Opinion ID: 154197
Heading Depth: 2
Heading Rank: 2

Heading: The Service Marks

Text: First Bank System prevailed in the district court by defensive use of a federal service mark registration. Federal registration is a creature of the Lanham Act of 1946, which provides national protection for trade and service marks used in interstate and foreign commerce. See 15 U.S.C. §§ 1051-1127 )1963 & Supp. 1996); Park’N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 193 (1985).7 Congress considered nationwide protection of marks desirable because of the uncertain, piecemeal protection afforded by 7 A service mark is a word, name, symbol, device, or any combination thereof used “to identify and distinguish the services of one person, including a unique service, from the services of others, and to indicate the source of the services.” 15 U.S.C. § 1127. The Lanham Act generally applies the same to both trade and service marks. Park’N Fly, 469 U.S. at 191 n.1. -12- state and common law. Park’N Fly, 469 U.S. at 193. Therefore, federally registered marks receive nationwide protection regardless of the area in which the registrant actually used the mark, because registration constitutes nationwide constructive notice to competing users. 15 U.S.C. § 1072 (1963); Armand’s Subway, Inc. v. Doctor’s Assocs., Inc., 604 F.2d 849, 849 (4th Cir. 1979). A federally registered mark is superior to any confusingly similar mark subsequently adopted anywhere in the United States. 4A Rudolf Callmann, The Law of Unfair Competition, Trademarks and Monopolies § 25.04 (4th ed. 1994); Mister Donut of Am., Inc. v. Mr. Donut, Inc., 418 F.2d 838, 844 (9th Cir. 1969). The unauthorized use of any reproduction, counterfeit, copy, or colorable imitation of a registered mark in a way that is likely to cause confusion in the marketplace concerning the source of the different products constitutes trademark infringement. 15 U.S.C. § 1114(1)(a) (1963); Universal Money, 22 F.3d at 1529. The wide benefits provided by federal registration are justified by the order they bring to the market place. Weiner King, Inc. v. Wiener King Corp., 615 F.2d 512, 523-24 (C.C.P.A. 1980). Nationwide trademark protection fosters competition and product quality by securing to the producer the benefits of good reputation. Park’N Fly, 469 U.S. at 198. It benefits the consumer by preventing confusion about the source of products, and by instilling in consumers “the confidence that inferior goods are not being passed off by use of a familiar trademark.” Natural Footwear Ltd. v. Hart, Schaffner & Marx, 760 -13- F.2d 1383, 1395 (3d Cir. 1985). Federal registration also protects other entrepreneurs, who “should be able to rely on a search of the trademark registry and their own knowledge of whether the mark has been used so that what may be substantial expenditures of money promoting the mark will not be wasted.” Id. Although First Bank System has used, and still uses, many different service marks, we are concerned in this appeal with the mark registered in 1971. The 1971 registration is the only registration alleged by First Bank System to have provided constructive notice to First Savings in 1983, and the district court based its judgment on a likelihood of confusion between the 1971 registration and the FirstBank mark, not between the FirstBank mark and any other service mark potentially involved in this case. Of course, First Bank System may yet be able to prove that it has gained rights, through prior use within the trade territory, to some other marks--such as FIRST BANK SYSTEM per se or even FIRST BANK per se--but the district court has never made any determination on this point. Therefore, in reviewing the judgment, we compare FirstBank to the entire 1971 mark as registered.8 8 In Homeowners Group, Inc. v. Home Marketing Specialists, Inc., 931 F.2d 1100, 1106 (6th Cir. 1991), the court carefully explained how confusion regarding the precise marks to be compared can lead to error. There, the district court had assumed as a matter of logic that ownership in a mark consisting of the initials HMS alone also granted to the plaintiff ownership in a mark consisting of the same initials with a roof design. The court of appeals stated: (continued...) -14- Initially, we note that First Bank System’s 1971 registration expired in 1991, and First Bank System did not merge with Metropolitan until 1995. The district court never determined whether First Bank System had extended its business into the five-county trade territory prior to the registration’s expiration. Ordinarily, constructive notice terminates with the registration on which it is based, 4A Rudolf Callmann, The Law of Unfair Competition, Trademarks and Monopolies § 25.04, at 26 (4th ed. 1994), and it would be difficult for First Bank System to rely upon the 1971 registration