Doctrine of “Tacking” was Properly Applied to Establish Bank’s Priority in Trademark Action

November 26, 2013 | Bulletin No. 1066715.1

In a trademark infringement action, a jury found in favor of a foreign bank and against a California financial corporation, where the bank established prior use under the “tacking” doctrine.  The Ninth Circuit Court of Appeals held that the jury was properly-instructed on the doctrine of “tacking” and there was sufficient evidence to support the jury’s verdict.  (Hana Financial, Inc. v. Hana Bank (9th Cir. Nov. 22, 2013, No. 11-56678.)

Defendant – Hana Bank

Hana Bank (“Bank”), the fourth largest bank in Korea, adopted its name in 1991.  In May 1994, the Bank established the “Hana Overseas Korean Club” (“Club”) and extended its financial services to expatriates in the United States.  The Club’s target customer base was Korean Americans.  In July 1994, the Bank published advertisements for the Club in Korean-language newspapers in several major U.S. cities.  The advertisements included the name “Hana Overseas Korean Club” in English and “Hana Overseas Korean Club” and “Hana Bank” in Korean.  The Bank’s logo, which is sometimes referred to as the “dancing man,” also appeared in the advertisement.  The logo has not changed since 1994.

Plaintiff – Hana Financial

Hana Financial, Inc. (“HFI”), a California financial corporation, came into existence a month later and started using its trademark in April 1995.  It obtained a federal trademark registration in July 1996.  The principals of HFI and the Bank have known each other since 1985.  In 1995, the Bank’s principal asked HFI’s principal why HFI was using the word “Hana” without the Bank’s permission.  HFI’s principal said there was no overlap in the services of the two companies.  In 2000, the Bank changed the Club’s name to “Hana World Center” and attempted to register its trademark, but was unable to do so, in part because of HFI’s registered mark.  The Bank began operating an agency in New York under its own name.

The Lawsuit

HFI filed a complaint in 2007 alleging that the “‘Hana Bank’ mark infringed HFI’s ‘Hana Financial’ mark because its use of the word ‘Hana’ in connection with financial services would likely cause confusion.”  In response, the Bank sought cancellation of HFI’s trademarks based upon HFI’s alleged awareness of the Bank’s superior rights.  Here, “the priority issue turns on whether it was permissible for the jury to find that the Bank could ‘tack’ its present use of ‘Hana Bank’ mark to its use of the Club mark beginning in 1994.”  A jury found in favor of the Bank on the ground that it “had ‘used its mark in commerce in the United States beginning prior to April 1, 1995, and continuously since that date.’”

The Doctrine of “Tacking”

A party who claims trademark ownership is required to show “priority,” or in other words “that it was the first to use the mark in the sale of goods or services.”  Priority may be established through “tacking,” which “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.”  Here, the jury was instructed on the doctrine of tacking and concluded that the Bank used its mark in the U.S. prior to April 1, 1995, when HFI began using its mark, and that the Bank had used the mark continuously since that date.  The court of appeals held that the jury was entitled to find that the doctrine of tacking applied.

The Court of Appeal’s Analysis

The issue of whether consumers would consider two marks as essentially the same mark is a “highly fact-sensitive inquiry.”  The words “Hana Overseas Korean Club,” “Hana World Center,” and “Hana Bank,” seem “aurally and visually distinguishable” and the evidence could be construed to support HFI’s claim.  However, because HFI lost the jury trial, it must show on appeal “that its interpretation is the only reasonable one.”  HFI did not overcome this burden.

The Bank offered financial services to Korean-speaking consumers and advertised in Korean-language newspapers.  The advertisements included “Hana Overseas Korean Club” in English next to its “Hana Bank” mark in Korean.  The Bank’s logo, which has not changed, appeared in all of the advertisements.  The court concluded, “[t]he jury could have reasonably concluded that the ordinary purchasers of the financial services at issue likely had a consistent, continuous commercial impression of the services the Bank offered and their origin.”

The customers likely had a preexisting awareness of the Bank because of its presence in Korea.  The court found “‘Hana’ was arguably the most significant portion of the trade name, as the ordinary purchasers would have then made the association between the English word ‘Hana’ and the Bank’s Korean name.”  When the marks are viewed “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.”  Accordingly, the court found there was sufficient evidence of tacking to support the jury’s verdict in favor of the Bank.

Summary

The standard for tacking is still exceedingly strict, in that the “marks must create the same, continuing commercial impression.”  In the Ninth Circuit, tacking presents a question of fact to be decided by the jury, as opposed to other circuits, which consider “tacking” a question of law.  The “tacking” doctrine exists to protect costumers from being misled about the source of products.  While “tacking” still only applies in rare circumstances, it does not mean that “tacking” will never apply.

 

Questions

If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Bruce A. Scheidt or Jennifer A. Scott | 916.321.4500