N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT W ELLS FAR GO & C OM PANY; W ELLS FAR GO INSUR

A NC E SER

VIC ES USA, INC ., Plaintiffs - Appe lla nts, v. AB D INSUR

ANC E & FINANC IAL SER VIC ES, INC ., FKA Insura nc e Le a de rship Ne twork, Inc .; KUR T DE GR OSZ; B R IAN HETHERINGTON, De fe nda

nts - Appe lle e s. No. 13-15625 D.C . No. 4:12-c v-03856-PJH M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Northe rn Distric t of C a lifornia Phy llis J. Ha

m ilton, Distric t Judge , Pre siding Argue d an d Subm i tte d De c e m be r 2, 2013 San Fran c isc o , C a lifornia B e fore : HAW KINS, GOULD, a nd PAEZ, C irc uit Judge s . Appe lla nts W e l ls Fa

rgo & C o. e t a l. (“ W e l ls Fa rgo” ) bring this c a se a ga inst Appe l le e AB D Insura

nc e and Fina

nc ia l Se rvic e s (“

N e w AB D” ) arguing tha

t the 

# FIL ED D EC 20 2013 M OLLY C. DW Y ER, CLERK U . S . CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.distric t c o urt a buse d its disc re tion whe n it de nie d W e lls Fa rgo’ s m otion for pre l im ina ry injunc tion. W e hav e jurisdic tion pursua nt to 28 U.S.C . § 1291, a

nd we re ve rse the distric t c ourt’ s orde r and re m and the c a se for re c o nside ration of the m otion for pre l im ina

ry injunc tion c onsiste nt with this m e m orandum

disposition. W e lls Fa rgo a c quire d the origina l AB D Insura nc e an d Fina

n c ia l Se rvic e s (“ Form e r AB D” ) in 2007, a t w h ic h point hundre ds of Form e r AB D e m ploy e e s joine d W e lls Fa

rgo offic e s. In 2008, W e lls Fa rgo c ha nge d the nam e of AB D to

“ W e lls Fa rgo Insura

nc e Se rvic e s,” but c ontinue d to displa y the Form e r AB D m ark on c ustom e r pre se ntations a nd solic ita

tions, a nd m a inta ine d the the a

bdi.c o m we bsite and m e tata g s. Howe v e r, m e m be rs of the Form e r AB D le ft W e lls Fa rgo in 2009 a nd c re ate d a

ne w insura

nc e and fina

nc i a l se rvic e s c om

pa ny c a lle d Insura

nc e Le a de rship Ne t

work, Inc (“ ILN” ). Those m e m be rs the n use d ILN to la

unc h Ne w AB D in Juneor July 2012, using the e xa c t sa m e nam e a s Form e r AB D, whe n the y le arne d tha

t W e lls Fa

rgo ha d not re ne we d the re gistra

t ion of theForm e r AB D m ark. W e l ls Fa

rgo file d suit a ga inst Ne w AB D on July 24, 2012 a sse rting tra de m a rk, fa lse a ffilia

tion a nd a dve rtise m e nt, a

nd unfa ir c om

pe t ition c l a im s. W e lls Fa rgo file d a

m otion for a

pre lim ina

ry injunc tion on Ja

nua ry 16, 2013. The distric t c o urt de nie d tha

t m otion by

orde r of M arc h 8, 2013.

2The distric t c ourt’ s de nia l of pre lim ina ry injunc tive re lie f is re vie we d for a n a buse o f disc re tion. Brook fie ld C omms., Inc . v . W

e st C oast Entm’t C

orp. , 174 F.3d 1036, 1045–46 (9th C ir. 1999). “ ‘ A distric t c ourt would ne c e ssa rily a buse its disc re tion if it ba se d its ruling on a n e rrone o us vie w of the la w,’ C oote r & Ge ll v . Hartmarx C orp. , 496 U.S. 384, 405 (1990), so we re v ie w the unde rly ing le ga l issue s de novo.” Brook

fie ld C o mms. , 174 F.3d a

t 1046 (c ita

tions omitte d). A pla intiff se e king a

pre lim ina

ry injunc tion m

ust e sta blish: (1) a

like lihood of suc c e ss on them e rits, (2) tha t the pla intiff will like ly

suffe r irre pa

ra ble ha rm in the a bse nc e of pre lim ina

ry re lie f, (3) that the ba l anc e of e q uitie s tip in its fa

v or, and (4) tha

t the public inte re st fa

vors a n injunc tion. W

inte r v . N .R.D.C ., Inc . , 555 U.S. 7, 20 (2008). W e a gre e with W e lls Fa rgo tha t the distric t