without first proving that it expanded into the trade territory prior to expiration. Here, however, the district court extended the constructive notice by finding FirstBank confusingly similar to the 1971 registration and then by tacking the 1971 registration to First Bank System’s 1989 registration. First Savings questions the decision to tack the two registrations, but 8 (...continued) Homeowners argues that since it has ownership of a mark consisting of the initials HMS, such ownership extends to other marks containing those initials along with other words or designs. This is the argument accepted by the District Court without proper analysis. Homeowners cannot make out an infringement case against [Defendant] by showing ownership of one mark (the initials HMS alone) and a likelihood of confusion based on a comparison between a different mark (the HMS-roof design mark) and [Defendant’s] mark. Id. Similarly, here, First Bank System cannot make out its constructive notice defense by showing registration of the 1971 mark, but then a likelihood of confusion between a different mark (FIRST BANK or FIRST BANK SYSTEM per se) and First Savings’ mark. -15- we need not reach this issue. Tacking is only relevant if FirstBank was confusingly similar to the 1971 registration in the first place. We hold it was not. As proponent of the constructive notice defense, First Bank System bears the burden of proving a likelihood of confusion. Universal Money, 22 F.3d at 1530. When determining whether there is a likelihood of confusion between two marks, we consider the following factors: (a) the degree of similarity between the marks; (b) the intent of the alleged infringer in adopting its mark; (c) the relation in use and the manner of marketing between the goods or services marketed by the competing parties; (d) the degree of care likely to be exercised by purchasers; (e) evidence of actual confusion; and (f) the strength or weakness of the marks. Id. All of these factors are interrelated and no one factor is dispositive. Id. In light of these factors, the ultimate question is whether First Savings’ adoption of the FirstBank mark was likely to cause consumers to believe there is an affiliation between First Savings and First Bank System. See id. The district court opinion does not reflect a full consideration or discussion of the appropriate factors. Instead, the district court relied on two connected, but insufficient conclusions. First, it determined that the appearance and pronunciation of the marks were similar. Second, the court reasoned that if it accepted First Savings’ argument that FIRST -16- BANK KANSAS is confusingly similar to FirstBank, then FirstBank must itself be confusingly similar to FIRST BANK SYSTEM.9 The first conclusion reflects, at most, a consideration of the first Universal Money factor. This is not enough, and borders upon little more than a side-by-side comparison of the marks. See Universal Money, 22 F.3d at 1531 (courts must not engage in a “side-byside” comparison); Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d 934, 941 (10th Cir. 1983) (same). The second conclusion perpetuates the error of the first by again assuming that visual or verbal similarity is itself the dispositive factor. Considering that literally hundreds of banks use the words FIRST and BANK in their marketing names, it is certainly possible that FirstBank could be confusingly similar to FIRST BANK KANSAS, but not to “First Bank System” and design. Accordingly, we apply the appropriate factors de novo in order to determine whether First Bank System is entitled to a favorable summary judgment on the likelihood of confusion between the FirstBank 9 The district court also apparently relied on the decision in an Iowa case refusing to enjoin First Bank System’s use of FIRST BANK or FIRST BANK IOWA within a local Iowa trade territory. See First Bank v. First Bank System, Inc., 909 F. Supp. 657 (S.D. Iowa 1995), aff’d, 84 F.3d 1040 (8th Cir. 1996). The Iowa case involved materially different facts and was decided on a different legal basis, and cannot support the decision in this case. The court of appeals in the Iowa case specifically stated that it “need not determine whether FIRST BANK and FIRST BANK SYSTEM or FIRST BANK IOWA are similar enough to create a likelihood of confusion among customers.” 84 F.3d at 1047 n.9. The parties have supplemented the record with a slip opinion in the Iowa case, in which the district court dismissed the local bank’s damages claims for substantially the same reasons it denied injunctive relief. See First Bank v. First Bank System, Inc., No. 4- 95-CV-80021 (D. Iowa Nov. 15, 1996). This opinion also does not affect our disposition. -17- mark and the 1971 registration. We discuss the factors in a rough order of their importance to this case.
