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Supreme Court decision likely to increase Trademark owners’ costs

The Supreme Court settled a divisive trademark issue in Hana Financial, Inc. v. Hana Bank, et al. The Justices decided that the legal concept of “trademark tacking” should be analyzed by a jury, in the event of a lawsuit, instead of a judge. The decision may not seem important to anyone unfamiliar with “trademark tacking,” but it will likely result in higher litigation costs for any trademark owner who has to protect their registered trademarks in court.

The concept of trademark tacking allows a trademark owner to alter a registered trademark and still keep the legal protection of the original mark. The only requirement is that the new mark must be the “legal equivalent” of the old mark. The test for this determination is that consumers must consider both marks to be indistinguishable. If the new mark meets the standard, it is afforded the legal benefits associated with the original mark. Trademark tacking exists because the Courts realize that trademark owners change their marks to modernize or adjust to market conditions.

The decision in Hana Financial makes sure that the question of what a typical consumer would consider “legal equivalents” is decided by a group of, presumably, typical consumers – the jury. The Supreme Court’s decision seems logical when considered that way. However, the ruling will have several implications for any trademark owner who has to defend a trademark in court. Any lawsuit that involves trademark tacking will now, likely, be more expensive. Matters of law can be decided by the judge at many stages of litigation and do not always require a full trail, which limits the costs and time associated with a lawsuit. Now that trademark tacking is determined by a jury, a full trial with discovery on the matter will be required. A potential unintentional benefit to this increased litigation cost is that fewer trademark tacking cases may be filed altogether. A second big concern for trademark owners is the increased uncertainty associated with jury determinations. A jury consists of a different group of people in every trial. Trying to guess how a hypothetical group of people will decide an issue is much more difficult than guessing how a judge who handles a lot of trademark lawsuits will rule.

The Supreme Court’s decision in this case will not have a direct impact on many people’s lives. However, all trademark owners should be mindful of this when making alterations to trademarks or contemplating litigation.

George A. GellisSupreme Court decision likely to increase Trademark owners’ costs
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