Hana Fin., Inc. v. Hana Bank

• Decision Date: 22 November 2013
• Docket Number: No. 11–56678.,11–56678.
• Citation: 735 F.3d 1158
• Parties: HANA FINANCIAL, INC., a California corporation, Plaintiff–Appellant, v. HANA BANK, a Korean corporation; Hana Financial Group, a Korean corporation, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

735 F.3d 1158

HANA FINANCIAL, INC., a California corporation, Plaintiff–Appellant,

v.HANA BANK, a Korean corporation; Hana Financial Group, a Korean corporation, Defendants–Appellees.

No. 11–56678.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted Aug. 9, 2013.

Filed Nov. 22, 2013.

Steven E. Shapiro (argued), Kim, Shapiro, Park, & Lee, Los Angeles, CA, for Plaintiff–Appellant.

Carlo F. Van den Bosch (argued), Robert D. Rose, and Michelle LaVoie Wisniewski, Sheppard Mullin Richter & Hampton LLP, Costa Mesa, CA, for Defendant–Appellee.

Appeal from the United States District Court for the Central District of California, Percy Anderson, District Judge, Presiding. D.C. No. 2:07–cv–01534–PA–JWJ.

Before: RICHARD C. TALLMAN, RICHARD R. CLIFTON, and CONSUELO M. CALLAHAN, Circuit Judges.

OPINION

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.

I

A

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.¹ In 1991, it adopted its current name. Presently, it is the fourth largest bank in Korea. Plaintiff–Appellant Hana Financial, Inc. (“HFI”) is a California corporation that was incorporated on August 15, 1994.

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,² and met with her annually from 2004 through 2006.

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 ³ and certain other financial services. HFI advertised in Korean-language newspapers (including the Los Angeles edition of the Korea Times), other major newspapers, and on television. Its customers were primarily Korean Americans, but its customer base eventually expanded to include non-Korean Americans, who may have even constituted a majority of its customers at the time of trial.

In 1995, Charles Kim showed Seoung–Yu Kim a copy of his HFI business card. Seoung–Yu Kim asked Charles Kim why he was using the “Hana” mark without permission. Charles Kim stated that he thought it was a “wonderful” name. He explained that HFI would only be engaged in factoring and would not be providing banking services, so there would be no overlap in the two companies' services.

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.

B

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.⁴

The trademark infringement claims were triable by jury and the court also submitted the Bank's laches and unclean hands defenses to the jury for an advisory verdict. The trial commenced on May 24, 2011. At the close of evidence, HFI moved for judgment as a matter of law arguing that the Defendants had presented “no evidence” on trademark priority, laches, and unclean hands. The district court denied the motion.

In the jury instructions, the district court explained:

A party may claim priority in a mark based on the first use date of a similar but technically distinct mark where the previously used mark is the legal equivalent of the mark in question or indistinguishable therefrom such that consumers consider both as the same mark. This is called “tacking.” The marks must create the same, continuing commercial impression, and the later mark should not materially differ from or alter the character of the mark attempted to be tacked.

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...