2000 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-13-2000

Commerce Natl Ins v. Commerce Ins Agcy

Precedential or Non-Precedential:

Docket 99-5117

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Recommended Citation

"Commerce Natl Ins v. Commerce Ins Agcy" (2000). 2000 Decisions. Paper 129.

http://digitalcommons.law.villanova.edu/thirdcircuit_2000/129
Filed June 13, 2000 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 99-5117 

COMMERCE NATIONAL INSURANCE SERVICES, INC.; 

COMMERCE BANCORP, INC. 

v. 

COMMERCE INSURANCE AGENCY, INC.; COMMERCE 

INSURANCE AGENCY OF SOUTH JERSEY, INC. 

(District of New Jersey (Camden) Civil 97-4600) 

COMMERCE INSURANCE AGENCY, INC. 

v. 

COMMERCE NATIONAL INSURANCE SERVICES, INC. 

(District of New Jersey (Camden) Civil 97-4750) 

Commerce Insurance Agency, Inc., and Commerce 

Insurance Agency of South Jersey, Inc., 

 Appellants 

On Appeal From the United States District Court 

For the District of New Jersey 

District Judge: Honorable Joseph E. Irenas 

Argued: December 8, 1999 

Before: SLOVITER, NYGAARD, and ROSENN, 

Circuit Judges. 

(Filed: June 13, 2000) 
 John F. Ward (Argued) 

 Ward & Olivio 

 708 Third Avenue 

 New York, New York 10017 

 Kenneth L. Winters 

 John G. Gilfillan, III 

 Carella, Byrne, Bain, Gilfillan, 

 Cecchi, Stewart & Olstein 

 6 Becker Farm Road 

 Roseland, NJ 07068 

 Counsel for Appellants 

 Laurence S. Shtasel (Argued) 

 Dennis P. McCooe 

 Louis Charles Shapiro 

 Blank, Rome, Comisky & McCauley 

 LLP 

 One Logan Square 

 Philadelphia, PA 19103 

 Counsel for Appellees 

OPINION OF THE COURT 

ROSENN, Circuit Judge. 

In an era of aggressive commercial competition, this 

appeal raises unsurprising, although important, issues of 

trademark confusion in the banking and insurance 

industries. Commerce Insurance Agency, Inc. (CIA), a small 

corporation engaged in the insurance business in Southern 

New Jersey for over thirteen years, sought an injunction in 

the United Sates District Court for the District of New 

Jersey prohibiting Commerce National Insurance Services 

(CNIS), a recently formed corporation, from using the 

"Commerce" mark to promote its insurance business. CNIS 

is a wholly owned subsidiary of Commerce Bancorp, Inc. 

(CBI) which had used the "Commerce" mark in connection 

with its banking services prior to CIA's adoption of the 

mark. The District Court denied CIA relief on the ground 

that CIA could not assert rights to the mark against either 

 2 
CBI or CNIS because of CBI's prior use of the mark. CIA 

timely appealed. We will reverse.1 

I. 

A. 

Commerce Bancorp, Inc. commenced operations in 1973

with the opening of a single branch in Marlton, New Jersey. 

In December of 1974, it began offering credit life insurance 

and credit disability insurance in connection with its 

lending services. By 1983, CBI had opened six branches 

and controlled more than $100 million in assets. By the 

time this litigation was commenced, CBI had opened more 

than fifty branches and exercised control over nearly $3 

billion in deposits. Since January of 1973, CBI has

promoted its banking services under the Commerce mark. 

Commerce Insurance Agency commenced its insurance 

business in April of 1983, with a single office in Cedar 

Brook, New Jersey. After five years of growth, CIA moved to 

larger offices in Sicklersville, New Jersey. Since its 

establishment in 1983, CIA has promoted its insurance 

services under the "Commerce" mark. 

From 1983 until 1996, CBI and CIA coexisted amicably 

in Southern New Jersey despite their use of the same mark 

to identify their respective services. CIA opened business 

accounts in its name with CBI, secured lines of credit from 

CBI, and rented a safe deposit box from it. CIA and CBI 

also referred customers to each other during this span of 

years. CIA's principal, Robert Loser, established a"good" 

relationship with a CBI branch manager and a "personal" 

relationship with CBI's regional vice president. This 

_________________________________________________________________ 

1. We have appellate jurisdiction under 28 U.S.C. 1291 and review the 

District Court's factual findings for clear error. See American Home 

Prods. Corp. v. Barr Lab., Inc., 834 F.2d 368, 370 (3d Cir. 1987). Clear 

error exists when giving all due deference to the opportunity of the trial 

judge to evaluate the credibility of witnesses and to weigh the evidence, 

we are left with a definite and firm conviction that mistake has been 

committed. See Versa Prods. Co. v. Bifold Co. , 50 F.3d 189, 209 (3d Cir. 

1995). 

 3 
relationship led to an invitation from CBI requesting CIA to 

participate in CBI's 5th Annual Commerce Golf Classic. CIA 

accepted the invitation, and CBI printed CIA's name as a 

contributor in CBI's annual program booklet as well as on 

a sign posted at the tournament. Throughout the thirteen 

year period between 1983 and 1996, neither CIA nor CBI 

were aware that anyone believed that the companies were 

business affiliates of each other. 

