CALLAHAN, Circuit Judge:
A party claiming trademark ownership must establish that it was the first to use the mark in the sale of goods or services. This concept is known as trademark "priority." One of the ways that a party may establish priority is through the constructive use doctrine known as "tacking." Tacking allows a party to "tack" the date of the user's first use of a mark onto a subsequent mark to establish priority where the two marks are so similar that consumers would generally regard them as being the same.
We have previously indicated that tacking only applies in "exceptionally narrow" circumstances, Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1047 (9th Cir.1999), and is properly resolved "as a matter of law if reasonable minds cannot differ and the evidence permits only one conclusion," One Industries, LLC v. Jim O'Neal Distributing, Inc., 578 F.3d 1154, 1160 (9th Cir.2009). Nonetheless, the rule in our circuit is that tacking "requires a highly fact-sensitive inquiry" generally reserved for the jury. Id. On the facts of this case, we conclude that the properly-instructed jury was entitled to find that the doctrine applied.
The Korean word pronounced as "hana" means "number one," "first," "top," or "unity." The parties in this dispute both use the English word "Hana" in their names and offer financial services in the United States. Defendant-Appellee Hana Bank (the "Bank") is a Korean entity established in 1971 as Korea Investment Finance Corporation.
The principals of the two entities were no strangers. The Bank's Chairman, Seoung-Yu Kim, and HFI's former CEO, Charles Kim, met for the first time in 1985 and met at least once per year thereafter until 2002, when Charles Kim became seriously ill. During that time period, Charles Kim affectionately referred to Seoung-Yu Kim as "big brother." Seoung-Yu Kim also knew HFI's current CEO, Sunnie Kim,
In 1991, Charles Kim and Sunnie Kim were working at an American bank. At that time, the Bank was considering offering services to Korean Americans living in Los Angeles through a partner. Charles Kim and Sunnie Kim met with Seoung-Yu Kim to discuss a potential equity investment and strategic alliance. To that end, the companies executed a non-binding memorandum of understanding. The deal, however, was never completed. It was initially delayed by regulatory issues, and after the 1992 Los Angeles riots, the Bank decided it would take a "wait and see" approach.
In May 1994, the Bank acted on its plan to extend its services to the United States, establishing the "Hana Overseas Korean Club" (the "Club") to provide financial services to Korean expatriates. The Club's target customer base consisted of Korean Americans living in the United States, particularly in certain areas, such as Southern California, New Jersey, Chicago, and San Francisco. That July, the Bank published advertisements for the Club in several Korean-language newspapers in major cities throughout the United States, including the Los Angeles edition of the Korea Times. The advertisements included the name "HANA Overseas Korean Club" in English. The names "Hana Overseas Korean Club" and "Hana Bank" also appeared in Korean, along with the Hana Bank logo, which is sometimes called the "dancing man." The dancing man logo has not changed since then. The Bank subsequently received a number of applications for the Club from customers in the United States. The application materials included the name "Hana Overseas Korean Club" in English and "Hana Bank" in Korean next to the dancing man logo.
HFI came into existence one month later. Its Articles of Incorporation indicated that it could engage in lawful acts "other than the banking business." It began using its trademark in commerce the following year, on April 1, 1995. On July 16, 1996, it obtained a federal trademark registration for a pyramid logo with the words "Hana Financial" for use in connection with factoring
Meanwhile, the Bank continued operating the Club in the United States. Its initial customers included individuals in several states, at least one of whom remained a customer through the time of the trial. From 1994 onward, the Bank wired money to its customers in the United States "almost every day"—totaling over $37 million between 2002 and 2007—and accepted over 11,500 applications. In 2000, the Bank changed the Club's name to the "Hana World Center."
In 2001, the Bank sought to register its trademark but was unable to do so, at least in part due to HFI's mark. The Bank contacted HFI about the issue, but they were unable to resolve it. In 2002, the Bank began operating an agency in New York under its own name.
On March 8, 2007, HFI filed its complaint alleging trademark infringement and related claims. In essence, HFI contended that the Bank's use of its "Hana Bank" mark infringed HFI's "Hana Financial" mark because its use of the word "Hana" in connection with financial services would likely cause confusion. In response, the Bank sought cancellation of HFI's trademark based on HFI's alleged awareness of the Bank's superior rights, and the Bank also asserted the equitable defenses of laches and unclean hands. On January 7, 2008, the district court granted the Bank's motion for summary judgment on trademark priority. The district court also granted HFI's motion for summary judgment on the Bank's cancellation counterclaim. Both parties appealed.
On October 4, 2010, we reversed on priority, finding that the Bank's advertisements and other exhibits purportedly demonstrating priority were "relevant," but were also subject to competing inferences or were not presented in admissible form. Hana Fin., Inc. v. Hana Bank, 398 Fed. Appx. 257, 258-59 (9th Cir.2010). Accordingly, we remanded for trial. Id. at 259. We also affirmed the district court's grant of summary judgment on the Bank's cancellation counterclaim, noting that HFI's alleged knowledge of the Bank's mark was insufficient to establish the requisite element of fraudulent intent. Id.
