Wells
Fargo & Co. v. ABD Ins. & Financial Services, Inc., --- F.3d ---, 2014
WL 806385 (9th Cir. Mar. 3, 2014) (don't know how I missed this in March, but catching up now)
Opinion below denying a
preliminary injunction on Wells Fargo’s trademark infringement claim on
abandonment grounds,
reversed here. Wells Fargo sued ABD (New
ABD) for trademark infringement and false advertising. Wells Fargo bought Former ABD in 2007,
leading hundreds of Former ABD employees to join Wells Fargo; Wells Fargo
changed Former ABD’s name to Wells Fargo Insurance Services. However, Wells Fargo continued to display the
Former ABD mark on customer presentations and solicitations, to maintain the
abdi.com website and metatags, and to accept customer payments made to ABD. Members
of Former ABD left Wells Fargo in 2009, then launched New ABD in 2012, using
the same name, when they learned that Wells Fargo had not renewed the
registration of the Former ABD mark.
The
court of appeals held that the district court erred in its legal analysis and
thus abused its discretion on likelihood of success on the merits. First, the district court erred in failing to
consider the false advertising claim separately, concluding that it was
derivative of the trademark infringement claim.
But “the two claims are distinct and require the application of separate
tests.” There are five elements of a
false advertising claim, but only two (ownership and likely confusion) for a
trademark infringement claim. Though the court of appeals didn’t say more, one
could tease out the idea that false advertising can deal with certain claims
that should be channeled out of trademark law—not just comparative advertising,
but also claims based on material confusion caused by someone picking up
abandoned marks.
However,
the court of appeals also found that the district court abused its discretion by
misapplying the law in its abandonment analysis “when it considered evidence of
prospective intent to abandon the mark to determine whether Wells Fargo’s uses
were bona fide and in the ordinary course of business.” Abandonment requires discontinuance plus
intent not to resume use. Even a single
instance of use, made in good faith, defeats a claim of abandonment. Unless the use is actually terminated, the
intent not to resume use prong of abandonment is irrelevant—prospective intent
to abandon is meaningless.
The
district court therefore erred when it reasoned that Wells Fargo’s continued
uses of the ABD mark were not bona fide and in the ordinary course of trade
because such uses were “residual ... or in the context of a historical
background” given Wells Fargo’s rebranding efforts. The consideration of Wells Fargo’s intent to
rebrand ABD wrongly relied on prospective intent to abandon. Plus, the district court misconstrued what
could count as a “bona fide use in the ordinary course of trade,” which depends
on the totality of the circumstances.
Even a declining business can continue to benefit from goodwill until
its use ends. Uses in customer
presentations and solicitations “demonstrate[d] Wells Fargo’s business
calculation that it could continue to benefit from the goodwill and mark recognition
associated with ABD.” Thus, Wells Fargo
continued bona fide use and did not abandon the mark.
The
court of appeals continued by cautioning against weighing lack of evidence of
actual confusion decisively against a plaintiff at the preliminary injunction
stage. “ [A]t that point parties rarely
have amassed significant evidence of actual confusion.” Further, Wells Fargo could raise a false
affiliation claim on remand. (What this
means is unclear, but probably irrelevant given the abandonment holding.)
Finally,
giving a pro-plaintiff spin to Herb Reed,
the court of appeals directed the district court to revisit the issue of
irreparable harm, quoting only that case’s statement that “[e]vidence of loss
of control over business reputation and damage to goodwill could constitute
irreparable harm.”
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