On July 25, 1996, CBI announced its intention to enter 

into the general insurance services industry. Within one 

month of that announcement, CIA began taking steps 

designed to shore up its position for a potential trademark 

dispute. On August 26, 1996, CIA filed a service mark 

registration application with the United States Patent and 

Trademark Office seeking federal registration of the 

"Commerce" mark for insurance services. The application 

was granted. On August 28, 1996, CIA filed a service mark 

registration application with the New Jersey Secretary of 

State (the "Secretary") seeking state registration of the 

business name "Commerce Insurance Agency." The 

Secretary registered the name on September 3, 1996. On 

the same day, CIA filed a service mark registration

application with the Secretary seeking registration of the 

business name "Commerce National Insurance Agency."

The Secretary registered the name on September 11, 1996. 

By November of 1996, CBI had acquired two existing 

insurance agencies from which CBI formally established 

CNIS. At this time, CNIS began promoting its services 

under the names "Commerce National Insurance Services" 

or "Commerce Insurance." In December of 1996, CBI 

purchased two additional insurance agencies and added 

them to CNIS. These additions made CNIS the 58th largest 

insurance agency in the United States, having a customer 

base of more than 38,000 individuals and businesses and 

maintaining more than $150 million of insurance coverage. 

Instances of confusion between CIA and CNIS began to 

develop in 1997. In the early part of that year, CIA 

contacted an insurance carrier to track down a missing 

policy. On the assumption that CIA had been acquired by 

CBI, the carrier asked what CIA's agency code number had 

been prior to its purchase by CBI. Later, in May of that 

 4 
year, CNIS and CIA began to receive each other's mail. CIA 

also began to receive telephone calls intended for CNIS. 

When CIA brought these instances of confusion to the 

attention of CNIS in June of 1997, CNIS denied the 

existence of any confusion. 

B. 

Shortly thereafter, however, CBI and CNIS filed a petition 

for cancellation of CIA's federal registration of the 

"Commerce" mark. CBI and CNIS also filed a complaint in 

the United States District Court contending, inter alia, that 

CIA's use of the Commerce mark infringed CBI's rights in 

the mark. CIA responded to the actions of CBI and CNIS by 

commencing an action of its own. In its complaint, CIA 

alleged, inter alia, that CNIS's use of the Commerce mark 

infringed CIA's rights in that mark. 

The District Court consolidated the two actions, and the 

parties filed applications for preliminary relief based solely 

on the federal trademark issue.2 CBI and CNIS sought 

preliminarily to enjoin CIA from using the Commerce mark 

to promote its insurance services. CIA, in turn, sought a 

preliminary injunction prohibiting CNIS from promoting its 

insurance services under the Commerce mark. After 

reviewing the parties' briefs and hearing oral argument, the 

District Court issued an opinion and order in which it 

declined to grant either CBI's and CNIS's request 

preliminarily to enjoin CIA from using the Commerce mark 

or CIA's request preliminarily to enjoin CNIS from using the 

Commerce mark. 

In reaching its decision, the District Court first 

determined that CBI's rights in the Commerce mark were 

senior to those of CIA. The District Court concluded that, 

as of 1983, the time CIA began its use of the Commerce 

mark, CBI had established secondary meaning in the 

Commerce mark. See Commerce Nat'l Ins. Servs. v. 

Commerce Ins. Agency, 995 F. Supp. 490, 499 (D.N.J.

_________________________________________________________________ 

2. Although the parties do not clearly identify the statute on which they 

base their claims, it appears that they charge a violation of the Lanham 

Act, 15 U.S.C. S 1125. 

 5 
1998). Additionally, the Court found that CIA's use of the 

Commerce mark in 1983 was likely to create confusion, 

because reasonable consumers dealing with CIA "would 

have assumed that they were dealing with CBI or some CBI 

affiliate or offshoot." Id. at 499-501. Accordingly, the 

District Court concluded that CBI's rights to the Commerce 

mark were senior to those of CIA and that CBI's rights to 

the mark "encompassed" both the banking and insurance 

services industries. See id. at 501. 

After reaching this conclusion, the District Court 

proceeded to determine whether CBI was entitled to 

preliminarily enjoin CIA from using the Commerce mark. In 

addressing this issue, the Court reasoned that CBI's 

fourteen year delay in enforcing its rights constituted 

laches and that therefore CBI was not entitled to the 

injunctive relief it sought. See id. at 503. Nevertheless, the 

District Court recognized that although CBI was estopped 

from invoking its right to prevent CIA from using the mark, 

it had not lost its rights in the mark altogether. See id. at 

505. Accordingly, the Court held that although CBI was not 

entitled to a preliminary injunction against CIA, CBI's 

wholly owned subsidiary, CNIS, could not be preliminarily 

enjoined from using the Commerce mark by CIA. See id. 

C. 

