Opinion ID: 2051720
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Heading Rank: 4

Heading: Has there been infringement of the mark COMMERCIAL?

Text: Having decided that plaintiff has a valid common-law trademark in the mark COMMERCIAL, we next must determine whether the trademark has been infringed by defendant, Commercial Federal Bank.
In prior decisions, we stated, confusion of names in business is sufficient ground for the issuance of an injunction. Atlas Assur. Co. v. Atlas Ins. Co., 138 Iowa 228, 233, 112 N.W. 232, 233 (1907). We have also stated that an injunction will lie to prevent not only the use by another of the identical name, but the use of a name which, by reason of similarity, will tend to create confusion and enable the later user to obtain the business of the first. Iowa Auto Market, 197 Iowa at 423, 197 N.W. at 323 (emphasis added). Courts from other jurisdictions have adopted a similar standard for determining whether a trademark has been infringed whether there is a likelihood of confusion among consumers. See SquirtCo v. Seven-Up, 628 F.2d 1086, 1091 (8th Cir.1980); Phipps Bros., 508 N.W.2d at 886; Madison Reprographics, 552 N.W.2d at 444-45. This likelihood of confusion standard is either based on pertinent language of the Lanham Act, see 15 U.S.C. § 1114(1)(b), [6] the federal law governing trademark infringement claims, or upon language of section 20 of the Restatement (Third) of Unfair Competition. [7] While our prior cases implicitly required a finding that use of a similar business trade name or trademark constitutes infringement when a likelihood of confusion exists among consumers, we now follow courts from other jurisdictions and officially adopt the likelihood of confusion standard. Thus, once a plaintiff has proved that it has a valid common-law trademark by showing that the name or designation it seeks to protect is distinctive, either inherently so or through secondary meaning, it then must prove that defendant's use of a similar designation will cause a likelihood of confusion among consumers. See Restatement (Third) Unfair Competition § 20 cmt. d. Following this analysis, our next task is to consider whether the district court properly concluded that Commercial Savings failed to prove that Commercial Federal's use of the name COMMERCIAL is likely to cause confusion among consumers concerning the goods, services or business provided by plaintiff and defendant.
Commercial Savings bears the burden of proving that Commercial Federal's use of the name COMMERCIAL would create a likelihood of confusion, deception, or mistake among an appreciable number of ordinary consumers as to the source of or association between the banks' services. See First Nat'l Bank, Sioux Falls v. First Nat'l Bank, South Dakota, 153 F.3d 885, 888 (8th Cir.1998). Courts have established the following factors to be considered in determining whether there is a likelihood of confusion between two marks: (1) strength of the trademark; (2) similarity between the trademark and the defendant's mark; (3) competitive proximity of the products on which the respective marks are placed; (4) intent of the alleged infringer to pass off its goods as those of the trademark holder; (5) incidents of actual confusion; and (6) degree of care likely to be exercised by potential customers of the trademark holder. See Mutual of Omaha Ins. Co. v. Novak, 836 F.2d 397, 399 (8th Cir.1987) (citing SquirtCo, 628 F.2d at 1091); see also Restatement § 21 (listing similar factors). [T]he relative weight of the factors depends on the facts of the individual case, First Nat'l Bank, Sioux Falls, 153 F.3d at 888, and no single one is dispositive, First Savings Bank, F.S.B. v. First Bank Sys., 101 F.3d 645, 652 (10th Cir.1996). Additionally, whether the use of a particular designation causes a likelihood of confusion must be evaluated in light of the overall market context in which the designation is used. Restatement § 21 cmt. a. The Restatement explains that the confusion must threaten the commercial interests of the owner of the mark, see id. § 20 cmt. b. In other words, one's use of a similar trademark presents a significant risk to the sales or good will of the trademark owner. Id.
The strength of a mark measures the degree of distinctiveness for the purpose of determining the likelihood of confusion resulting from another's use of a similar mark. Id. § 21 cmt. i. The more distinctive a mark is, the stronger it is, and the greater the likelihood of confusion and scope of protection. See Madison Reprographics, 552 N.W.2d at 446. Thus, fanciful or arbitrary marks, such as the trademark EXXON, are considered strong marks because they have a high degree of distinctiveness and are thus protected to a greater extent than are weak or descriptive designations that are less distinctive. See Restatement § 21 cmt. i. Unlike trademarks that are considered suggestive or arbitrary/fanciful, a descriptive mark is not inherently distinctive and thus is not considered to be a strong mark. See id. § 13 cmt. e. As noted above, we conclude that plaintiff has acquired secondary meaning with respect to the mark COMMERCIAL. While we believe that the name COMMERCIAL is sufficiently distinctive such that consumers in the eight-county area would identify the mark with banking goods and services provided by plaintiff, we do not believe that the mark is so strong or distinctive that defendant's use of the name COMMERCIAL FEDERAL is likely to cause confusion among consumers.
