In a unanimous ruling, the Supreme Court upheld the Ninth Circuit Hana Financial v. Hana Bank and ruled that the question of “tacking” — whether a party’s prior version of its trademark is so closely similar to the current one that the prior period of use should be added, thus giving an earlier priority date — is for juries, not judges, to decide. The logic of the opinion is fairly simple: since the similarity of the prior mark is to be evaluated from the perspective of “an ordinary purchaser or consumer,” lay jurors are well suited to make this determination.
This ruling will have fairly serious implications for trademark enforcement. Prior decisions had held that the tacking doctrine is “extraordinarily narrow,” in that the prior mark had to be “virtually identical” to the current one. The purpose of the doctrine was to allow mark holders to “polish up” their marks without fear of losing priority. From a trademark enforcement perspective, this meant that a party writing a cease and desist letter could feel fairly confident about the other side’s priority date. Now, relative priority may be far less clear.
The facts of the case illustrate how broadly the tacking doctrine can be interpreted by juries. The jury allowed the defendant in the case, now using the mark HANA BANK, to tack not once, but twice to get priority over the plaintiff — from HANA BANK to the prior mark HANA WORLD CENTER, and from that mark to the one prior to that, HANA OVERSEAS KOREAN CLUB. It seems very unlikely that a judge would have found these three fairly distinguishable marks to be “virtually identical,” or mere “polishing,” but the jury did. Indeed, the Ninth Circuit had acknowledged in its opinion that its “characterization of tacking as a question of fact is arguably dispositive” — implying fairly clearly that it would have ruled differently, and disallowed the tacking, if the standard of review were looser.
The overall trend at the Supreme Court seems to be to limit appellate review of IP cases. In the patent arena, recent rulings have accorded more deference to district court judges in their Markman rulings and in their “exceptional case” determinations for purposes of fee-shifting. Prior to that, the justices had held that irreparable harm in IP cases need no longer be presumed, but can be assessed by district courts on a discretionary, case-by-case basis. Given the extremely broad deference that will now be given to tacking and priority determinations by juries, we can add Hana Financial to the list of recent cases that reduce the role of the federal appellate courts.