Approximately eleven months later, the parties returned 

to the District Court seeking a final disposition of their 

claims. They entered into a stipulation requesting the 

District Court to enter a final judgment based on: (1) the 

record created in connection with the parties' cross 

applications for preliminary relief; (2) their respective expert 

reports (but without any testimony from either expert); and 

(3) supplemental briefs directed to the admissibility of those 

reports. The District Court obliged, and on January 20, 

1999, it issued a final judgment in which it again declined 

to grant any party's request for injunctive relief with respect 

to the Commerce mark. 

 6 
II. 

On appeal, CIA contends that the District Court erred in 

concluding that CBI, by virtue of its use of the Commerce 

mark within the banking industry, acquired rights in the 

mark that extend to the insurance services industry. More 

specifically, CIA argues that the District Court committed 

clear error in finding that as of 1983 CBI had established: 

(1) secondary meaning in the Commerce mark within the 

insurance services industry; (2) ownership of the Commerce 

mark within the insurance services industry; and (3) that 

CIA's use of the Commerce mark was likely to create

confusion in the minds of reasonable consumers. CIA

requests this Court to reverse these findings and remand 

the case for consideration of its claim for injunctive relief 

against CNIS.3 

III. 

"The law of trademark protects trademark owners in the 

exclusive use of their marks when use by another would be 

likely to cause confusion." Interpace Corp. v. Lapp, Inc., 721 

F.2d 460, 462 (3d Cir. 1983). A claim of trademark 

infringement is established when the plaintiff proves that: 

(1) its mark is valid and legally protectable; (2) it owns the 

mark; and (3) the defendant's use of the mark to identify its 

goods or services is likely to create confusion concerning 

the origin of those goods or services. See Opticians Ass'n of 

Am. v. Independent Opticians of Am., 920 F.2d 187, 192 (3d 

Cir. 1990). 

If the mark at issue is federally registered and has 

become incontestible, then validity, legal protectability, and 

ownership are proved. See Ford Motor Co. v. Summit Motor 

Prods., 930 F.2d 277, 292 (3d Cir. 1991). If the mark has 

not been federally registered or, if registered, has not 

achieved incontestability,4 then"validity depends on proof 

_________________________________________________________________ 

3. CIA also requests that the case be remanded for consideration of its 

claim for damages. However, on the record before us, there seems to be 

no evidence as to the amount of damages CIA sustained. 

4. A mark becomes incontestible after the ownerfiles affidavits stating 

that the mark has been registered, that it has been in continuous use for 

 7 
of secondary meaning, unless the unregistered or 

contestable mark is inherently distinctive." 5 Id. A plaintiff 

must establish secondary meaning in a mark at the time 

and place that the defendant began use of the mark. See 

Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225, 

1231 (3d Cir. 1978); J. Thomas McCarthy, McCarthy on 

Trademarks and Unfair Competition S 15:4 (4th ed. 1997) 

[hereinafter "Trademarks"]. 

Secondary meaning exists when the mark "is interpreted 

by the consuming public to be not only an identification of 

the product or services, but also a representation of the 

origin of those products or services." Scott Paper Co. at 

1228. In general, it is established through extensive 

advertising which creates in the minds of consumers an 

association between the mark and the provider of the 

services advertised under the mark. See id. Under certain 

circumstances, a mark "can develop secondary meaning as 

to goods or services to which the mark has not been

applied." Id. The rationale for extending protection of a 

mark into a noncompeting market are the potential dangers 

that: "(1) the reputation of the holder of the mark may be 

tarnished or (2) the user of an infringing mark may be 

attempting to benefit from the general goodwill developed 

by the holder of the protected mark." Id. 

Although there are numerous cases discussing secondary 

meaning, there is not yet a consensus as to its specific 

elements. See Ford Motor Co., 930 F.2d at 292. A nonexclusive list of factors which may be considered includes: 

(1) the extent of sales and advertising leading to buyer 

association; (2) length of use; (3) exclusivity of use; (4) the 

fact of copying; (5) customer surveys; (6) customer

_________________________________________________________________ 

five consecutive years subsequent to registration, that there is no 

pending proceeding contesting the owner's rights to registration, and 

that there has been no adverse decision concerning the registrant's 

ownership or right to registration. See 15 U.S.C. SS 1058, 1065; Fisons 

Horticulture, Inc. v. Vigoro Indus., 30 F.3d 466, 472 n. 7 (3d Cir. 1994). 

5. A mark is inherently distinctive if it may be fairly characterized as 

arbitrary, fanciful, or suggestive. See Ford Motor Co., 930 F.2d at 292 n. 

18. Neither CBI, CNIS, nor CIA contends that the Commerce mark is 

inherently distinctive. 

 8 
testimony; (7) the use of the mark in trade journals; (8) the 

size of the company; (9) the number of sales; (10) the 

number of customers; and, (11) actual confusion. See id. 

