Tacking isn't tacky - narrow doctrine saves defendant

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In Hana Financial v Hana Bank (Case No 11-56678), the US Court of Appeals for the Ninth Circuit has affirmed the district court’s decision denying Hana Financial Inc’s motion for judgment as a matter of law. The Ninth Circuit decision, which focused on the issue of priority, upheld the jury’s verdict that Hana Bank had established priority over Hana Financial based on the doctrine of 'tacking'.

The plaintiff, Hana Financial, a California corporation, began using the mark HANA FINANCIAL in 1995 and obtained federal registration in 1996 for a pyramid logo that includes the words 'Hana Financial'. The word 'hana' means 'number one', 'first', 'top' or 'unity' in Korean.

The defendant, Hana Bank, is a Korean entity established in 1971 in Korea as Korea Investment Finance Corporation. Hana Bank adopted its current name, Hana Bank, in Korea in 1991. In May 1994 Hana Bank extended its services to the United States, establishing the Hana Overseas Korean Club, which provided financial services to Korean expatriates and Korean Americans. Advertisements for Hana Overseas Korean Club included 'Hana Overseas Korean Club' (in English) along with 'Hana Bank' (in Korean) and Hana Bank’s dancing man logo. Application forms for Hana Oversees Korean Club contained similar information. In 2000 Hana Bank changed the name Hana Overseas Korean Club to Hana World Center. In 2001 Hana Bank sought to register the mark HANA BANK in the United States, but was unable to do so because of Hana Financial’s prior US registration. Nevertheless, in 2002 Hana Bank began operating an agency in New York under the name Hana Bank.

On March 8 2007 Hana Financial filed suit against Hana Bank in the US District Court for the Central District of California, claiming that Hana Bank’s use of its HANA BANK mark infringed Hana Financial’s registered trademark HANA FINANCIAL, used for similar financial services. However, Hana Financial failed to prove it had priority over Hana Bank before the jury at the district court due to Hana Bank’s successful reliance on the doctrine of tacking.

In response to the jury verdict in favour of Hana Bank, Hana Financial filed a motion for judgment as a matter of law with the district court challenging the priority verdict. As the district court denied that Motion, Hana Financial appealed to the Court of Appeals for the Ninth Circuit.

The Ninth Circuit affirmed the district court’s denial of Hana Financial’s motion, finding that it was permissible for the jury to find that Hana Bank could 'tack' its use of its present HANA BANK mark to its prior use of HANA OVERSEAS KOREAN CLUB along with 'Hana Bank' (in Korean), which dated back to 1994. This established that Hana Bank’s use of the HANA BANK mark tacked back to 1994, predating Hana Financial’s first use of its HANA FINANCIAL mark in 1995.

The doctrine of 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 Ninth Circuit noted that tacking is permitted because:

“without tacking, a trademark owner’s priority in its mark would be reduced each time it made the slightest altercation to the mark, which would discourage it from altering the mark in response to changing consumer preferences, evolving aesthetic developments, or new advertising and marketing styles.”

The Ninth Circuit, however, noted that tacking only applies in “exceptionally narrow” circumstances and that a tacking analysis must consider the respective marks in their entirety to determine whether each conveys the same commercial impression such that they possess the same connotation in context. Moreover, tacking is resolved “as a matter of law” only if reasonable minds cannot differ and the evidence permits only one conclusion. In the Ninth Circuit, tacking requires a highly fact-sensitive inquiry generally reserved for the jury. In this case, the Ninth Circuit found that the properly-instructed jury was entitled to come to the conclusion that the doctrine applied for Hana Bank’s benefit.

In particular, the Ninth Circuit held that Hana Financial did not meet the requisite standard to reverse the jury’s finding. As the losing party in a jury trial, Hana Financial had to show that its interpretation of the evidence was the only reasonable one. However, the Ninth Circuit found that a 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 Hana Bank offered and their origin.

Specifically, the Ninth Circuit reasoned that the ordinary purchasers were Korean-speaking, and thus, likely had a pre-existing awareness of Hana Bank due to its ongoing business presence in Korea. Additionally, the jury could have reasonably concluded that these purchasers associated Hana Bank with the Hana Overseas Korean Club, as the advertisements all used 'Hana Overseas Korean Club' (in English) next to 'Hana Bank' (in Korean) along with Hana Bank’s distinctive dancing man logo. The court found that, in that context, 'Hana' was the most significant portion of the usage. In sum, the Ninth Circuit found that there was sufficient evidence to support the jury’s verdict on trademark priority.

This article first appeared in World Trademark Review Daily, published by The IP Media Group, on January 14, 2014. To view WTR Daily online, please go to www.worldtrademarkreview.com.