Tuesday, February 12, 2019

better bank battle: false use of (R) can't support false advertising claim

San Diego County Credit Union v. Citizens Equity First Credit Union, No. 18cv967-GPC(RBB), 2019 WL 446475 (S.D. Cal. Feb. 5, 2019)

SDCCU sued CEFCU, its competitor in the credit union market, seeking a declaratory judgment of non-infringement and invalidity of the federally registered mark CEFCU. NOT A BANK. BETTER. (issued 2011) and the asserted common-law mark NOT A BANK. BETTER, as well as for false registration and unfair competition.  SDCCU itself has a 2014 federal registration for IT’S NOT BIG BANK BANKING. IT’S BETTER. Several third-party credit unions use similar trademarks such as “NOT A BANK – BETTER!”, “BETTER THAN A BANK”, and “IT’S NOT A BANK.” [We are running out of trademarks.]

SDCCU’s customers are primarily located in Southern California while CEFCU’s customers are primarily located in Peoria, Illinois and Northern California. [CEFCU bought a credit union in Northern California in 2008, but didn’t start advertising its mark outside Illinois until 2011.]  In early 2016, a CEFCU employee saw the SDCCU mark on a billboard in San Diego, and in May 2017, CEFCU filed a petition to cancel the SDCCU registration based on its registered and claimed common-law marks.

The complaint alleged that the CEFCU mark was more similar to the third party marks than to the SDCCU mark, and that if CEFCU asserted rights broad enough to encompass the SDCCU Mark, it therefore materially misrepresented to the USPTO that the CEFCU Mark was not confusingly similar to any of the third-party marks.  In the alternative, its confusion claim was unjustified.  Also, CEFCU allegedly uses ® on its common-law variant.

Under the Lanham Act, “Any person who shall procure registration in the Patent and Trademark Office of a mark by a false or fraudulent declaration or representation, oral or in writing, or by any false means, shall be liable in a civil action by any person injured thereby for any damages sustained in consequence thereof.” 15 U.S.C. § 1120. The alleged falsities were (1) lack of use in interstate commerce, given that it wasn’t using the mark outside Illinois when it declared the mark was being used in commerce and (2) lack of confusion with preexisting marks such as the “IT’S NOT A BANK” mark of Warren Federal Credit Union, “BETTER THAN A BANK” mark of ABNB Federal Credit Union and “NOT A BANK-BETTER!” mark of United 1st Federal Credit Union.

This was sufficiently pled on a motion to dismiss—whether there was actually use in commerce outside Illinois at the relevant time, or whether use in Illinois by a federally regulated credit union was sufficient for “use in commerce,” was not for the court to resolve on a motion to dismiss. Likewise, though SDCCU can’t assert others’ rights, it sufficiently alleged that the existence of those rights meant that CEFCU made a false statement in its registration application.

SDCCU also alleged damages in the form of company resources expended to fight the claim. The harm must be proximately caused by the fraudulent registration; CEFCU argued that its rights were not dependent on the date of the registration and that this dispute would be happening anyway, thus there was no proximate causation.  That again was a factual dispute not appropriate for a motion to dismiss.

The court also dismissed claims based on false use of ®.  As to the actually (but allegedly fraudulently) registered mark, use of ® was literally true; SDCCU’s remedy was to be found in §1120, not in a false advertising claim.  As to the unregistered mark, the use might be literally false, but a ® symbol didn’t relate to the “nature, characteristics, qualities or geographic origin” of CEFCU’s services, as required.

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