"With respect to ownership of an unregistered mark, the 

first party to adopt a mark can assert ownership so long as 

it continuously uses the mark in commerce." Ford Motor 

Co., 930 F.2d at 292. However, where a senior user of a 

mark later expands into another industry and finds an 

intervening junior user, priority in the mark in the second 

industry depends on whether the senior user would 

normally or reasonably have been expected to expand into 

that industry. See J. Wise and Sons Co. v. W. E. Bassett 

Company, 462 F.2d 567, 569 (C.C.P.A. 1972). This, in turn, 

depends on whether the nature of the industries was such 

that purchasers would reasonably expect the services 

rendered by these industries to originate from a common 

source. See id. at 569; see also McCarthy, Trademarks, 

S 16:5; Volkswagenwerk Aktiengessellschaft v. Wheeler, 814 

F.2d 812, 815 (1st Cir. 1987). 

In addition to establishing validity and ownership,"a 

plaintiff must also prove likelihood of confusion, which is 

said to exist `when the consumers viewing the defendant's 

mark would probably assume that the product or service it 

represents is associated with the source of a different 

product or service identified by a similar mark.' " Ford 

Motor, 930 F.2d at 292 (quoting Scott Paper Co., 581 F.2d. 

at 1229). The likelihood of confusion analysis requires the 

evaluation of a number of factors including: (1) the degree 

of similarity between the owner's mark and the alleged 

infringing mark; (2) the strength of the owner's mark; (3) 

the price of the goods and other factors indicative of the 

care and attention expected of consumers when making a 

purchase; (4) the length of time defendant has used the 

mark without evidence of actual confusion arising; (5) the 

intent of the defendant in adopting the mark; (6) the 

evidence of actual confusion; (7) whether the goods, though 

not competing, are marketed through the same channels of 

trade and advertised through the same media; (8) the 

extent to which the targets of the parties' sales efforts are 

the same; (9) the relationship of the goods in the minds of 

the public because of the similarity of function; (10) other 

 9 
facts suggesting that the consuming public might expect 

the prior owner to expand into the defendant's market. See 

Scott Paper, 589 F.2d at 275. 

IV. 

We now turn to the District Court's specific findings of 

fact with respect to secondary meaning, ownership, and 

likelihood of confusion. 

A. 

After concluding that CBI's use of the "Commerce" mark 

"is not inherently distinctive and does not have great 

conceptual strength," the District Court found that the 

mark "does have substantial marketplace recognition value 

in New Jersey." Commerce Nat'l Ins. Servs. , 995 F.Supp. at 

499. In elaborating on this point, the Court continued: 

 Consumers viewing the term "Commerce" in front of a 

 bank, in connection with banking more generally, or in 

 a headline or article in a newspaper business section 

 may well assume they are dealing with CBI. Still, given 

 the frequency with which consumers see the term 

 "Commerce" -- and similar marks such as 

 "Commercial" -- they likely have come to recognize that 

 different goods and services identified by the term 

 "Commerce" mark may have different origins. On 

 balance, this Court concludes that the "Commerce" 

 mark, by virtue of its marketplace recognition, was 

 fairly strong in 1983 -- when CIA was founded-- and 

 is stronger today. It will be protected in connection 

 with banking and financial services. It also will be 

 protected in connection with some products and 

 services which are closely related to banking and 

 financial services in the minds of consumers. 

Id. 

Although the Court never specifically labeled the above 

rationale as its secondary meaning analysis, the parties 

agree that the language reflects the District Court's findings 

in this regard. The parties disagree, however, over the 

soundness of those findings. Naturally, CBI argues that 

 10 
they are firmly supported by the evidence of record; CIA 

argues to the contrary. 

We believe that CIA has the more credible position. In our 

view, CBI failed to produce a sufficient quantum of evidence 

from which the Court could reasonably conclude that CBI 

had established secondary meaning in the "Commerce"

mark within the general insurance services industry as of 

1983, the year in which CIA was established. 

CBI offered no evidence as to the extent to which it had 

promoted the "Commerce" mark by 1983. The only specific 

figure provided in the record involves the year of 1996, 

thirteen years later, when CBI claims to have spent more 

than $4 million to promote its services under the 

"Commerce" mark. The amount of money spent promoting 

the mark after 1983, however, is irrelevant. See Scott Paper 

Co., 589 F.2d at 1231; McCarthy, Trademarks , S 15:4. CBI 

attempts to divert attention from this irrelevant fact by 

pointing to a sentence in the District Court's opinion which 

states: "CBI has promoted the `Commerce' mark . . . widely 

through customer services, promotional materials, 

advertisements, and community service activities." 

Commerce Nat'l. Ins. Servs., 995 F. Supp. at 494. That 

statement, however, does not demonstrate that CBI had 

promoted the "Commerce" mark before 1983. Moreover,

even if it were so intended, it would be clearly erroneous 

because there is no evidence of record to support such a 

finding. 

CBI's proof as to secondary meaning was deficient in 

other respects as well. First, CBI was unable to produce a 

single instance of actual confusion between it and CIA. The 

only evidence of actual confusion in this case relates to the 

dispute between CIA and CNIS. Although evidence of actual 

confusion is but one factor in the secondary meaning 

analysis, see Ford Motor Co., 930 F.2d at 292, CIA's and 

CBI's harmonious coexistence in the same geographical 

area for thirteen years most certainly cuts against CBI's 

claim to secondary meaning within the insurance services 

industry. Second, CBI offered no evidence to demonstrate 

that trade journals or other publications referred to it as 

"Commerce" in 1983. Instead, CBI offered two newspaper 

articles published in 1996. Although those articles do refer 

 11 
to CBI as "Commerce," they do not aid in determining 

whether CBI was commonly identified by consumers as

"Commerce" during the time period relevant to these

actions. 

