United States: That’s A Fact, Tack You Very Much

Last Updated: February 11 2015
Article by Scott J. Slavick

After surprise granting of cert in tacking case, SCOTUS rules it's a jury's job

Tacking is a principle in trademark law that permits owners of a mark to make changes to it while retaining the priority date of the original. But a mark's owner can rely on tacking to establish priority only if the new version of the mark is the "legal equivalent" of the older version.

In January, in one of the few trademark cases to have made it to the U.S. Supreme Court in recent years, the nation's highest court unanimously affirmed the ruling of the U.S. Court of Appeals for the 9th Circuit in Hana Financial, Inc. v. Hana Bank, holding that whether tacking is available as an argument for the priority of a mark in a given case is a question of fact for the jury to decide.

Priority is an important concept in a trademark infringement claim because a plaintiff must demonstrate that its trademark rights predate the rights of the defendant. In this case, the district court had tasked the jury with determining whether Hana Bank could establish priority over Hana Financial by tacking its use of prior marks, Hana World Center and Hana Overseas Korean Club, to its current mark, Hana Bank.

The jury found in favor of Hana Bank. Hana Financial moved for judgment as a matter of law, which the district court denied.

The 9th Circuit affirmed the district court's decision, noting that the question of tacking is a "highly fact-sensitive inquiry" to be resolved by juries. However, other circuits, such as the Federal Circuit and 6th Circuit, have treated the question of tacking as a question of law to be decided by the judge. The Supreme Court granted certiorari to resolve this circuit split. 

Writing for the Court, Justice Sotomayor stated that two marks are legal equivalents when they "create the same, continuing commercial impression" so that consumers consider both versions as the same mark. The commercial impression of a mark is determined from the perspective of an ordinary consumer's understanding of the impression that a mark conveys. Accordingly, the Court held that the question of whether tacking is warranted must be decided by a jury. 

Because of business decisions and changing advertising styles, a trademark may undergo changes in format and appearance over a period of years. Traditionally, such changes have been attacked in the courts on two grounds: one being that the change resulted in abandonment of rights in the old form and another being that the change prevents the user from tracing priority of use back to a date of first use of the old form of the mark. Tacking is another way to state the priority issue: It allows a mark's owner to "tack on" the prior use of the old format to the use of the new format to achieve priority of use over a rival.

According to the Supreme Court, applying a test that relies upon an ordinary consumer's understanding of the impression that a mark conveys falls comfortably within the ken of a jury. Indeed, the Court felt that it had long recognized across a variety of doctrinal contexts that, when the relevant question is how an ordinary person or community would make a fact-based assessment, the jury ought generally be the decision-maker.

Of course, a judge may decide the tacking issue in a non-jury case, and may do so in a jury case if the facts warrant it on a motion for summary judgment or for judgment as a matter of law. But otherwise, when a jury trial has been requested, "the question whether tacking is warranted must be decided by a jury."

The Court found that the district court had properly instructed the jury on the issue, and it therefore affirmed the district court judgment of non-infringement.

It has long been held that tacking is a question of fact, not law, and that evidence should be demonstrated that the commercial impression on consumers of old and new versions of the marks are the same. Other courts, however, have found that tacking is an issue of law. But the issue of tacking has come up relatively rarely in trademark jurisprudence.

That is partly why the Supreme Court's decision to grant certiorari in this case was surprising. And many pundits have wondered whether the Court's ruling could indirectly impact a more important parallel issue that has also split the circuits: whether likelihood of confusion, a central trademark question, should be decided as a factual question or a legal one.

Most courts have said likelihood of confusion is a purely factual question best handled by juries; but the 2nd and 6th Circuits have said it is a mixed question of fact and law, and the Federal Circuit has ruled it is a purely legal question. This Circuit split is important not only in that it changes who is making the final decision on confusion but also because it changes the standard for appellate review.

The 9th Circuit, for example, would review a lower court's finding of confusion for "clear error;" the 2nd Circuit would review the factors that went into the finding for "clear error," but would then review the ultimate determination of likelihood of confusion de novo; the Federal Circuit would review the ruling entirely de novo.

(It's not without merit to speculate that the Supreme Court's recent ruling on the standard for appellate review of claim construction in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. might also suggest the highest court wants to curb the Federal Circuit's propensity to favor de novo review of everything presented to it. But that's a topic for another day — and for one of my colleagues in patent law!)

Back to this circuit split on likelihood of confusion, however. The same circuits have split the same way over tacking, leading some to speculate that the two might be linked in the eyes of the high court. In its brief, respondent Hana Bank went so far as to tell the justices that their eventual ruling would likely impact how courts weigh likelihood of confusion because both issues "compare trademarks by assessing their impression upon consumers." Hana Bank further argued that "Other courts are likely to look to this case not just for tacking guidance, but also to direct other consumer perception inquiries including likelihood of confusion, distinctiveness and secondary meaning... .".

Then, during oral argument in Hana last month, Justice Kennedy asked if the justices "have to have in the back of our minds what effect it will have on ... the likelihood of confusion issue" when it considered tacking.

In its ruling, the court did not explicitly address whether it views likelihood of confusion as a fact question to be handled by juries, the way it did about tacking; nor did the justices issue a radical ruling that cut against what most appeals courts have said about confusion, such as declaring tacking an issue of law.

But the court's main thrust was that trademark issues relating to consumer impression are likely better off being handled by juries, who are a group of consumers themselves. The court said it has long held that juries are the right way to go when the test at issue is how "an ordinary person or community would make an assessment."

Some lower courts might see that wording as reaching beyond the confines of tacking to likelihood of confusion — a test of how American consumers are likely to view an allegedly infringing mark. Some might consider the court's unanimous ruling in Hana as a strong indicator that the court believes issues involving consumer perception — whether tacking, likelihood of confusion, or secondary meaning — better align with the fact-finding role of a jury.

An alternate view, however, is that tacking is a subset of the likelihood of confusion analysis, and while it is now to be considered a question of fact, it does not necessarily follow that this subset should affect how the greater question is analyzed. On this model, if likelihood of confusion was determined to always be a question of fact for juries to decide, then it would necessarily follow that the subsidiary issue of tacking would also be a question of fact. But it's harder to argue that the lesser issue of tacking should control how a court analyzes the greater issue (likelihood of confusion).

Perhaps the Court's decision in Hana will push future litigants to argue that the minority of circuits that consider likelihood of confusion something other than a purely factual issue to reconsider that position. Only time will tack—er, I mean, tell.

Originally published by Inside Counsel, February 9, 2015

This article is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. Brinks Gilson & Lione does not intend to create an attorney-client relationship by offering this information and review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention. For further information, please contact a Brinks Gilson & Lione lawyer.

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Scott J. Slavick
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