c o urt e rre d in its vie wof the a

p p lic a ble la w a nd the re fore a

buse d its disc re tion in its a na ly sis of the first e le m e n t, the like lihood of suc c e ss on them e rits. First, the distric t c ourt a

b use d its disc re tion whe n it did not se pa rat e ly c onside r the fa lse a d

ve rtise m e nt c la im . The distric t c ourt inc lude d tha

t c la im in its tra de m a rk infringe m e nt a

na l y sis be c a

use it found fa lse a dve rtise m e n t to be

“ de rivat ive of W e lls Fa

rgo’ s tra de m ark infringe m e nt c la im .” Howe ve r, the two c la im s a re distinc t and re quire the a

pplic ation of sep arate te sts. To suc c e e d on a fa lse a d ve rtise m e nt c la im

unde r Lanha

m Ac t § 43(a ), a

pla intiff m

ust prove : 3(1) a

fa lse sta te m e nt of fa c t by

the de fe nda

nt in a c om m e rc i a l a dve rtise m e nt a

b out its own or a

n othe r’ s produc t; (2) the sta te m e nt a c tua lly de c e ive d or ha s the te nde nc y to de c e ive a substa ntia l se g m e nt of its a u die n c e ; (3) the de c e ption is mate ria l, in tha t it is like ly

to influe nc e the purc ha sing de c ision; (4) the de fe nda n t c a use d its fa lse sta te m e nt to e n te r inte rstate c om m e rc e ; a nd (5) the pla intiff ha s be e n or is like ly

to be injure d a s a

re sult of thefa lse sta

te m e nt, e ithe r by dire c t dive rsion of sa le s from itse lf to de fe nda

n t or by le sse n ing of the goodwill a ssoc iate d with its products. Southland Sod Farms v

. Stov e r Se e d C

o. , 108 F.3d 1134, 1139 (9th C ir. 1997) (c ita tions omitte d ). The fa lse a dve rtise m e nt te st re quire s a pla intiff to show all five e le m e nts. Id . B y c o n tra st, a c la im for tra d e m a

rk infringe m e nt re quire s only two e le m e nts: (1) owne rship of a tra de m ark, a

nd (2) tha t the pla i ntiff show a like lihood of c onfusion through the

ba la nc ing of e ight fa c t ors. Re arde n LLC v . Re arde n C omme rc e , Inc . , 683 F.3d 1190, 1202 (9th C ir. 2012). The se te s ts a re distinc t, a

nd the d istric t c o urt a

buse d its disc re tion whe n it did not se pa rate ly c onside r the fa lse a dve rtise m e nt c l a im . The distric t c ourt a l so a

buse d its disc re t ion by m isa

pply i ng the la

w in its a ba ndonm e nt a

na ly sis whe n it c onside re d e vide n c e of prospe c t ive inte n t to a ba ndon them ark to de te rm ine whe the r W e lls Fa rgo’ s use s we re bona

fide and in the o rdina ry c ourse of busine ss. To provea ba ndonm e nt of a

m ark a s a

de fe nse to a c la im of tra de m ark infringe m e n t, a de fe nda nt m ust show tha

t the re wa s: “ (1) disc ontinua

nc e of tra de m ark use and (2) inte nt not to re sum e suc h use . ” Ele c tro 4Sourc e

, LLC v . Brande

s s-K a lt-Ae tna Grp., Inc . , 458 F.3d 931, 935 (9th C ir. 2006). The phra se “ tra de m ark use ” m e ans “ the bona fide use of a

m a rk in theordina

ry c ourse of tra de , a

nd not m e re ly

to re se rve a

right in a m ark.” Id . at 936 (quoting 15 U.S.C . §1127). Eve n a

“ single insta

nc e of use is suffic ie nt a ga inst a c la im of a ba ndonm e nt of a m ark if suc h use is m a de in good fa ith.” C a rte r-W allac e , Inc . v . Proc te r & Gamble C

o . , 434 F.2d 794, 804 (9th C ir. 1970). All bona fide use s in the o rdina ry c ourse of busine ss m

ust c e a se be fore a

m ark is de e m e d

a ba ndone d. W e have sa id tha

t “ unle s s the tra de m ark use is a c t ua lly te rm i nate d , the inte nt not to re sum e use prong of a ba ndonm e nt doe s not c om e into pla y .” Ele c tro Sourc e , 458 F.3d a

