Bank of No Confusion: BNC National Bank fails to enjoin Bank of North Carolina rebranding

BNC Bancorp v. BNCCORP, Inc., 2016 WL 3365428, No. 15-cv-793 (M.D.N.C. Jun. 16, 2016)

Bank of North Carolina sought a declaratory judgment against BNC National Bank to settle rights in the BNC mark, and BNC National Bank sought a preliminary injunction to keep Bank of North Carolina from rebranding its North Carolina operations from “Bank of North Carolina” to “BNC Bank.”

Bank of North Carolina, a commercial bank incorporated and chartered under the laws of North Carolina, opened its doors in North Carolina in 1991.  In 2010, it opened branches in South Carolina and Virginia. In 2011, Bank of North Carolina it registered a BNC BANK word and design mark in connection with banking services:

In South Carolina and Virginia, Bank of North Carolina is known as “BNC Bank,” and it announced plans to rebrand its North Carolina operations from “Bank of North Carolina” to “BNC Bank” as well.

BNC National Bank is a federally chartered bank with branches in North Dakota, Minnesota, and Arizona. It adopted its current name in 1995. In December 2014 and January 2015, BNC National Bank filed federal trademark applications for the word marks BNC and BNC NATIONAL BANK, in connection with banking and financial services. Bank of North Carolina’s opposition was suspended for this case.

BNC National Bank, the court concluded, couldn’t show likely success as to its prior ownership of a valid mark in North Carolina.  Use requires deliberate and continuous use.  BNC National Bank’s evidence was as follows: by 1996, it had three general banking accounts linked to addresses in Norh Carolina.  In 2001, it had 13 such accounts.  In 2016, it had 54 such accounts.  BNC National Bank closed its first mortgage loan in North Carolina in 2008 and consistently closed mortgage loans in the state every year thereafter. BNC National Bank also had at least one wealth management customer in North Carolina in 2007.  BNC National Bank argued that it used the BNC marks in North Carolina when it communicates with its North Carolina customers through account statements, notices, brochures, and business cards, delivered through mail, email, and BNC National Bank’s website, as well as its mobile banking application. The earliest communication BNC National Bank may have mailed to North Carolina was a brochure informing customers of BNC Bank Line, a free service that allows customers to make account inquiries and transactions over the phone, mailed in either December 1995 or January 1996.

  

Bank of North Carolina claimed to have used the BNC mark “[a]t least as early as 1995.” Shortly after opening in 1995, it introduced BNC Free (a free checking account) and BNC Mortgage (a small mortgage business). In September 1992, when Bank of North Carolina moved from a temporary location to its headquarters, a VP testified that he remembered hanging BNC Free and BNC Mortgage banners on the front of the new building. BNC Free and BNC Mortgage were also part of the marketing for a new branch opened in 1995.

Given this evidence, BNC National Bank didn’t meet its burden of demonstrating it was likely to succeed in proving ownership of the BNC marks in North Carolina. The evidence as of 1996 boiled down to three general banking accounts with North Carolina addresses plus regular communications with customers bearing the BNC marks.  But BNC National Bank presented no evidence that its North Carolina customers actually received communications bearing the marks. Furthermore, Bank of North Carolina’s evidence called into question whether even 1996 would suffice to give BNC National Bank priority.  The court also questioned whether BNC National Bank’s use of the marks was either deliberate or continuous. BNC National Bank didn’t know how it has acquired customers in North Carolina, or whether it had any customers in North Carolina in the years immediately following 1996.  “This showing does not suggest deliberate and continuous use; rather, it appears more sporadic, casual, and transitory.”

In a footnote, the court noted that Belmora didn’t require ownership of trademark rights to bring a §43(a)(1) claim.  However, Belmora emphasized that it was “not a trademark infringement case,” and this is.

Then, even if BNC National Bank could claim priority, the court found that it couldn’t show likely success on confusion.  When evaluating likelihood of confusion, “it is important to remember that ‘trademark infringement protects only against mistaken purchasing decisions and not against confusion generally.’ ”

Similarity of the marks weighed in favor of finding confusion, since BNC was the dominant portion of each mark, and the parties directly competed, also favoring a confusion finding.  However, BNC National Bank didn’t show that its marks had any strength in North Carolina, and there was no intent to confuse, weighing against likely confusion.

BNC National Bank focused on evidence of actual confusion.  However, “[i]f there is a very large volume of contacts or transactions which could give rise to confusion and there is only a handful of instances of actual confusion, the evidence of actual confusion may receive relatively little weight.”

BNC National Bank claimed that, from July 2015 to March 2016, its employees kept track of over one hundred instances of alleged confusion. The court found many of these entries to be incomprehensible.  “Several of these entries state only ‘N/A.’ Others include short phrases like ‘North Carolina’ or ‘Looked on internet,’ which convey little information and require the Court to speculate as to what happened in each instance.”  But they seemed to involve instances where a Bank of North Carolina customer mistakenly called BNC National Bank or visited BNC National Bank’s website.

Also, a Twitter user posted a tweet complaining that “BNC has the worst online banking setup ever.” She tagged BNC National Bank in her post, but clarified that she was talking about “BNC National Bank located in SC.” A vendor emailed Bank of North Carolina but mistakenly copied BNC National Bank employees on the email. A professional auditing company seeking to verify confidential information related to a Bank of North Carolina customer mailed its request to BNC National Bank instead. And a South Carolina resident applied on BNC National Bank’s website to open a checking account, thinking she was applying to open an account with Bank of North Carolina.

Was this the type of confusion against which the Lanham Act was designed to protect?  The Fourth Circuit has cautioned, “trademark infringement protects only against mistaken purchasing decisions and not against confusion generally.” When there are mistaken calls and letters from people attempting to reach a different party with a similar name, there still needs to be evidence linking “the confusion evinced by the calls to any potential or actual effect on consumers’ purchasing decisions.”  There wasn’t any here:

While these individuals contacted the wrong bank, there is no evidence they were confused about the source of their banking services. That is, while these individuals may have believed BNC National Bank’s phone number, website, and Twitter handle belonged to Bank of North Carolina, there is no indication that they believed they were banking with BNC National Bank, rather than Bank of North Carolina. Similarly, there is no indication that the vendor and professional auditing company emailed or mailed information meant for Bank of North Carolina to BNC National Bank under the belief they were doing business with BNC National Bank. At most, this evidence suggests perhaps a lack of careful attention on the part of the companies, not confusion in the minds of consumers.

The only relevant evidence was the individual in South Carolina who attempted to open a checking account with Bank of North Carolina by submitting an application on BNC National Bank’s website. “This evidence may suggest a mistaken purchasing decision.”  But, given that both banks had opened thousands of bank accounts, a single instance of confusion carried little weight. “Quite simply, there is little indication that consumers are likely to be confused about ‘the origin of the goods or services’ offered by each bank.”  [Another instance of a court shrinking the concept of confusion to reach a result it considers just. I have no quibble with this result! But compare the broad concept of confusion over affiliation/association recently reemphasized by the Second Circuit.]