The degree of similarity is tested on three levels as encountered in the marketplace: sight, sound, and meaning. Universal Money, 22 F.3d at 1530-31. Contrary to the district court, we find that a reasonable jury could only conclude that the similarity between FirstBank and the 1971 registration is minimal. The 1971 registration is written in a fancy script and the words are vertically stacked. The words appear against a distinct, black television background. FirstBank, on the other hand, is arranged left-to-right. The words are pushed together and are accompanied by the distinctive walking-one logo. The visual differences are apparent.10 As to pronunciation, “First Bank System” contains an additional word, and to that extent is pronounced differently than FirstBank. As to meaning, the FirstBank mark conveys a different and more focused impression than the 1971 registration. Indeed, at least one reason First Bank System quit 10 The district court characterized the black television background of the 1971 registration as an insignificant “field or carrier,” and gave this design aspect very little weight, if any. We find the background design more significant. It has a distinct visual impact and appears to be the reason the words are vertically stacked. Indeed, when the PTO forced First Bank System to distinguish its 1971 mark from that of a third party’s existing registration, First Bank System relied in part upon the fact that the words “First Bank System” are “positioned in solid field.” J.A. Vol. VII at 2361. In any event, regardless of the background’s impact in the abstract, when compared with the FirstBank mark, it is quite distinguishable. -18- using the registered mark in 1979 was because it believed the mark did not convey a strong enough impression. At her deposition, Mary Ann Hansen, a former First Bank System advertising executive, compared the 1971 registration with First Bank System’s newer graphic standards. She testified, “Member First Bank System was thought to be weak. The word “system” was kind of nebulous and it was too complicated. If you look at it type [sic] graphically, that first mark is stronger visually.” J.A. Vol IV at 1321 (emphasis added). We agree with Ms. Hansen. First Bank System, however, argues that the term FIRST BANK is the dominant portion of the 1971 registration, and that this dominant portion is very similar to FirstBank in appearance and identical in pronunciation. While the dominant portion is given greater weight, each mark still must be considered as a whole. Universal Money, 22 F.3d at 1531; Sun Banks of Florida, Inc. v. Sun Fed. Sav. & Loan Ass’n, 651 F.2d 311, 317-18 (5th Cir. 1981) (similarity of appearance is determined “on the basis of the total effect of the designation, rather than on a comparison of individual features” (quoting Restatement of Torts § 729, cmt. b (1938))). Therefore, in Universal Money, even though both parties’ bank cards used the dominant term UNIVERSAL, this court concluded that when the entire marks and attending logos were compared, the differences outweighed the similarities. The same applies here, particularly when the strength of the mark is considered. -19-
This factor is highly instructive in this case. “The stronger the mark, the more likely it is that encroachment on it will produce confusion.” Champions Golf Club, Inc. v. The Champions Golf Club, 78 F.3d 1111, 1117 (6th Cir. 1996). “A strong trademark is one that is rarely used by parties other than the owner of the trademark, while a weak trademark is one that is often used by other parties.” Universal Money, 22 F.3d at 1533 (quoting Exxon Corp. v. Texas Motor Exch., 628 F.2d 500, 504 (5th Cir. 1980)). The greater the number of identical or more or less similar marks already in use on different kinds of goods, the less is the likelihood of confusion between any two specific uses of the weak mark. Id.; Homeowners, 931 F.2d at 1108. In Universal Money, the plaintiff (“UMC”) held four registered trademarks, each incorporating the word UNIVERSAL: UNIVERSAL MONEY CARD; UNIVERSAL MONEY CENTER; UNIVERSAL MONEY and design; and UNIVERSAL MONEY. In seeking to enjoin the use of “AT & T Universal Card” for AT & T’s combination telephone and credit card, UMC naturally claimed that UNIVERSAL was the dominant