t 937–38. “ [A] prospe c tive inte nt to a ba ndon sa y s nothing a bout whe the r use of the m ark ha s be e n disc ontinue d.” Id . at 937. The distric t c ourt he ld tha t W e lls Fa

rgo a b andone d the AB D m a

rk, re a s oning tha

t W e lls Fa

rgo’ s c ontinue d use s of the AB D m ark we re not bona fide and in theordina

ry c o urse of tra de be c a

use suc h use s we re “ re s idua l . . . or in the c onte xt of a

historic a l ba c k g round” give n W e lls Fa rgo’ s re bran ding e fforts. The distric t c o urt’ s a

b a ndonm e nt findings were fla we d for two signific ant re a sons. First, prospe c tive inte nt to a ba ndon is not prope

rly c onside re d whe n e x a

m i ning whe the r bona

fide use s of the m ark in the ordina ry c o urse of busine ss ha

ve c e a se d, and the distric t c ourt e rre d whe n it c onside re d W e l ls Fa rgo’ s inte nt to re brand 5AB D in tha

t c onte xt. Se c o nd, the distric t c ourt m isc onstrue d the bre a dth of use s inc l ude d within the

sc ope of a

“ bona fide use in the ordina

ry c ourse of tra d e .” C ourts m ust c onside r the tota lity

of the c irc um s ta

nc e s surrounding the

use , a nd

“ e v e n a de c lining busine ss re ta ins, m ay be ne fit from , or m ay c ontinueto build its goodwill until it shuts its doors or c e a se s use of its m arks.” Id . at 938. In this c a se , W e lls Fa rgo c ontinue d to usethe m ark in se ve ra l wa y s, m ost nota

b ly in c ustom e r pre s e ntations a

n d solic i tations. Suc h use s de m o nstra te W e lls Fa

rgo’ s busine ss c a lc ulat ion tha

t it c ould c ontinueto be ne fit from the goodwill a

nd m ark re c o gnition a ssoc iat e d with AB D, a nd we c onc lude tha

t W e lls Fa

rgo c o ntinue d its bona fide use of the m ark in the ordina ry c ourse of busine ss through the se use s. Thus, thedistric t c ourt e rre d b y c onc luding tha

t W e lls Fa

rgo a ba ndone d the AB D m ark, c ontra

ry to the princ iple s of Ele c tro Sourc e . Fina lly , at the pre lim ina

ry injunc tion sta ge , e v ide nc e of a c tua l c onfusion is of dim inishe d im

porta n c e whe n a c ourt e xam i ne s the like lihood of c o nfusion for a tra de m a rk infringe m e nt c la i m . N e tw ork Automation, Inc . v . Adv anc e d Sy s. C onc e pts , 638 F.3d 1137, 1151 (9th C ir. 2011) (“ [W ] hile [a c tua l c onfusion] is a re le va nt fa c tor for de te rm ining thelike lihood of c onfusion . . . its im porta nc e is dim inishe d at the pre lim ina ry injunc tion sta g e of the proc e e dings.” ). B e c a use a m otion for pre l im ina

ry injunc tion norm a l ly

oc c urs e arly

in litiga tion, a t tha t point 6pa

rtie s rare ly

hav e am a sse d signific ant e vide n c e of a c tua l c onfusion. Id . For tha t re a s on, whilea c tua l c onfusion is a c ritic a l fa c tor in a

full like lihood of c onfusion ana ly sis, it is le ss im

porta n t at the pre lim i na

ry injunc tion sta ge , a

nd we c a ution a ga inst re sting a finding of thelike lihood of suc c e ss of a tra d e m ark infringe m e nt c la im on tha t fa c tor. W e a lso note that a lthough the distric t c o urt did not a

buse its disc re tion by om i tting c onside ra tion of the fa lse a ffilia t ion c la im be c a

use it wa s not prope rly ra ise d be l ow, we se e no re a son why tha t c la im c annot be ra ise d on re m and a nd the re fore hold tha

t W e l ls Fa

rgo c an a ddre s s a

ny fa lse a ffilia

tion c la im s it ha s in furthe r proc e e dings c onsiste nt with this m e m orandum

disposition. For the re a s ons sta

t e d a bove , we c onc lude tha

t the distric t c ourt a

buse d its disc re tion in its a

na ly sis of W e l ls Fa

rgo’ s like lihood of suc c e ss on them e rits of its c la im s, a nd we re ve rse the distric t c ourt’ s orde r and re m and for re c onside ration and furthe r proc e e dings. RE V E RSE D and RE M ANDE D.

7