Plaid must face jury on PNC's TM/advertising claims, but has good laches/acquiescence argument

PNC Financial Services Gp. v. Plaid Inc., 2024 WL 3687956, No. 2:20-cv-1977 (W.D. Pa. Aug. 7, 2024)

PNC is “a large, diversified financial institution offering retail and wholesale banking services,” while Plaid connects cash payment and investment account applications like Venmo, Robinhood, and Coinbase with a user’s banks. This allows a user to input the username and password affiliated with their bank account to create the connection between the user’s bank and the fintech app so money can be transferred between them.

PNC interface, L; Plaid connection interface with PNC logo, R

sample Plaid bank selection workflow

PNC alleged that Plaid infringed its trademarks by replicating the authentic PNC log-on screen to get them to provide private financial information, allowing Plaid to collect their data. Plaid responded that PNC knew about this as early as 2017 and worked with Plaid to make it easier for PNC customers to connect to fintech apps. The relationship became hostile in 2019, when a third party allegedy got PNC customer information that had been obtained by Plaid and leaked it on the “Dark Web.” At that point, PNC blocked Plaid from accessing/linking PNC account information using Plaid Link software in fintech apps.

Plaid allegedly then presented PNC consumers who were trying to connect to fintech apps via Plaid Link with messaging screens, using allegedly confusing branding, that said, “we’re currently experiencing connectivity issues with this bank” and “PNC has made a change that prevents you from being able to link your accounts.” One such screen also provided a link to the CFPB website and advised such users that they could file a complaint against PNC about their lack of fintech app access with that federal enforcement agency, “which PNC says led to users (who were presumably PNC retail customers) filing complaints against PNC with the CFPB. Plaid’s messaging also encouraged PNC customers to change banks.” In late 2020, a new Plaid user interface finally propitiated PNC.

PNC sued for counterfeiting, infringement, and false advertising/unfair competition under federal and Pennsylvania law. This opinion denies summary judgment to everybody on everything they sought, including claims and defenses.

Counterfeiting is probably the most eye-opening charge. A jury could find that the marks used by Plaid were spurious, that is, substantially indistinguishable from PNC’s actual marks and suggesting a false origin. There were “subtle color differences,” but indistinguishability was a “hallmark” question of fact.  And, interestingly, counterfeiting has to cover the “same” goods and services as the registrant’s, and the court considered it a jury question whether this was so. A jury could rationally conclude that Plaid and PNC do not offer the same financial services, given that “Plaid is not a bank.” Its customers are primarily fintech apps, not bank account holders. However, a reasonable jury could also find that Plaid offers the same “financial services” as PNC, or at least that both offer “financial services” covered by PNC’s registrations, especially given statements Plaid made to the PTO that it offered financial services. (The court did find that there was no judicial estoppel preventing Plaid from offering a defense that the services weren’t the “same,” given the gray areas involved.) A jury could also conclude that even if bank customers aren’t Plaid customers, they’re Plaid’s target audience—although how that matches up with the counterfeiting requirement I don’t know.

Trademark claims: The court declined to do a shortcut around the likely confusion factors despite the similarity of the uses and related services. (As is so common these days, the real issue is affiliation confusion, which also matters.)

The “consumer care” factor weighed against Plaid because of evidence that “Plaid Link’s entire system was designed to make consumers feel more comfortable in providing Plaid their banking information,” e.g. “[W]e use the bank logo and color scheme because it has a significant impact on conversion. It gives users more familiarity and trust in completing the linking flow.” Although banking may be “high engagement,” the evidence of confusion in the survey was “rather high (perhaps surprisingly high) in the control condition” at 38%; Plaid’s own statements indicated that using the logos made consumers more “comfortable” “and thereby perhaps less likely to be careful with their banking information”; and Plaid’s own experts “emphasize[d] that Plaid Link’s design structure promotes near-autonomous consumer decision making.”

But other consumer-based factors were up for grabs. A jury could readily conclude that “Plaid and PNC provide far different services and market to very different customers.” [Part of the issue here is: who’s confused about what? Plaid’s customers aren’t likely to be confused.]