CBI also makes much of the "fact of copying" (i.e. the fact 

that CIA also uses the "Commerce" mark in its business 

name), but there is no evidence that CIA intended to leach 

off the goodwill of CBI by appropriating its mark. To the 

contrary, CIA limited the mark's use to general insurance 

services, a use to which CBI consciously acquiesced for 

thirteen years. Moreover, as noted by the District Court, the 

"Commerce" mark is not particularly distinctive. It is a 

common term used nationally in connection with a variety 

of businesses, and is even prominently embedded in our 

federal constitution. CIA's election to use such a 

commonplace term in naming its insurance agency is no 

more evidence of copying than was CBI's choice of the 

mark. At most, it is only minimally probative of whether 

CBI established secondary meaning in the "Commerce"

mark in 1983. 

CBI also points to a recent customer satisfaction survey 

as evidence supportive of the District Court's finding that 

the mark achieved secondary meaning. However, CBI's

reliance on that survey is misplaced because the survey is 

wholly irrelevant to whether CBI established secondary 

meaning in the "Commerce" mark as of 1983. First, based 

on the recency of the survey, it follows that it is not 

particularly probative of customer views in 1983. Second, 

and more importantly, customer surveys and customer

testimony are relevant to the secondary meaning inquiry 

only insofar as they are probative of the strength of the 

"Commerce" mark in the collective consumer 

consciousness. The satisfaction of customers with CBI's 

services does little to demonstrate that when customers see 

the word "Commerce" they associate it with CBI. 

Finally, CBI also argues that the District Court did not 

clearly err in finding secondary meaning because at the 

time CIA began using the "Commerce" mark, CBI had 

already been using the mark for ten years; CBI's use of the 

mark was exclusive in the New Jersey service area with 

respect to banking; and, CBI was a relatively large bank 

 12 
controlling over $100 million in assets. Although this 

evidence is probative of secondary meaning, it nevertheless 

is insufficient to support a finding of secondary meaning. 

CBI is attempting to establish secondary meaning in the 

non-competing insurance services industry, not the 

banking industry. Moreover, CBI is also attempting to 

establish rights to a commonplace, descriptive term used by 

a variety of businesses in a variety of contexts. In these 

circumstances, the evidentiary bar must be placed 

somewhat higher. See McCarthy, Trademarks, S 15:28.

( "[A]s a general rule of thumb, the more descriptive the 

term, the greater the evidentiary burden to establish 

secondary meaning.") 

CBI offered no evidence that trade journals or other 

publications referred to it as "Commerce" in 1983. The 

record likewise reveals not a single CBI customer who ever 

confused CIA with CBI. Nor does the record contain any 

evidence as to the extent of CBI's promotional and 

advertising activities prior to 1983. In the absence of any 

evidence on these matters, CBI's status as a relatively large 

bank is insufficient to support the finding that CBI 

established secondary meaning in the Commerce mark with 

respect to the general insurance services industry.

B. 

Turning now to the District Court's determinations with 

respect to ownership and likelihood of confusion, it found 

that CBI's rights in the Commerce mark were senior to 

those of CIA because CIA's use of the mark, as of 1983, 

created a likelihood of confusion. In so finding, it appears 

that the District Court conjoined its analysis of ownership 

with its analysis of likelihood of confusion. Although these 

are distinct elements of a trademark infringement claim, 

the District Court's choice not to separate them is of little 

consequence because the findings turn on substantially the 

same evidence. See McCarthy, Trademarks S 16:5 (noting 

that when a senior user of a mark expands into a second 

service industry and finds an intervening junior user of the 

mark, ownership in the second industry is determined by 

whether the expansion is "natural" in that customers would 

have been confused as to source or affiliation at the time of 

 13 
the intervening user's appearance). Nevertheless, because 

we believe the evidence presented by CBI insufficient to 

demonstrate a likelihood of confusion, we conclude that the 

Court's finding as to both of these elements was clear error. 

The District Court appears to have rested its finding of a 

likelihood of confusion primarily on the assumption that 

banking and insurance are similar industries in the minds 

of consumers and that consumers would expect banks to 

expand into the insurance industry. In this connection, the 

District Court stated that because "[t]he composite phrase 

`Banking and Insurance' probably has resonance in the 

consumer mind" and because "[c]onsumers have long been 

aware that banks seek to expand territorially and in terms 

of the products and services they offer . . . many reasonable 

consumers encountering `Commerce' in connection with 

insurance and financial planning would have assumed they 

were dealing with CBI or some offshoot." Commerce Nat'l 

Ins. Servs., 995 F.Supp. at 501. 

