues—generally are to be resolved by juries. Id. at 5. It remains to be seen if, and how, lower courts might interpret and apply this decision outside of the tacking context.