Clearly, there is a noticeable similarity in the business names of plaintiff and defendant in that both use the word COMMERCIAL. However, the respective business logos used by the parties are substantially different. The record suggests that Commercial Savings has developed a strong business reputation since it began business in 1917. We believe that Commercial Savings' strong reputation is a factor that lessens any confusion due to the similarity in the names.
Neither party disputes the fact that both banks provide similar products and services and that they directly compete in the eight-county area. We thus need not further examine this factor.
The district court found no evidence of intent on the part of Commercial Federal of trying to pass off its services as those of the plaintiff. Commercial Savings does not dispute this finding, but instead argues that intent is not a relevant factor in the analysis, relying on previous decisions by this court. We believe that intent is a relevant factor with respect to the issue of whether defendant's use of a similar mark is likely to cause confusion. We also agree with the district court's finding that there is no evidence of intent or bad faith concerning Commercial Federal's adoption and use of the COMMERCIAL mark.
[W]hen determining whether there exists a likelihood of confusion, weight is given to the number and extent of instances of actual confusion. Life Technologies, Inc. v. Gibbco Scientific, Inc., 826 F.2d 775, 777 (8th Cir.1987). The test under this factor is whether any consumers have actually been confused by the products or services bearing the allegedly confusing marks. See KAT Video v. KKCT-FM Radio, 584 N.W.2d 844, 848 (N.D.1998) (citations omitted). Commercial Savings points to the evidence in the record concerning the letters and telephones calls it received as proof of actual confusion. These incidents of confusion, however, must be viewed in context. See Madison Reprographics, 552 N.W.2d at 449 (citing 1 J. Thomas McCarthy, Trademarks and Unfair Competition § 23.02(2)(a) (3d ed.1996)). First, the majority of mistakes concerning mail and delivery of documents were made by other entities doing business with Commercial Savings, not by actual customers. For the most part, it seems that these mistakes can be attributed to inattentiveness on the part of the caller or sender rather than actual confusion. We note that the incidents of confusion occurred during, or soon after, the time Commercial Federal assumed operation of Hawkeye Federal which diminishes the significance of the incidents. See First Nat'l Bank, Sioux Falls, 153 F.3d at 890 (Isolated evidence of some actual confusion occurring initially upon the creation of a potentially confusing mark is not itself sufficient to establish a likelihood of confusion.). We also note that plaintiff presented no additional evidence concerning incidents of actual confusion following the October 31, 1996 hearing and the December 19, 1996 ruling denying a temporary injunction to plaintiff and the entry of the agreed final decree almost four months later. Thus, plaintiff's evidence on this factor can more accurately be characterized as short-lived confusion by non-customers rather than lasting confusion by actual customers. See Safeway Stores Inc. v. Safeway Discount Drugs, 675 F.2d 1160, 1167 (11th Cir.1982) (noting that kinds of persons confused and degree of confusion are factors that affect the weight and relevance afforded instances of confusion). Based on the minimal incidents of actual confusion by customers, we believe the district court properly determined that the similarity in the names is not such that an appreciable number of ordinary purchasers are likely to be misled as to the source of plaintiff's products and services. [8]
In applying this factor, we consider the degree of care expected of a reasonably prudent purchaser or ordinary consumer using ordinary care. See Restatement § 20 cmt. h. If the goods or services are normally purchased only after considerable attention and inspection, greater similarity between the designations may be permitted than when the goods or services are purchased casually or impulsively. Id. § 21 cmt. h. Courts have noted that bank customers exercise a greater degree of care than do customers of other businesses. See First Nat'l Bank, Sioux Falls, 153 F.3d at 889 (noting that bank customers tend to exercise a relatively high degree of care in selecting banking services); Empire Nat'l Bank of Traverse v. Empire of America, 559 F.Supp. 650, 656 (W.D.Mich.1983). We believe that consumers in the eight-county area in which plaintiff does business would use the same degree of care in banking business and would be able to distinguish between the services and products provided by plaintiff and defendant. We do not believe that an ordinary consumer would be misled in banking decisions simply because two banks in the area have similar names. We believe this to be especially true in this case where Commercial Savings has developed a strong reputation concerning its products and services.
In summary, we agree with the district court's decision that plaintiff has failed to make the requisite showing of likelihood of confusion between the use of its business names, COMMERCIAL, COMMERCIAL BANK, and COMMERCIAL SAVINGS BANK, and the use of defendant's business name, COMMERCIAL FEDERAL. Although the strength of the trademark COMMERCIAL SAVINGS, the similarity of the names and goods and services favor a likelihood of confusion, the rest of the factors do not: degree of care exercised by customers, minimal evidence of actual confusion by customers, lack of intent to deceive. Additionally, we believe that given plaintiff's solid reputation in the eight-county area, that it is not likely that any negative comments concerning defendant's bank will affect plaintiff's bank. The fact that there is another bank in the area at which customers may choose to do business is not sufficient to enjoin defendant's use of that name in its business. We do not believe that the similarity between the business names used by plaintiff and defendant will cause a likelihood of confusion such that customers of Commercial Savings will be so confused that they will inadvertently do their banking business with Commercial Federal.