term in its federal registrations. We cited with approval the following analysis of the district court regarding the strength of this “dominant” term: [T]he evidence produced by AT & T and uncontroverted by UMC indicates that the term “Universal” is widely used by parties other than UMC. In particular, the term is in use by approximately six financial institutions throughout the country who have used the term on their own ATM cards. The term is also in use by two credit card companies (“Universal Gold Card” and “Universal Premiere Card”) . . . . Further, Dun & Bradstreet -20- shows over 200 active businesses employing the term. In short, the term is used by a significant number of entities and is thus a relatively weak mark. Universal Money, 22 F.3d at 1533-34. Thus, we recognized the well-established principle that extensive third-party use of the disputed term indicates that the term itself deserves only weak protection. See Freedom Sav. & Loan Ass’n v. Way, 757 F.2d 1176, 1182 (11th Cir. 1985) (where consideration of third-party usage contributed to finding that FREEDOM was weakly protected); Sun Banks, 651 F.2d at 316 (where extensive third-party use of SUN was impressive evidence that there would be no likelihood of confusion between Sun Banks and Sun Federal). Specifically, third-party registrations are “relevant to prove that some segment of the composite marks which both contesting parties use has a normally understood and well-recognized descriptive or suggestive meaning, leading to the conclusion that that segment is relatively weak.” 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 11.27[2][b] (3d ed. 1995). As noted, First Bank System argues that the term FIRST BANK constitutes the dominant segment of the 1971 registration. The record contains evidence of extensive third-party use of the terms FIRST, BANK, and FIRST BANK. First Savings’ search of the federal registry revealed registrations for “FIRSTBANK CARD”; “FIRST BANK AND TRUST COMPANY”; “THE FIRST BANKERS”; “BANCFIRST”; “CALIFORNIA FIRST BANK”; and “FIRST BANK OF SAN LUIS OBISPO.” Each of these marks were registered in 1983 or earlier. Many more registrations exist with FIRST and BANK separated by only one word, such as “FIRST CITY BANK” or “FIRST -21- PROFESSIONAL BANK.” Furthermore, First Savings produced applications to the PTO by other financial institutions seeking registration of FIRST BANK per se, and claiming first use in commerce well before 1983. These registrations and applications provide compelling evidence of what most consumers would recognize from experience; namely, that banks are wont to refer to themselves as the “First.”11 This extensive use suggests that FIRST BANK per se is a weak term, at least when applied to the provision of financial services. The term’s category fully supports this conclusion. A term for which trademark protection is claimed will fall into one of four categories: (1) generic; (2) descriptive; (3) suggestive; or (4) arbitrary or fanciful. Champions Golf, 78 F.3d at 1116-17. A generic term is a term used to describe the relevant type or class of goods. It is the weakest mark and cannot become a trademark under any circumstances. Id. at 1117. A descriptive term describes a characteristic of a product or service, and is protected only where secondary meaning is shown. Id. Examples of descriptive terms include BEST, SUPERIOR, or PREFERRED. Id. (citing J. Thomas McCarthy, McCarthy’s Desk Encyclopedia of Intellectual Property 93 (1991)). The third, and stronger, mark is the suggestive mark, which suggests rather than describes a characteristic of the product and requires the This practice appears to date back at least to 1863, when Salman P. Chase, then 11 Secretary of the Treasury, announced that all national banks would include their numerical order of charter. See Bastrop Nat’l Bank v. First Nat’l Bank of Bastrop, 222 U.S.P.Q. 524, 528 n.9 (W.D. La. 1983). -22- consumer to use imagination and perception to determine the product’s nature. Id. Finally, the arbitrary or fanciful mark is the strongest mark. An arbitrary mark has a common meaning unrelated to the product for which it has been assigned, such as APPLE when applied to computers, while a fanciful mark, such as KODAK or EXXON, signifies nothing but