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U.S. Supreme Court Rules on Tacking, Legal Equivalent & Confusingly Similar
In December 2014, the Supreme Court of the United States heard oral arguments in two trademark cases. It has been almost ten years since the Court has issued any substantive decision involving trademark law. One of the two cases was Hana Financial v. Hana Bank. (The other covered trademark secondary meaning and distinctiveness.)
Hana Financial v. Hana Bank
This case deals directly with the doctrine in trademark law called “tacking.” “Tacking” is a legal technique that allows a trademark owner to “tack” on a new mark to an old mark, therefore maintaining the older mark’s priority. Priority in trademarking is important because generally, the first party to use a trademark in commerce owns it. But, in order to be able to take advantage of “tacking” a party must prove that the later mark is a “legal equivalent” of the earlier mark. This issue has not been before SCOTUS in almost 100 years.
Now for the facts. Hana Financial claims that Hana Bank is infringing on its trademark because the two marks are “confusingly similar.” Hana Bank admits that it did not use the mark “Hana Bank” until after Hana Financial trademarked its name, however, it argues that the mark “Hana Bank” should be “tacked on” to an earlier use of a similar mark, namely “Hana Overseas Korean Club,” which later became “Hana World Center” and eventually “Hana Bank.” In support of its argument Hana Bank points to an advertisement that pre-dated Hana Financial’s registration. These advertisements were target to Koreans living in the United States. The reference to “Hana Bank” was entirely in Korean, but there was some English that referred to “HANA Overseas Korean Club.”
The question of whether Hana Bank could “tack” on to its earlier use of “Hana Overseas Korean Club” and thus determine if the later mark was a “legal equivalent” was sent to a jury. The jury ruled in Hana Bank’s favor. The Ninth Circuit affirmed.
Whether the two trademarks are confusingly similar depends on a number of factors, including:
- The existence of actual confusion in the marketplace between the trademarks;
- Similarity of the appearance, sound and meaning of the trademarks;
- Similarity of the goods and services being identified by the trademarks;
- The degree of secondary meaning acquired by the trademarks;
- The sophistication of the consumers who buy the particular products or services;
- The similarity of the channels of distribution of the products or services (that is, are they both sold in the same types of stores);
- The degree of commercial competition between the two trademark users; and
- The distinctiveness of the trademarks (that is, are they somewhat descriptive or are they arbitrary and fanciful).
Tacking & Legal Equivalents
Tacking is a legal technique that allows a trademark owner to make slight alterations in a trademark, without abandoning ownership of the original trademark.
SCOTUS most likely agreed to hear this matter because the Circuit Courts are split on whether a determination of “legal equivalents” are issues of law for the judge or issues of fact for the jury. The Ninth Circuit (which this case came out of) is of the opinion that it is a question of fact for the jury. The Sixth Circuit, the Federal Circuit and the TTAB have previously held that “legal equivalents” is a legal issue for the judge. Therefore, the question before SCOTUS is a very narrow one—in which they will only decide whether “legal equivalent” is a question of fact or law.
The brief from Hana Bank compares the two marks, the one used in the early advertisement and the one challenged by Hana Financial, side-by-side. The logos used in the two marks are almost identical, as can be seen below:
Essentially, the only difference between the two marks is that the later English version is just a translation from the Hangul script used in Korea.
While Hana Financial argues that “legal equivalent,” is just that, a legal determination for a judge, Hana Bank, in contrast, stresses that whether an advertisement creates a “continuing commercial impression” should be left to consumers—i.e., a jury.
About six weeks after oral arguments, SCOTUS delivered an opinion. With a unanimous Court, SCOTUS determined that deciding whether two marks are “legal equivalents” is a question for a jury to decide. The Court adopted Hana Bank’s arguments and found that tacking relies on “an ordinary consumer’s understanding of the impression that a mark conveys.” However, the Court did not close the door on future potential legal determinations by a judge holding that a court “may [still] decide a tacking question on a motion for summary judgment or for judgment as a matter of law” if “the facts warrant it.”