On remand, HFI filed a motion in limine seeking to exclude the Club advertisements and related exhibits, arguing that the evidence was irrelevant. Specifically, it argued: (a) that the Bank's mark and the Club's mark were not virtually identical and therefore, tacking for the purposes of establishing trademark priority was improper; and (b) in the alternative, that the Bank had abandoned the mark in 1999 or 2000. The district court denied the motion.
In the jury instructions, the district court explained:
HFI had proposed a similar instruction and did not object. Moreover, in its closing argument, HFI argued that tacking was inapplicable because the Bank and the Club had "completely different" names.
The jury found that the Bank had "used its mark in commerce in the United States beginning prior to April 1, 1995, and continuously since that date." It also found, in its advisory capacity, that the Bank had proven its laches defense, but not its unclean hands defense. The court subsequently issued findings of fact and conclusions of law, determining, among other things, that HFI's claims were barred by both laches and unclean hands.
After the district court issued its decision, HFI renewed its motion for judgment as a matter of law and moved for a new trial, challenging the priority verdict as well as the laches and unclean hands decisions. The district court denied the motion, noting that HFI had failed to cite any supporting legal authority. It also rejected HFI's motion on the merits, noting that: (a) we had previously remanded the case for trial on the priority issue; (b) there was sufficient evidence to support the jury's verdict on priority; and (c) the court had given a tacking instruction similar to the one HFI had requested. HFI now appeals, and we have jurisdiction pursuant to 28 U.S.C. § 1291.
We review the district court's decision to deny a motion for judgment as a matter of law de novo. First Nat'l Mortg. Co. v. Fed. Realty Inv. Trust, 631 F.3d 1058, 1067 (9th Cir.2011). In doing so, however, we must "view the evidence in the light most favorable to the party in whose favor the jury returned a verdict and draw all reasonable inferences in its favor." Id. "The verdict will be upheld if it is supported by substantial evidence, even if it is also possible to draw a contrary conclusion." Id. (internal quotation marks omitted).
"It is axiomatic in trademark law that the standard test of ownership is priority of use." Brookfield Commc'ns, Inc. v. W. Coast Entmt. Corp., 174 F.3d 1036, 1047 (9th Cir.1999) (quoting Sengoku Works Ltd. v. RMC Int'l, Ltd., 96 F.3d 1217, 1219 (9th Cir.1996)). "To acquire ownership of a trademark it is not enough to have invented the mark first or even to have registered it first; the party claiming ownership must have been the first to actually use the mark in the sale of goods or services." Id. Here, the priority issue turns on whether it was permissible for the jury to find that the Bank could "tack"
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." Id. at 1048. "Tacking" is permitted because "[w]ithout tacking, a trademark owner's priority in his mark would be reduced each time he made the slightest alteration to the mark, which would discourage him from altering the mark in response to changing consumer preferences, evolving aesthetic developments, or new advertising and marketing styles." Id. Moreover, "[g]iving the trademark owner the same rights in the new mark as he has in the old helps to protect source-identifying trademarks from appropriation by competitors and thus furthers the trademark law's objective of reducing the costs that customers incur in shopping and making purchasing decisions." Id.
The fact that a mark contains a portion of an earlier mark is not sufficient to establish tacking; a tacking analysis must consider the marks "in their entirety to determine whether each conveys the same commercial impression" such that they "possess the same connotation in context." Van DyneCrotty, Inc. v. Wear-Guard Corp., 926 F.2d 1156, 1160 (Fed.Cir. 1991). "The `commercial impression' of a trademark is the meaning or idea it conveys or the mental reaction it evokes." See Gideon Mark & Jacob Jacoby, Continuing Commercial Impression: Applications and Measurement, 10 Marq. Intell. Prop. L.Rev. 433, 434 (2006) (citing Spice Islands, Inc. v. Frank Tea & Spice Co., 505 F.2d 1293, 1296 (C.C.P.A.1974)). "`Commercial impression,' like most issues in trademark law, should be determined from the perspective of the ordinary purchaser of these kinds of goods or services." 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 17:26 (4th ed.2013) [hereinafter, "McCarthy"]. In determining whether the marks have the same commercial impression, the visual or aural appearance may be instructive. See Van Dyne-Crotty, 926 F.2d at 1159. Commercial impression, however, should be resolved by considering a range of evidence, ideally including consumer survey evidence. See Mark & Jacoby, supra, at 457; McCarthy § 17:26. In our circuit, whether consumers would consider the two marks as being essentially the same is a question of fact.
Like our sister circuits, we have indicated that tacking applies only in "exceptionally narrow" circumstances. Brookfield, 174 F.3d at 1047-48. We have explained:
Id. at 1048 (citations and internal quotation marks omitted).