This speculative rationale amounts to little more than an 

assumption of consumer behavior for which there is little 

substantive proof of record. CBI's only evidence that a 

reasonable consumer in 1983 would have expected banks 

to expand into the insurance industry consisted of (1) a 

single affidavit in which CNIS's president and CEO stated 

that CBI offered credit life insurance and credit disability 

insurance beginning in December of 1974 and (2) an 

unpersuasive report from CBI's expert who concluded that 

reasonable consumers in 1983 would have expected banks 

to sell insurance. This evidence is insufficient to support a 

finding of likelihood of confusion for several reasons. 

First, although the affidavit of CNIS's president and CEO 

establishes that CBI offered credit life insurance and credit 

disability insurance in support of its loans to its banking 

customers, it does little to demonstrate that reasonable 

consumers in 1983 would have also expected CBI to be 

selling insurance generally, including the huge variety of 

liability and risk insurance. Likewise, CBI's expert's report 

does little to aid the inquiry. Although the report does list 

several surveys reflecting consumer attitudes and 

expectations with respect to the banking industry, only one 

of those surveys was taken during the time period relevant 

 14 
to this action. That survey, taken in October of 1978, 

reflects that ". . . 94.2% of respondents replied they thought 

credit insurance was a good thing, the large majority 

without any qualifications." The survey does not, however, 

aid in a determination that consumers in 1983 expected 

banks to be engaged in the general insurance industry 

because it simply reveals that some consumers believed 

credit life insurance was "a good thing." It says nothing 

about the extent to which the consumers believed banks to 

be engaged in the insurance business. Moreover, even if it 

did, it is not at all clear that the impressions of the 

respondents in that survey reflected how New Jersey

consumers viewed the banking industry.6 

It is also important to note that New Jersey law severely 

limited banks from engaging in the general insurance 

industry at the time CIA was formed. By statute, see e.g. 

N.J.S.A. SS 17:3C-1 and 17:19A-213.1 (West 1984), banks 

could not sell general insurance services or products until 

1996 when the United States Supreme Court decided 

Barnett Bank of Marion County v. Nelson, 517 U.S. 25 

(1996). This prior statutory bar eviscerates the possibility 

that prior to 1996 southern New Jersey consumers 

reasonably expected CBI to engage in the insurance 

industry. Moreover, it is apparent that CBI had no 

expectation of engaging in the general insurance industry 

until the Barnett decision in 1996. 

Furthermore, not only was CBI's evidence of a likelihood 

of confusion insufficient, but there was also other evidence 

tending to suggest there was no danger of confusion

between CIA and CBI in 1983. A review of the record

reveals not a single instance in which a consumer actually 

confused CIA with CBI. To the contrary, the record reveals 

that, from 1983 through 1996, CBI and CIA coexisted

amicably, even referred customers to one another, and 

operated in their respective spheres of interest without any 

_________________________________________________________________ 

6. As noted, CBI's expert did conclude in his report that a reasonable 

consumer would have expected CBI to be engaged in the insurance 

business; however, his report failed to set forth a sufficient basis from 

which to reasonably draw that conclusion and therefore offers little 

support of consumer confusion. 

 15 
confusion. Confusion only developed early in 1997 after CBI 

elected to enter the insurance business by forming CNIS. 

CBI attempts to undercut the impact of the lack of evidence 

of confusion prior to CNIS's entry into the New Jersey 

insurance market by arguing that the parties' investigation 

into the matter was minimal. This argument, however, 

ignores that the burden of proving likelihood of confusion 

rested on CBI. 

CBI also attempts to make much of the similarity 

between the marks of the two companies. However, until 

CBI decided to enter the insurance industry, neither party 

challenged the other's use of the mark. Of course, the 

Commerce mark is the same no matter who uses it, but 

this evidence is not particularly probative of a likelihood of 

confusion because Commerce is a commonplace mark used 

by countless businesses in countless contexts. The District 

Court conceded as much during its analysis of the mark 

and noted that "given the frequency with which consumers 

see the term `Commerce' . . . they likely have come to 

recognize that different goods and services identified by the 

term `Commerce' may have different origins." See Commerce 

Nat'l Ins. Servs., 995 F.Supp. at 499. 

Finally, as noted above, there is little evidence from 

which one could conclude that CBI's Commerce mark was 

particularly strong in 1983. CBI offered no customer 

surveys or testimony tending to suggest that the consuming 

public readily identified the Commerce mark with CBI. Nor 

did CBI offer any evidence as to the extent to which it had 

promoted the Commerce mark prior to CIA's entry into the 

insurance market. Because the Commerce mark is not 

inherently distinctive and because CBI adduced no evidence 

to demonstrate that the mark had developed significant 

marketplace recognition prior to 1983, it is difficult to 

conclude that the mark was particularly strong. 