Length of time/actual confusion: Record evidence “unconnected to Plaid’s messaging on the heels of the 2019 Cybersecurity Event” was “relatively sparse.” A consumer complaint cited by PNC might be relevant to false advertising, but didn’t obviously show trademark confusion:  

Venmo says they have lost connection with my bank – sounds like Venmo’s problem. I attempt to reconnect. Then the ‘Plaid’ screen appears. (As noted, I’m sure it’s safer to have this extra level of security – when it functions). Then the PNC (?) ‘Enter your credentials’ screen appears; when I enter my username and password the PNC screen says ‘the username you provided was incorrect.’ I have called PNC to confirm my username, and it’s the same one that works on the pnc.com site. So what next?

Maybe the complaining consumer believed that Plaid is a security feature of PNC, but “this consumer complaint could also be read as saying that Plaid is an independent software service that provides another level of security. More importantly, there is minimal other record evidence of actual confusion based exclusively off of Plaid’s use of PNC’s marks.” There was the survey, but a jury could find in Plaid’s favor.

Plaid’s purposes— “consumer ease of use and bank identification”—were not bad faith as a matter of law. However, bad faith isn’t required, only “intentional conduct” [what can this possibly mean? It seems to turn knowledge into bad intent]. And “statements from Plaid’s CEO regarding Plaid’s efforts to conceal its use of bank marks from the banks supports the conclusion that Plaid’s intent was willing and voluntary.” That is, the CEO told employees to make sure that they did not send an email announcing the addition of over 6,000 new bank logos to Plaid Link to the banks themselves. “A jury could readily conclude that Plaid wanted to guise itself in the marks of other banks, including PNC.”

PNC has a stake in another company, Akoya, designed to compete with Plaid. “[W]hile a jury could reasonably conclude that PNC is likely to indirectly compete with Plaid and that Plaid’s use of PNC’s marks harms PNC’s hypothetical future efforts in the account linking and data aggregation field, a jury could also conclude that PNC is prosecuting this case less to foster its own expansion plans and more to undermine Plaid before advancing its competing product.”

False advertising: This claim was based on Plaid’s messaging screens blaming PNC after PNC implemented changes that prevented users from using Plaid to link their PNC accounts with their chosen fintech apps. Plaid encouraged consumers to report PNC to the CFPB, and Plaid customer service representatives told those customers to switch banks.

Surprisingly, the court found that these statements could be “intentionally misleading,” because the statements “implicitly place the culpable fault on PNC for the measures it took to protect its customers’ data after the 2019 Cybersecurity Event. … [A] jury could conclude that Plaid did not tell PNC customers the full story, namely that there had been a security breach involving Plaid by which PNC customers’ private data was leaked on the ‘Dark Web.’” And the reference to the CFPB “could also be found to imply that PNC’s conduct was at least wrongful, if not illegal.” [But the precedents usually agree that statements by laypeople about violations of laws that are arguable/not yet decided are not factual and therefore can’t violate the Lanham Act. Unless Plaid was under a duty to disclose the security incident, it’s usually ok to give only information that favors yourself.] And PNC identified “multiple communications from consumers to the CFPB regarding their dissatisfaction with PNC after Plaid’s messaging screens went live,” such as “PNC has blocked access to Plaid, which allows me to transfer funds in and out of my account. It’s extremely inconvenient and I will have to switch banks because of it.” But that doesn’t demonstrate deception! That was true! Still, the court found this to be evidence of materiality.

Nor could Plaid win summary judgment on harm. A jury could find harm to goodwill.

PNC didn’t manage to kick out laches/acquiescence as a defense. PNC delayed four years before objecting, and another before suing, “despite evidence that shows that PNC worked with Plaid during much of that four-year period and had access to demos that showed PNC what the Plaid Link user interface looked like.” Prejudice was a closer question; it may have run up the potential damages, and Plaid could argue that to the jury. Acquiescence was similar: there was “plenty of record evidence that suggests that PNC made a thoughtful decision to continue working with Plaid despite having access to Plaid’s allegedly infringing user interface, at least in demo version, such that PNC conveyed implied consent to Plaid to use PNC marks as it did.” A jury could find this was more than mere inaction, especially given the participation of PNC senior executives.