Our decisions demonstrate the narrowness of the doctrine. In Brookfield, 174 F.3d at 1048-49, we reversed the district court's denial of a preliminary injunction based in part on the fact that the plaintiff had failed to make a sufficient showing that it could tack "The Movie Buff's Movie Store" onto its later mark, "moviebuff.com." In Quiksilver, 466 F.3d at 759-60, we reversed the district court's decision finding that tacking applied and remanded where there was "evidence from which a reasonable jury could easily conclude that `QUIKSILVER ROXY' and `ROXY' did not create the `same, continuing commercial impression' at the time the `ROXY' brand was introduced." In One Industries, 578 F.3d at 1161-62, we found that the district court correctly determined that the plaintiff could not satisfy the tacking test where its angular "O'" mark was materially different from its rounded "O'" mark.
Further underscoring the limited reach of the doctrine, we have repeatedly cited a group of out-of-circuit cases where a court or the Trademark Trial and Appeal Board found that the doctrine did not apply. One Indus., 578 F.3d at 1161 (collecting cases); Brookfield, 174 F.3d at 1048-49 (collecting cases). This group of decisions
In contrast, we have cited Hess's of Allentown, Inc. v. National Bellas Hess, Inc., 169 U.S.P.Q. 673 (T.T.A.B.1971), as an example of a case where tacking was
Here, reasonable minds could disagree on whether the Bank's marks were materially different. In isolation, the words "Hana Overseas Korean Club," "Hana World Center," and "Hana Bank" seem aurally and visually distinguishable. It is not necessarily clear from their names that these entities offer the same services. Moreover, there was no survey evidence indicating that the marks convey the same, continuing commercial impression.
That the evidence could be construed to support HFI's position, however, is not enough for it to prevail. As the losing party in a jury trial, HFI must show that its interpretation of the evidence is the only reasonable one. See Martin v. Cal. Dep't of Vet. Affairs, 560 F.3d 1042, 1046 (9th Cir.2009). Here, HFI has not satisfied that standard. Tacking requires a highly fact-sensitive inquiry, and the jury decided the issue after receiving an instruction that correctly conveyed the narrowness of the doctrine. In this respect, our characterization of tacking as a question of fact is arguably dispositive. Cf. Van Dyne-Crotty, 926 F.2d at 1159 (observing that in the Federal Circuit, a determination that two marks are not legal equivalents is a legal determination that is not entitled to deference).
The evidence showed that the Bank offered financial services to Korean-speaking American consumers. It advertised in Korean-language newspapers, including the name "Hana Overseas Korean Club" in English next to its "Hana Bank" mark in Korean. Its distinctive dancing man logo—which has not changed—appeared in all of the advertisements. The application forms contained similar information. The ordinary purchasers of the Bank's services were likely aware of the Bank and its services from their experiences in Korea, given that by 1994, it had been known as "Hana Bank" for several years.
The jury could have reasonably concluded that the ordinary purchasers of the financial services at issue likely had a consistent, continuous commercial impression of the services the Bank offered and their
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. In other words, viewing the marks in context and in their entirety, the ordinary purchasers could perceive them as conveying the same idea or meaning or evoking the same mental reaction. Consequently, there was sufficient evidence to support the jury's verdict on trademark priority.
At oral argument, HFI's counsel further argued that if the Bank were to prevail, it would create uncertainty because there would have been no way for an entity like HFI to learn about the Bank's mark without expending significant resources. The registration process is the typical means for determining whether there is a preexisting mark. It is wellsettled, however, that registration is not necessarily dispositive of ownership. See Brookfield, 174 F.3d at 1047 (indicating that registration is prima facie evidence of the validity of the registered mark, but it may be rebutted by establishing priority of use). To the extent that the resulting uncertainty is a problem, it already exists. In any event, this abstract concern is irrelevant in this case given that HFI actually knew about the Bank's mark and its activities in the United States.
HFI also argues that the Bank "abandoned" the Club's mark in 1999 or 2000. A trademark owner loses its exclusive rights if it fails to actually use the mark. Sands, Taylor & Wood, 978 F.2d at 954-55 (citing 15 U.S.C. § 1127). "To show abandonment by nonuse, the party
There was evidence at trial that the Bank maintained customers in the United States from 1994 through the present and made wire transfers nearly every day. HFI may be referring to the fact that the Club's name changed in 2000 to the "Hana World Center." This argument was at least implicitly considered and rejected by the jury as part of its evaluation of HFI's tacking argument. Accordingly, for the same reasons that we find HFI's tacking arguments unavailing, we also reject HFI's abandonment argument.
We reiterate that tacking applies only in rare circumstances and our decision here does not alter the strict tacking standard. But the fact that the doctrine rarely applies does not mean that it never will. Indeed, the tacking doctrine exists for compelling reasons: to protect consumers from being misled about the source of products and facilitate their purchasing decisions. In our circuit, tacking presents a question of fact that must ultimately be decided by the jury unless the evidence is so strong that it permits only one conclusion. In this case, the district court properly instructed the jury and allowed it to decide the issue. HFI has not shown that the jury's decision was 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. We accordingly affirm the district court's decision denying HFI's motion for judgment as a matter of law on trademark priority and uphold the jury's verdict. In light of our conclusion on trademark priority, we need not and do not reach the Bank's equitable defenses.