In sum, the record is critically deficient of that minimum 

quantum of evidence from which the District Court could 

have reasonably found that CIA's use of the Commerce 

mark in 1983 resulted in a likelihood of confusion. CBI had 

an opportunity to undertake discovery and to prepare for a 

trial. Instead, it chose, along with CIA, to run the risk of 

relying on the slender record presented with its request for 

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a preliminary injunction. That record supports neither the 

findings of secondary meaning, ownership, nor likelihood of 

confusion. As Judge Learned Hand observed in Federal 

Telephone & Radio Corp. v. Federal Television Corp. , 180 

F.2d 250 (2d Cir. 1950), which involved a suit by Federal 

Telephone & Radio Corp. to enjoin the defendant as the 

junior user of the name "Federal:" "we should have no 

warrant for depriving the defendant of whatever good-will it 

has already acquired by its sales under its own name. It 

started the use in entire good faith, the word is in general 

use for all sorts of purposes, and the plaintiff 's pretension 

to monopolize it is without any present basis that we can 

discover." Id. at 251-151. Accordingly, it was error to 

conclude that CBI possessed rights to the exclusive use of 

the Commerce mark in the insurance services industry. 

V. 

We now turn to the merits of CIA's claim against CNIS. 

The non-existent rights of CBI can no longer serve to shield 

its wholly-owned subsidiary, CNIS, from liability. CIA 

contends that CNIS's use of the Commerce mark infringes 

CIA's rights in the mark because CNIS's use of the mark 

results in reverse confusion. CIA is entitled to a remand on 

this claim only if the record contains sufficient evidence 

from which the District Court could reasonably conclude 

that: (1) CIA's Commerce mark is valid and legally 

protectable; (2) CIA owns the Commerce mark; and (3) 

CNIS's use of the Commerce mark results in reverse 

confusion. See Fisons Horticulture, Inc. v. Vigoro Industries, 

Inc., 30 F.3d 466, 474 (3d Cir. 1994) (adopting the doctrine 

of reverse confusion); Sun Shipbuilding & Dry Dock Co. v. 

McCabe, 593 F.2d 234, 239 (3d Cir. 1979) (noting that a 

remand is unnecessary where evidence of record would not 

support a finding in favor of party seeking remand). We 

address each of these issues in turn. 

A. 

Although CIA has registered the Commerce mark with 

the United States Patent and Trademark Office, the mark 

has yet to achieve incontestability. Therefore, to 

 17 
demonstrate that the Commerce mark is valid and legally 

protectable, CIA must demonstrate that it had established 

secondary meaning in the Commerce mark as of 1996, the 

year in which CNIS began use of the mark. See Ford Motor 

Co., 930 F.2d at 292. Although CIA's evidence of secondary 

meaning suffers from some of the same weaknesses as

CBI's proof, we think CIA's evidence sufficient to permit a 

finding that CIA has established secondary meaning in the 

Commerce mark within the insurance services industry. 

Unlike CBI, CIA is not attempting to establish secondary 

meaning in the Commerce mark with respect to services 

which it has yet to offer. Rather, CIA is simply asserting 

that it has established secondary meaning in the Commerce 

mark with respect to the insurance services it had offered 

under that mark for thirteen years prior to the formation of 

CNIS and continues to offer. We think it a reasonable 

inference that during those thirteen years CIA was able to 

build up substantial good-will for its general insurance 

services under the Commerce mark.7 It not only sold

general insurance continuously during this period but also 

expanded to larger offices. Moreover, we note that in the 

context of a reverse confusion case, the evidentiary burden 

upon a smaller, senior user to establish the existence of 

secondary meaning is placed somewhat lower. See Elizabeth 

Taylor Cosmetics Company, Inc. v. Annick Goutal, 673 

F.Supp. 1238, 1248 (S.D.N.Y. 1987)("[A] minimal showing 

of secondary meaning is required in a reverse confusion 

case."). Otherwise, "a larger company could with impunity 

infringe the senior mark of a smaller one." Banff, Ltd. v. 

Federated Dep't Stores, Inc., 841 F.2d 486, 491 (2d Cir. 

1988). 

For these reasons, we conclude that CIA's proffered

evidence is sufficient to support a finding of secondary 

meaning in the insurance industry. 

_________________________________________________________________ 

7. Although that good-will may be limited geographically to an area no 

greater than southern New Jersey, the fact remains that, within that 

area, CIA has offered sufficient evidence from which a finding of 

secondary meaning can be made. 

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B. 

Turning now to the question of ownership, there is 

sufficient evidence in the record from which the District 

Court may reach the conclusion that CIA owns the 

Commerce mark within the insurance services industry of 

southern New Jersey. CIA began using the mark in that 

industry in 1983; CNIS did not commence its use until 

1996. 

C. 

Finally, we turn to the issue of reverse confusion. This 

Court adopted the doctrine of reverse confusion in Fisons 

Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466 (3d 

Cir. 1994). In so doing, we explained that "[r]everse 

confusion occurs when a larger, more powerful company 

uses the trademark of a smaller, less powerful senior owner 

and thereby causes likely confusion as to the source of the 

senior user's goods or services." Id. at 474. Quoting the 

Sixth Circuit's decision in Ameritech, Inc. v. American 

Information Technologies Corp., 811 F.2d 960, 964 (1987), 

we elaborated: 

 the junior user saturates the market with a similar 

 trademark and overwhelms the senior user. The public 

 comes to assume the senior user's products are really 

 the junior user's or that the former has become 

 somehow connected to the latter. The result is that the 

 senior user loses the value of the trademark -- its 

 product identity, corporate identity, control over its 

 goodwill and reputation, and ability to move into new 

 markets. 

