Who's On First: Hana Bank or Hana Financial

Trademark lawyers will tell clients that the Junior (i.e., second)  user of a mark has rights in the mark depending whether the mark is being used in the same territory as the Senior (first) user. First in use and first to file a registration with the USPTO matters. 

Use matters because the Senior User has rights superior to all others, and can generally exclude others from using their mark, but only in the territory where they provide products or services.  If the junior user registers the mark federally prior to the senior user, then the junior user obtains nationwide priority, and can exclude all uses of the mark except the senior user's use of the mark in the senior user's own territory. That is, the user of, say, "Burger King" in a locality, if first in that place can continue to use the mark forever as long they started before anyone registered the mark for, say, restaurants. But, if someone else files a registration for "Burger King," and the Senior User has not registered, it is the Junior User, or first to register, that obtains expansion rights. 

In Burger King of Florida, Inc. v. Gene Hoots and Betty Hoots d/b/a Burger King in Mattoon, Illinois, a couple has started a Burger King business before there was the franchise. In a fight with the franchise company later, they were able to keep the name in a 20 mile radius around Mattoon, and the franchise company was excluded. Here they are, the only Burger King in Mattoon:

Now, to apply this doctrine the marks must be equivalent. "Mosaic" as a mark in real estate is different than "Mosaic" as a mark. But, trademark law also has a doctrine known as “tacking,” which means that a party can “tack,” or expand, the use of an older mark onto a new mark for the purposes of determining priority. For example, Hana Bank registered the mark “HANA OVERSEAS KOREAN CLUB,” and later expanded the mark to “HANA WORLD CENTER.” Then, it became became  "HANA BANK," with priority all going back to the first registration for the Korean Club.

This odd rule is that if a party makes minor changes to a trademark, it can continue to claim priority in the mark even if the current version of the mark differs slightly from the way the mark was originally used. In order for the tacking doctrine to apply, however, the marks must be so-called “legal equivalents.” In order to be considered legal equivalents, the marks must create the same commercial impression and cannot differ materially from one another.

Of course, the inevitable happened, and someone registered “HANA FINANCIAL” which the Senior Hana argues is confusingly similar to “HANA BANK.” Hana Bank first used the HANA BANK mark several years after Hana Financial adopted its mark; but, Hana Bank claims priority by virtue of the tacking doctrine. The Supreme Court is taking this matter up on a technical trademark issue; but, the lesson is that differenting one's mark only by category of use has litigation dangers. The best way to be first is to be distinctive and avoid marks that can morph into  something like the one you want.

Registration Means Something, But Not Much

“[T]rademark or service mark ownership is not acquired by federal or state registration. Rather, ownership rights flow only from prior appropriation and actual use in the market.”

Trademarks are strange. They are, in essence, opportunity. They are the opportunity to associate the producer or provider of a good or service with that product. That association -- a name, figure, sound, logo, or some combination -- becomes "owned" only to the extent that the association is developed.  Service mark ownership is not acquired by federal or state registration. Rather, ownership rights flow only from prior appropriation and actual use in the market. See 1 J. McCarthy, Trademarks and Unfair Competition, § 16:5, at 733 (2d ed. 1984).

Once, an Arizona company who had registered and used the term "HOGIE" for the sandwich tried to prevent 7/11 from using that term.  The Court properly found that administrative approval of registration is not conclusive for establishing the validity of a mark. Hoagie, of course, is generic: it is the good itself, not the association with the producer (names the sound the same are the same for trademark purposes). Raizk v. Southland Corp., 121 Ariz. 497, 591 P.2d 985 (Ariz.App., 1978). And, of course, the rule in trademark is use or lose it. 

Metatags and Adwords: Other People's Marks

So. Let's put a competitor's mark on my site. Not referring to them, but embedded in metatags or by purchasing adwords. OK? or a lawsuit?

The classic metatag case is Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036 (9th Cir.1999). In Brookfield, in 1999, the Ninth Circuit concluded that the Lanham Act bars a defendant from including in its meta tags a competitor's trademark or confusingly similar terms. Brookfield, 174 F.3d at 1065.  But later, the Ninth Circuit allowed use of a competitor's trademarks in adwords.

First, Brookfield was a case mostly about the use of  "moviebuffs.com" as a web address by the Defendant when the Plaintiff had registered "MovieBuff" as a mark. The Defendant had used the tag line “The Movie Buff's Movie Store” prior to Plaintiff's use of MovieBuff. The 9th Circuit said that “The Movie Buff's Movie Store” and “moviebuff.com” are very different, so the argument did not fly. This is a lesson in building a family of marks, and another good story to follow. But, the Plaintiff went on and complained about meta tags, which are now irrelevant (live movie stores), but the case law lives on.

Brookfield reasoned that using another's mark in meta tags could result in what is known as initial interest confusion. They reasoned that web surfers looking for Brookfield's “MovieBuff” products who are taken by a search engine to “westcoastvideo.com” will find a database similar enough to “MovieBuff” so a sizeable number of consumers who were originally looking for Brookfield's product will simply decide to utilize West Coast's offerings instead.



The interesting thing about Brookfield is that it disclaimed source confusion. They reasoned that  consumers knew they were patronizing West Coast rather than Brookfield, but there was nevertheless initial interest confusion in the sense that, by using “moviebuff.com” or “MovieBuff” to divert people looking for “MovieBuff” to its web site, West Coast improperly benefitted from the goodwill that Brookfield developed in its mark. The use of another's trademark in a manner calculated “to capture initial consumer attention, even though no actual sale is finally completed as a result of the confusion, may be still an infringement.”

Initial interest confusion is the bane of the web, which is all about attracting surfers.In 2002, the Seventh Circuit agreed with Brookfield. N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1218-1224 (11th Cir.2008). Other courts have held that the use of a competitor's trademarks as metatags can create confusion and constitute trademark infringement. See, e.g.,  Suarez Corp. v. Earthwise Tech., Inc., Nos. C07-5577RJB, C07-2020RJB, 2008 WL 4934055, at *6 (W.D.Wash. Nov.14, 2008); Deltek, Inc. v. Iuvo Systems, Inc.  2009 WL 1073196, 8 (E.D.Va.) (E.D.Va.,2009).

Suddenly, in 2011, the Brookfield case was criticized by the 9^th Circuit. They noted that modern search engines such as Google no longer use metatags but instead rely on their own algorithms to find websites. See McCarthy at § 25:69.” Network Automation, Inc. v. Advanced Systems Concepts, Inc.  638 F.3d 1137, 1146 (C.A.9, 2011). But initial interst confusion lives.

The Catch-22 here is that the use of metatags may not cause consumer confusion if they are ineffective. In the Ninth Circuit, a Court must do a complete analysis of the following factors in order to make the determination of whether there is a likelihood of consumer confusion (the Sleekcraft factors): The eight factors we identified in Sleekcraft were: “[1] strength of the mark; [2] proximity of the goods; [3] similarity of the marks; [4] evidence of actual confusion; [5] marketing channels used; [6] type of goods and the degree of care likely to be exercised by the purchaser; [7] defendant's intent in selecting the mark; and [8] likelihood of expansion of the product lines.”

Because this is a fact intensive analysis, a court case can  be expensive. If the use of metatags works, then it is more likely that the defendant will be found to have caused consumer confusion and be liable. Simply put, success in using metags is what could create liability.