Supreme Court Gives Power Back to Juries in Trademark Cases

If the wording or design of your trademark has evolved over the years, the decision on Wednesday in Hana Financial v. Hana Bank is important. It is the second in a row this week where our top court endorsed the ability and wisdom of those who make the first round decisions in most intellectual property cases. Tuesday in the Teva decision it was federal judges. In Hana, it’s juries.

The dispute was about trademark “tacking.” All trademarks have a history beginning on the first day they were used in commerce. If you’re the first to use a trademark on particular goods or services, you have priority over everyone else who wants to use the same or similar trademark for the same kind of goods or services. In a fight over who has the right to use the trademark, priority wins.

But if your trademark changed from its form on day one, you might not win because the other side can argue you don’t have priority going back to the original since the trademark you use today is not the same.

Sometimes the changes are subtle and leave no doubt the new version is the same trademark people know. Think of the Starbucks mermaid logo. One of the world’s most recognized trademarks, its earliest version became a registered trademark in 1978. Although the original image differs from today’s streamlined, crisp white and green design, the basics are there and you know it means Starbucks.

The Supreme Court’s unanimous decision announced by Justice Sotomayor on Wednesday ends a fight between Hana Financial and Hana Bank. Hana Financial started in California and used its trademark since 1995. It sued Hana Bank in 2007.

Hana Bank is a Korean company that defended the lawsuit by claiming priority for its trademark back to 1994. It operated then as “Hana Overseas Korean Club” but included “Hana Bank” written in Korean in its advertisements. It became just “Hana Bank” in 2002.

The federal trial judge presiding over the case in California let a jury decide whether Hana Bank could tack its trademark back to 1994. Hana Bank won. Although Hana Financial wrote the jury instruction they challenged on appeal, they argued all the way to the Supreme Court that the judge alone had to decide the tacking issue and the jury verdict should be reversed.

Owners think of the trademarks they use as their property, but the policy behind protecting trademarks is prevention of confusion to the public. Tacking claims always contain a fact question: do the original and revised trademarks create the same impression for consumers so there is no confusion whether the revised trademark is the same brand they knew? If the revised trademark creates the same impression, the original and revision are “legal equivalents” and the revised trademark can claim priority back to the first day the original was used.

Financial made four arguments which all amounted to saying the subject was too difficult for the ordinary folks on a jury. The Federal and Sixth Circuit courts of appeals agreed with that and only permitted judges to decide.

Justice Sotomayor summarized this common sense, unanimous decision in one sentence. “Be­cause the tacking inquiry operates from the perspective of an ordinary purchaser or consumer, we hold that a jury should make this determination.” Besides the common sense result, it was the second day in a row this week when the Supreme Court rejected the Federal Circuit court of appeals’ special rules for IP cases.

About Craig Pinkus

Craig Pinkus is a partner in the Intellectual Property Group. He also is a member of the Litigation and the Sports, Entertainment and Media Groups. He assists clients with a broad range of disputes and transactions involving all areas of intellectual property, entertainment, and other complex business arrangements. He has conducted trials and arbitrations throughout the United States and has argued appeals before the Seventh, Sixth and Federal Circuit Courts of Appeal, the Indiana appellate courts, and United States Supreme Court.
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