When brand owners such as Wendy's fast food restaurants decide to modernize a logo to appeal to changing consumer tastes, the focus is usually on branding and image consultants. However, a decision by the Supreme Court earlier this week served as a reminder that trademark laws need to be factored into the decision to modernize or modify a brand.
Companies regularly modernize or modify brands to freshen them to appeal to changing consumer tastes or send new messages to the public. The goal is to retain the recognition and good will in the existing brand while creating a new vision for that brand. For example, a review of the evolution of the famous Prudential "Rock of Gibraltar" shows a vivid graphic depiction of the physical "Rock" that evolved into a highly stylized logo.
But modernizing a brand is not without its risks. Generally, whoever uses a trademark first has priority over any later users. If a modernized trademark is sufficiently similar to the old trademark, the priority in the trademark continues or "tacks" onto the earlier rights. But if a trademark is modified so much that it is no longer the "legal equivalent" of the old trademark, the trademark rights and priority in the old trademark can be completely abandoned.
The Supreme Court of the United States addressed this problem in Hana Financial, Inc. v. Hana Bank, Slip Op. No. 13.1211 (Jan. 21, 2015). The Court held that jurors are the appropriate arbiters of whether the rights from an old mark continue in a new mark—a process known as "tacking." The case began when Hana Financial, a financial service provider that had used its mark since 1995, sued Hana Bank for trademark infringement. Hana Bank responded that it had rights in its mark dating before 1995. However, Hana Bank had changed its mark over time through a few "Hana" variations, e.g., Hana Overseas Korean Club, Hana World Center. The transition to Hana Bank did not occur until 2002.
With these modifications in its mark, Hana Bank's defense relied on the tacking doctrine to claim rights to its older "Hana" marks. To do so, the marks must be "legal equivalents" such that that the old mark and the new mark "create the same, continuing commercial impression." The fundamental question is whether the relevant consumers would "consider both as the same mark." The trial court jury found these conditions were met and returned a verdict in favor of Hana Bank. On appeal, Hana Financial asserted that the question of tacking was one of pure law and, therefore, inappropriate for the jury's consideration. The Court resolved a circuit split on this issue, holding that the tacking of trademarks is a question for a jury's determination.
PRACTICE TIP: The case serves as a reminder that any rebranding effort or modification to a mark potentially raises risk that the owner's trademark rights could be lost and any trademark registration for such marks subject to cancellation. Proper legal planning for these transitions can minimize the associated risks of abandonment and avoid the potential for the issue ever making it to a jury decision.
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