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Opinion analysis: Justices, yet again, remind courts of appeals of importance of juries in IP cases

A morning of déjà vu – as Justice Sonia Sotomayor announced her opinion for a unanimous Court in Hana Financial, Inc. v. Hana Bank. The Court heard oral argument in three intellectual property cases this fall. It decided the first one yesterday (Teva Pharmaceuticals v. Sandoz) and the second one this morning (Hana). Both cases asked whether an appellate panel should review trial court findings about mixed questions of law and fact under a de novo standard or a clear error standard. In both cases, the supporters of de novo review argued that it would not be practicable to identify separate factual questions suitable for clear-error review. And in both cases, the Court unanimously concluded that clear-error treatment was appropriate, largely because that is the treatment that would apply outside the IP context.

Where Teva was a patent case, Hana was a trademark case. Hana involves the “tacking” of trademarks – a rule that allows the owner of the mark to make slight changes in the mark, without losing the priority that the trademark owner has based on the date when it first started using the original mark. The doctrine is limited, however, to cases in which the revised mark creates “the same, continuing commercial impression so that consumers consider both as the same mark.”

The specific question before the Court was whether the consumer’s understanding of the similarity of the two marks is a question for the judge or the jury. The Court found that question no harder than it did the parallel question resolved in favor of the jury yesterday in Teva. For the Court, it was enough to decide the question to cite several earlier decisions, from disparate areas of the law, in which the jury was held the appropriate decision-maker for questions involving the assessment of an ordinary person or community. A single paragraph making that point provided all of the Court’s affirmative explanation of its decision.

The Court did go on to spend three more pages shooting down the various reasons offered to support treatment as a question of law. All of the Court’s explanations, however, could be summarized as making the point (again and again) that courts face mixed questions of law and fact all the time, and juries routinely play a role in their resolution. As in Teva, the Court was dubious of the idea that tacking should be treated as a legal question to ensure uniformity. The Court reiterated its view that questions of consumer impression are most sensibly treated as questions of fact, suggesting that rules of preclusion would provide uniform decisions for cases involving the same controversy.

The decision in this case will surprise nobody familiar with the argument, in which several Justices scoffed at the notion that juries were incapable of resolving such questions. What is most noteworthy about the opinion, though, is its careful avoidance of any statement at all about trademark law itself. For example, it seemed remarkable in the briefing that the law of tacking has rarely (arguably never) come before the Court. You might think it would be hard to write an opinion deciding whether tacking is a question of law or fact without addressing the preliminary questions of whether and when tacking should be available. Justice Sotomayor’s opinion for the Court, however, worked hard to sidestep those questions. When it described the doctrine of tacking, it described “the general rule adopted by lower courts” and dropped a footnote indicating that the parties “do not question the existence of the tacking doctrine or th[e] substantive standard.” At least as a matter of logic, that leaves open the possibility that in a later case the Court might reject the doctrine of tacking entirely, or substantially alter its doctrinal parameters. But no word on that topic today.

Similarly, a large part of the briefing and argument in Hana (as in its near-companion B&B Hardware v. Hargis Industries, which remains undecided from the December session) emphasized how central consumer understanding is to the creation and definition of rights in trademarks. You might have expected – and this writer did expect – that an opinion finding this to be a question of fact would include at least a sentence or two affirming that understanding of trademarks. But that was not to be. As mentioned above, the Court rested its determination that fact-question treatment was appropriate entirely on past practice about questions of consumer understanding. The relevant paragraph (and that’s all there is – a single paragraph) cites not a single source involving trademarks.

Hana probably will not turn out to be one of the important cases of the Term. It probably won’t even turn out to be an important trademark case, even though the Court hears so few cases in that area; the December session was the first time in ten years the Court heard a substantive trademark case. So if it ends up standing for anything, I suppose it will be the point with which I started this post – another example of the Court’s firm opposition to IP exceptionalism.

So who should care the most? Maybe expert witnesses. Here and in Teva, treatment as a fact question will shift litigation resources to jury persuasion. And on questions as complex as these that will lead to a lot of expert testimony.

Plain language summary: When a business starts using a trademark, it gets rights in the mark that allow it to stop other businesses from using similar marks – first in time is first in right. And the rights disappear if you stop using the mark. So if the first user stops using the mark for long enough (a few years would be more than long enough), then the second user all of a sudden would have the only right to use the mark. But sometimes (all the time) trademark owners make small changes and then they say the changes don’t matter, because the mark is really no different than it was in the first place.

The question in this case was how to decide a case like that. One side said this was a question for the jury – because it depends on what ordinary consumers think about the mark. The other side said it was a question of law – because it involves looking at the marks. The Court decided this was a question for a jury.

Recommended Citation: Ronald Mann, Opinion analysis: Justices, yet again, remind courts of appeals of importance of juries in IP cases, SCOTUSblog (Jan. 21, 2015, 4:30 PM),