Defendant PeoplesBank sought a preliminary injunction against People’s United Bank (a Connecticut-based bank) from use of “People’s United Bank,” or any variant of the name containing the word “peoples,” alone or as part of a logo, on exterior signs and billboards and in advertising and marketing in four Western Massachusetts counties. (People’s United Bank had sought a declaratory judgment of noninfringement, triggering the expected counterclaims; PeoplesBank unsuccessfully sought to have the case heard in Massachusetts.)
In January 2008, People’s United Bank, a federally chartered bank, acquired two Massachusetts banks, the Bank of Western Massachusetts and Flagship Bank and Trust Company. It wanted to use the name “People’s United Bank” in conjunction with them. PeoplesBank is a state-chartered Massachusetts bank with 16 branches and 35 ATM locations in Hampden and Hampshire counties, and it has used the PeoplesBank name and service mark since 2001.
In January 2009, People’s United consolidated the charters of all its acquisitions and, as required by federal regulation, has been operating in Massachusetts under the names, “The Bank of Western Massachusetts, a division of People’s United Bank” and “Flagship Bank, a division of People’s United Bank.” It wants to get rid of the other names entirely. This dispute resulted.
Initially, the district court noted the old standard that, in a trademark case, irreparable harm is inherent in a showing of likely success on the merits, but held that Salinger v. Colting changed the result. “Although Salinger does not specifically apply this change to trademark law, this Court does not see how Salinger’s reasoning can be distinguished in the trademark context. The Second Circuit’s admonition that a court ‘must not adopt a “categorical” or “general” rule or presume that the plaintiff will suffer irreparable harm,’ is as applicable to trademark as copyright. It would be illogical if trademark was the only intellectual property regime holding harm inherent in a prima facie case of infringement.” As a result, PeoplesBank would be required to prove irreparable harm.
The mark had secondary meaning but was not very strong; many banks use “people” in their names. Similarity was “not particularly helpful in the analysis,” but the court found that the “sight” of the marks was distinctive because of the parties’ differing logos, which “undoubtably help customers to distinguish between the entities”; thus, similarity weighed only slightly in favor of PeoplesBank.
What really caught my eye was the discussion of actual confusion. Several PeoplesBank employees testified to instances of confusion: a potential customer called and asked if PeoplesBank was affiliated with the Bank of Western Massachusetts; PeoplesBank received a wire transfer from the town of Southbridge, intended for deposit in the town’s People’s United account; PeoplesBank received a check from another bank addressed to People’s United, which meant that PeoplesBank lost a few days while the check was reissued; four People’s United customers attempted to make deposits at one branch, and similar things happened at other branches; a woman sought assistance after her People’s United ATM card locked following three wrong entries of her pin at the PeoplesBank ATM, but only the issuing bank can unlock an ATM card; several customers attempted to cash checks drawn on People’s United at PeoplesBank; a woman with a People’s United ATM card was surprised that using a PeoplesBank ATM would incur a fee; PeoplesBank customers tried to make withdrawals from People’s United accounts, and vice versa; a PeoplesBank customer inquired about a security breach at People’s United; and a People’s United customer drove by a PeoplesBank branch and entered, mistaking it for People’s United, though she also testified that she wasn’t paying attention and “felt like an idiot.” Two of these incidents occurred before People’s United began using its name in Massachusetts.
The court found that very little of the testimony proved actual confusion, because PeoplesBank was unable to show consumers’ state of mind. The only consumer to testify stated that she wasn’t paying attention, not that she was confused. Affiliation/identity wasn’t the only reason for these events. Consumers might have belived that they could unlock an ATM card where it locks or cash a check at any bank. The only events the court was persuaded showed actual confusion were the attempted deposits or withdrawals at the other party’s branch as well as the PeoplesBank customer’s concern over the People’s United security breach.
But, in order to obtain a PI, PeoplesBank needed to show that the proposed use of the mark would cause or increase confusion over the existing marketplace baseline. Witnesses testified, however, that consumers often request services from banks where they are not customers and get ‘confused’ between banks in the same area with obviously different names, from Bank of America to Florence Savings Bank. Likewise, many of the events occurred before People’s United started using its name in Massachusetts; PeoplesBank didn’t show that confusion increased after that. This was crucial to the request for an injunction, which is supposed to maintain the status quo; PeoplesBank couldn’t show that People’s Union’s planned rebranding will cause confusion above the current rate.
Essentially, the court applies the same standard to testimony about actual confusion that courts now do with consumer surveys: subtract the baseline/control level of confusion to get the amount caused by the similarity between two marks. I’ve just never seen it done with actual confusion before!
The court also thought that the parties’ long history of close proximity, with ads for both banks crossing the Massachusetts-Connecticut border, showed that over time people could distinguish them.
PeoplesBank also had a survey, but it backfired. Respondents were shown PeoplesBank’s mark followed by three other banks’ marks, then asked if any of the three later banks were “the same as” or “affiliated with” PeoplesBank. 32% of respondents thought the parties were the same or affliliated, but the court thought the survey was suggestive, creating a “demand effect” where consumers knew the surveyor was looking for affiliation. (Why didn’t the control take care of this? The court is silent.) The real problem was that respondents exhibited more confusion between PeoplesBank and “Bank of Western Massachusetts, division of People’s United Bank” than between PeoplesBank and “People’s United Bank.” So the proposed injunction was against a use that would be less confusing than the status quo. (And that actually makes sense—the “division of” language could easily combine with a poor memory of a People mark to cause consumers to think affiliation, whereas when there’s just a primary mark they may work harder to distinguish different People mark.)
In addition, PeoplesBank didn’t show commercial injury—no lost sales, accounts, business opportunities or even damage to goodwill and reputation. “None of the events presented to the Court evidenced confusion by consumers choosing where to bank or among providers of banking services. Defendant did not proffer confusion which might alter consumers’ behavior. Defendant simply did not make the necessary connection between confusion and possible negative commercial impact.”
Ultimately, actual confusion favored People’s United. The number of incidents was rare by comparison to the number of bank transactions engaged in each day. But crucially, PeoplesBank couldn’t show that People’s United’s use of its name and logo in Western Massachusetts would increase the existing, longstanding low-level confusion due to geographic proximity.
Also, after detailed evidence—People’s United’s expert testified that, before investing, 25% of consumers perform almost no research, and 20% perform almost none before borrowing—the court was convinced that, for most consumers, banking isn’t an impulse purchase, making confusion less likely. (What about that substantial minority? I guess they’re just out of luck.)
Even if PeoplesBank had done better, People’s United showed that the balance of hardships favored it. It was trying to become a single brand running one bank, and the ability to present a consistent brand was a significant draw for customers. People’s United had hired a tech company to design and run a single, uniform operating system for an estimated cost of $40 million. The new system can only generate documents like deposit statements with the People’s United name and logo. An injunction would interfere with this transition and might even halt it outside Western Massachusetts.