Id. at 474-75. 

After adopting the doctrine of reverse confusion, we 

proceeded to assess the plaintiff 's reverse confusion claim 

in light of the Scott Paper factors. In doing so, we 

acknowledged that certain of these factors must be 

reworked in the context of a reverse confusion case. For 

example, when applying the strength of mark factor, the 

lack of commercial strength of the smaller senior user's 

mark is to be given less weight in the analysis because it is 

 19 
the strength of the larger, junior user's mark which results 

in reverse confusion. See id. at 479. Likewise, the intent 

inquiry must also be altered to focus on whether the 

defendant was aware of the senior user's use of the mark 

in question, or whether the defendant conducted an 

adequate name search for other companies marketing 

similar goods or services under that mark. See id. at 480. 

Consideration of CIA's reverse confusion claim in light of 

these modified Scott Paper factors reveals that there is a 

significant likelihood of reverse confusion in this case. CIA 

and CNIS are engaged in the same line of business. In 

addition, the "Commerce" mark used by the parties is 

identical. Although CNIS has added the words "National" 

and "Services" to its mark, the record reveals that instances 

of confusion between CIA and CNIS have already occurred 

despite the addition of these terms. 

CNIS's ability to promote its mark is also much greater 

than that of CIA's. The formation of CNIS was immediately 

followed by two newspaper articles providing accounts of 

CBI's expansion into the insurance industry through the 

formation of CNIS. In addition, CBI has boasted that it 

spent $4 million to promote the "Commerce" mark in 1996. 

Although these funds appear to have been spent promoting 

the mark in connection with CBI's banking services, it is 

likely that similar funds will be used in the future to 

promote the mark in connection with CNIS's insurance 

activities. Moreover, it is also possible that CNIS will have 

a substantial advertising budget of its own. In the short 

period of its existence, CNIS already has become the 58th 

largest insurance agency in the nation, serving more than 

38,000 individuals and businesses. Although the exact size 

of CIA is not known, it is obvious that CIA does not have 

similar resources to develop a high-powered promotional 

campaign. 

Furthermore, CBI was well aware of CIA and its mark

when it decided to form CNIS and enter the general 

insurance services market. The two had known each other 

for years; they had done business with each other; they had 

referred individuals and businesses to each other. CBI 

made a conscious decision to track the CIA name for its 

subsidiary, merely adding "National" when it entered the 

 20 
insurance industry. It is not entirely clear whether CBI's 

motive was to push CIA out of the market or whether CBI 

simply saw an opportunity to promote both its insurance 

and banking activities under a common mark. 

Nevertheless, the doctrine of reverse confusion is designed 

to prevent the calamitous situation we have here-- a 

larger, more powerful company usurping the business

identity of a smaller senior user. See Fisons , 30 F.3d at 474 

("Without recognition of reverse confusion, smaller senior 

users would have little protection against, larger more 

powerful companies who want to use identical or 

confusingly similar trademarks."). 

In sum, there is ample evidence of record that CNIS's use 

of the "Commerce" mark will result in reverse confusion. 

CNIS by virtue of its superior size, resources, and economic 

strength, as well as the support of its powerful and 

aggressive parent, may be able to saturate the market with 

advertising so that the public will likely believe that CIA is 

an affiliate of CNIS or possibly an interloper. 

VI. 

Accordingly, for the reasons set forth above, the District 

Court's order denying CIA's request for an injunction 

against CNIS from using the Commerce mark will be 

vacated and the case remanded for further proceedings as 

are consistent with this opinion. 

Upon remand, the District Court should make 

appropriate findings of fact as to whether (1) CIA has 

sufficient secondary meaning in the Commerce mark in the 

insurance industry, (2) the ownership of the mark, and (3) 

the likelihood of confusion in the use of the Commerce 

mark by CNIS, either in its name as presently formed or 

modified. As the concurrence observes, nothing in this 

opinion precludes the District Court on remand, if the 

evidence so warrants, from permitting CNIS to continue 

doing business under the "Commerce National Insurance 

Services" name. If, on the other hand, the Courts concludes 

that CIA's evidence establishes the foregoing elements of 

the trademark infringement claim, then it should grant CIA 

appropriate equitable relief. 

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Costs taxed against Commerce National Insurance 

Services, Inc. and Commerce Bancorp, Inc. 

 22 
SLOVITER, Circuit Judge, concurring. 

I write merely to make clear my understanding of what 

the court's opinion will allow the District Court to do on 

remand. In its judgment, the District Court enjoined CIA 

from using the term "National" as part of its service mark 

and/or business name. At the same time, the District Court 

enjoined CNIS from using the abbreviated business name 

and/or service mark "Commerce Insurance." Neither party 

objected on appeal to those portions of the District Court's 

order. I join the majority's opinion because I understand 

that nothing therein would preclude the District Court, on 

remand, from permitting CNIS to continue doing business 

under the name "Commerce National Insurance Services." 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 23