Jury Appropriately Allowed Tacking For Three Marks Incorporating ‘Hana' Term

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By Tamlin H. Bason  

Nov. 25 --A federal district court correctly denied judgment as a matter of law on a jury's decision that allowed, for purposes of establishing priority, the owner of the current “Hana Bank” mark to tack to its earliest uses of the “Hana World Center” and “Hana Overseas Korean Club” marks, according to a Nov. 22 ruling by the U.S. Court of Appeals for the Ninth Circuit (Hana Fin., Inc. v. Hana Bank, 9th Cir., No. 11-56678, 11/22/13).

Affirming the lower court's rulings on JMOL and a motion for retrial, the court said that tacking “applies only in rare circumstances and our decision here does not alter the strict tacking standard.” However, the court noted that unlike in other circuits, tacking in the Ninth Circuit is treated as a question of fact and not as one of law. Accordingly, the party opposing the tacking verdict needed to demonstrate that the jury's decision was unreasonable.

That standard was not met here and the court therefore affirmed the tacking ruling, which allowed a defendant to prevail on claims of trademark infringement.


Two Financial Firms Adopt 'Hana' Marks

The Korean word whose English translation is “hana” has a variety of meanings, including “number one,” “first” “top,” and “unity.”

Founded in 1971, the Korea-based Korea Investment Finance Corporation is now the fourth largest financial services institutional in Korea. In 1991, the company changed its name to Hana Bank. In 1994, Hana Bank began offering financial services, including banking, to customers in the United States under the Hana Overseas Korean Club mark. The mark was never registered.

Hana Bank's services in the United States were initially directed towards Korean American living in California. The services were advertised in several Korean-language newspapers throughout the United States. The advertisements featured the Hana Overseas Korean Club mark written in both Korean and English. The Hana Bank mark, written in Korean, also appeared in the advertisements.

One month after Hana Bank expanded in the United States, a new company, Hana Financial Inc., filed its articles of incorporation with the California Secretary of State. Like Hana Club, Hana Financial also was launched to provide Korean Americans with financial services. However, Hana Financial claimed that it would not engage in banking, and therefore in 1995 Hana Financial's president told Hana Bank's president that there would be no overlap between the services of the two companies.

In 1996, Hana Financial received a federal trademark registration for Hana Financial for use with services identified as “factoring,” which relates to accounts receivable management.

In 2000, Hana Bank stopped using the Hana Overseas Korean Club mark and instead began using the Hana World Center mark. Hana Bank in 2001 then tried to secure a federal registration for Hana Bank. It was unable to do so, in part because of Hana Financial's registration. In 2002, Hana Bank opened in New York under the Hana Bank name.

Hana Financial filed a trademark infringement suit against Hana Bank in 2007. The complaint alleged that the Hana Bank mark was likely to cause confusion with the Hana Financial mark. Hana Bank in turn countersued, seeking a cancellation of Hana Financial's mark on the grounds that Hana Financial knew that Hana Bank had superior rights in the Hana mark.

In 2008, the U.S. District Court for the Central District of California granted Hana Bank summary judgment on the infringement claim, finding that Hana Bank was the superior user. The court also granted Hana Financial summary judgment on the cancellation counterclaim. Both parties appealed and the Ninth Circuit, in a nonprecedential opinion, reversed and remanded the priority ruling. 398 Fed. App'x 257, 2010 BL 233182 (9th Cir. 2010).

The appeals court faulted the district court for relying exclusively on the 1994 Hana Bank advertisements to establish priority. Such evidence, the Ninth Circuit said, should have been balanced against other factors. The court thus remanded for a trial on the priority issue. The court, however, affirmed summary judgment in Hana Financial's favor with respect to the cancellation counterclaim.


Jury Permits Tacking

On remand, the jury was given instructions both on tacking and on Hana Bank's affirmative defenses of unclean hands and laches. The jury determined that Hana Bank had used its mark continually in commerce since 1994, and therefore had priority. The jury also found in favor of Hana Bank on its laches defense.

Hana Financial then moved for judgment as a matter of law and moved for a new trial. Judge Percy Anderson denied both motions and entered judgment in Hana Bank's favor on the trademark infringement claim. Hana Financial appealed.


9th Circuit Treats Tacking as Question of Fact

Hana Financial argued that the jury should not have permitted Hana Bank to tack its current mark onto its pervious marks.

The court, quoting Brookfield Commc'ns, Inc. v. W. Coast Entmt. Corp., 174 F.3d 1036, 50 U.S.P.Q.2d 1545 (9th Cir. 1999), said:

A trademark user may “tack” the date of the user's first use of an earlier mark onto a subsequent mark to establish priority where the “two marks are so similar that consumers generally would regard them as essentially the same.”  


There is a circuit split with respect to whether tacking is treated as a question of fact or a question of law. The Federal Circuit, Dyne-Crotty Inc. v. Wear-Guard Corp., 926 F.2d 1156, 17 U.S.P.Q.2d 1866 (Fed. Cir. 1991), and the Sixth Circuit, Data Concepts, Inc. v. Digital Consulting, Inc., 150 F.3d 620, 623 (6th Cir. 1998), treat the matter as a question of law. The Ninth Circuit, on the other hand, treats it as a question of fact, Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 759 (9th Cir. 2006).

However, although there is a split on whether tacking is a question of law or fact, “Like our sister circuits, we have indicated that tacking applies only in 'exceptionally narrow' circumstances,” Judge Consuelo M. Callahan said, again quoting Brookfield.

Indeed, the appeals court noted that it has repeatedly held that tacking applies only in limited circumstances. For instance, Quicksilver and Brookfield both reversed district court opinions that had permitted tacking.


Tacking Doctrine Narrow, Not Dead

“[T]he fact that the doctrine rarely applies does not mean that it never will,” the court said. But, in this case, “our characterization of tacking as a question of fact is arguably dispositive,” the court said.

“Here, reasonable minds could disagree on whether the Bank's marks were materially different,” the court said. “In isolation, the words 'Hana Overseas Korean Club,' 'Hana World Center,' and 'Hana Bank' seem aurally and visually distinguishable.”

“That the evidence could be construed to support Hana Financial's position, however, is not enough for it to prevail,” the court noted. Indeed, because the issue is treated as a question of fact, Hana Financial can only prevail if it can demonstrate that the jury's verdict was unreasonable, the court said.

The court noted that the evidence demonstrated that throughout the relevant time period Hana Bank continuously marketed its services to Korean-speaking American consumers, and that it always included the Korean typed “Hana Bank” mark in its advertisements. The court said:


In light of this combination of facts, the jury could reasonably conclude that throughout the time period at issue, the ordinary purchasers of these services had the continuous impression that the advertised services were being offered by the Bank and that there were no material differences between the marks.  


Accordingly, the court determined that the jury's tacking conclusion was not unreasonable.

“While other courts, which consider tacking a question of law, might reach a different conclusion on these facts, we are bound by our decisions holding that tacking is a question of fact,” the court said. It therefore upheld the jury's verdict.

Judges Richard C. Tallman and Richard R. Clifton joined the opinion.

Hana Bank was represented by Robert Dale Rose of Sheppard Mullin Richter & Hampton LLP, San Diego. Hana Financial was represented by S. Young Lim of Park & Lim, Los Angeles.

Text is available at http://www.bloomberglaw.com/public/document/Hana_Financial_Inc_v_Hana_Bank_et_al_Docket_No_1156678_9th_Cir_Se.


To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com