the product. Id. BANK is clearly generic and incapable of protection. We consider FIRST BANK weakly descriptive. FIRST BANK is not susceptible to a wealth of meaning. See First Nat’l Bank & Trust Co. v. First Nationwide Bank, 15 U.S.P.Q.2d 1457, 1461 (W.D. Mo. 1990) (finding FIRST NATIONAL BANK per se too common to warrant protection). FIRST BANK describes a bank first in time or quality. When applied to banks that were not first in charter, the term is really trade puffery. See Best Buy Warehouse v. Best Buy Co., 751 F. Supp. 824, 826 (W.D. Mo. 1989) (refusing to protect BEST BUY as applied to retail stores, noting the term is “sales puffing”), aff’d, 920 F.2d 536 (8th Cir. 1990). At least as applied to banking services, we consider it highly doubtful that the PTO would register FIRST BANK unaccompanied by any other words or design. Cf. First Nationwide Bank, 15 U.S.P.Q.2d at 1461 (finding that the PTO has determined FIRST NATIONAL BANK per se is not registerable). Furthermore, First Bank System itself has claimed in the district court, and on appeal, that the term FIRST BANK is only -23- descriptive. Appellee’s Br. at 14 n.6 (arguing that FIRST BANK is “a descriptive mark in a crowded field”).12 Thus, the primary segment of the 1971 registration upon which First Bank System relies is a weak term. When the primary term is weakly protected to begin with, minor alterations may effectively negate any confusing similarity between the two marks. Freedom Savings, 757 F.2d at 1183; Sun Banks, 651 F.2d at 316. We have already discussed the dissimilarities between the 1971 registration and the FirstBank mark. Because the common feature of the two marks is weak, the dissimilarities weigh heavily against any likelihood of confusion.13 Far from entitling First Bank System to a favorable judgment, this factor strongly suggests that a reasonable jury could only conclude that the marks are not confusingly similar. 12 We emphasize, however, that we consider the term FIRST BANK weakly descriptive, not generic. A party may be able to show that it has acquired secondary meaning in the term through extensive use within a specific trade area. See, e.g., First Fed. Sav. & Loan Ass’n v. First Fed. Sav. & Loan Ass’n, 929 F.2d 382, 385 (8th Cir. 1991) (where the ordinarily descriptive term FIRST FEDERAL acquired a special meaning in Pottawattamie County, Iowa). Furthermore, designs and logos may add distinction to the term. 13 First Bank System’s reliance upon Citibank, N.A. v. Citibanc Group, Inc., 724 F.2d 1540 (11th Cir. 1984) is unpersuasive. First Bank System claims that Citibank stands for the general proposition that a party cannot move its mark closer to a federally registered mark. Essentially, the argument is that when First Savings’ adopted FirstBank in 1983 it moved its mark closer to the 1971 registration. The mere fact that a mark has moved closer to, or further from, a registration does not answer the ultimate question. Indeed, every time any mark is changed it will in some respect move closer to, or further from, one of the thousands of federal registrations. The extent of the move, as it relates to the Universal Money factors, is the relevant point. Furthermore, this case involves a weaker term, and far more substantial differences between the marks, than did Citibank. -24- 3. Intent of First Savings in Adopting the “FirstBank” Mark We find no evidence in the record that First Savings adopted FirstBank with the intent to pass off its services as those of First Bank System or to benefit from the reputation or good will of First Bank System. To the contrary, the record indicates that First Savings was interested in establishing its own goodwill and reputation in the FirstBank mark. This also weighs against finding a likelihood of confusion. 4. Similarity of Services and Manner of Marketing Services To some degree, this factor weighs in favor of First Bank System. Both parties provide general banking services, and now do so in the same community. As most banks, both parties advertise by way of prominent exterior signs and the media. In light of previously discussed factors, however, we do not find this factor significant enough to indicate a likelihood of confusion, particularly when it is recognized that First Bank System’s branch-banking presence in the trade territory did not commence until 1995, long after the 1971 registration had expired, and the registered mark itself was not used by First Bank System after 1979. Thus, any potential confusion caused by similarities in the parties’ services and methods of marketing does not appear at all likely to relate to First Bank System’s 1971 registration, but rather to its use of other marks. 5. Degree of Care Exercised by Consumers and Evidence of Actual Confusion -25- We find no evidence in the record with respect to the degree of care exercised by consumers choosing between providers of banking services, and very little with respect to actual confusion.14 First Bank System has provided a research study of customer confusion within the trade territory, but the objective of the study is a comparison between First Savings’ FirstBank mark and First Bank System’s first mark and FIRST BANK logotype. The 1971 registration is only tangentially included in the study. The study’s obtuse treatment of the 1971 registration, particularly in light of the other factors, does not weigh in favor of a likelihood of confusion. In sum, we conclude that First Bank System was not entitled to prevail as a matter of law on the constructive notice defense. If we were to hold otherwise, we would in effect give First Bank System potentially nationwide rights, dating back to 1971, in FIRST BANK per se, even though these words alone almost certainly could not be registered. In the master service agreement between First Bank System and Metropolitan, First Bank System lists on an attached schedule thirty-three different service marks and trademarks in which it claims to have an interest. Twenty-two of the these marks are registered. We find it interesting that none of these registrations are for FIRST BANK per se, or even FIRST BANK with design. J.A. Vol. II at 641. Similarly, although First Although by no means strictly necessary, evidence of actual confusion is often 14 considered the best evidence of likelihood of confusion. Universal Money, 22 F.3d at 1534. -26- Bank System claims its 1971 registration already gave it superior rights in Kansas to FIRST BANK, it nevertheless sought in 1986, and was denied, a Kansas state registration for FIRST BANK. And, despite its alleged superior rights, First Bank System decided to use FIRST BANK KANSAS for former Metropolitan branches in Kansas, even though its general plan apparently was to make nationwide use of FIRST BANK per se for branches acquired in the merger. Furthermore, if we provided the liberal treatment of the 1971 registration that First Bank System urges, we would place an unrealistic burden on entrepreneurs who search, and hope to rely upon, the federal registry. While service marks undoubtedly represent a beneficial form of monopoly, they are monopolies nonetheless, and should not be construed liberally unless the owner is clearly entitled. Natural Footwear, 760 F.2d at 1396. Accordingly, we reverse the district court’s grant of summary judgment. We also conclude, in light of the record and the proper legal standards, that further consideration of this defense on remand would be a pointless exercise. In its opinion, the district court noted: Neither side argues that this question is inappropriate for summary judgment. Nor does either side come forth with evidence on this issue that requires credibility calls. The document evidence submitted is not the sort that raises competing inferences. Both sides appear to agree the issue is ripe for summary judgment but only disagree as to the decision to reach. First Savings Bank, 902 F. Supp. at 1376. Indeed, First Bank System argues that this case requires only the application of settled trademark principles to “undisputed events -27- occurring on undisputed dates.” Appellee’s Br. at 12. We agree. Having applied settled principles to the record, we hold that no reasonable jury could conclude that the marks are confusingly similar.15 First Bank System urges that we can uphold the judgment of the district court on the separate ground that First Bank System made prior use in Kansas of FIRST BANK and FIRST BANK SYSTEM. The record is not well developed on this issue. The district court never reached this point, and it may do so on remand.