better bank battle: false use of (R) can’t support false advertising claim

San Diego County Credit Union v. Citizens Equity First
Credit Union, No. 18cv967-GPC(RBB), 2019 WL 446475 (S.D. Cal. Feb. 5, 2019)
SDCCU sued CEFCU, its competitor in the credit union market,
seeking a declaratory judgment of non-infringement and invalidity of the federally
registered mark CEFCU. NOT A BANK. BETTER. (issued 2011) and the asserted
common-law mark NOT A BANK. BETTER, as well as for false registration and
unfair competition.  SDCCU itself has a 2014
federal registration for IT’S NOT BIG BANK BANKING. IT’S BETTER. Several
third-party credit unions use similar trademarks such as “NOT A BANK –
are running out of trademarks
SDCCU’s customers are primarily located in Southern
California while CEFCU’s customers are primarily located in Peoria, Illinois
and Northern California. [CEFCU bought a credit union in Northern California in
2008, but didn’t start advertising its mark outside Illinois until 2011.]  In early 2016, a CEFCU employee saw the SDCCU
mark on a billboard in San Diego, and in May 2017, CEFCU filed a petition to
cancel the SDCCU registration based on its registered and claimed common-law
The complaint alleged that the CEFCU mark was more similar
to the third party marks than to the SDCCU mark, and that if CEFCU asserted
rights broad enough to encompass the SDCCU Mark, it therefore materially
misrepresented to the USPTO that the CEFCU Mark was not confusingly similar to
any of the third-party marks.  In the alternative,
its confusion claim was unjustified. 
Also, CEFCU allegedly uses ® on its common-law variant.
Under the Lanham Act, “Any person who shall procure
registration in the Patent and Trademark Office of a mark by a false or
fraudulent declaration or representation, oral or in writing, or by any false
means, shall be liable in a civil action by any person injured thereby for any
damages sustained in consequence thereof.” 15 U.S.C. § 1120. The alleged
falsities were (1) lack of use in interstate commerce, given that it wasn’t using
the mark outside Illinois when it declared the mark was being used in commerce
and (2) lack of confusion with preexisting marks such as the “IT’S NOT A BANK”
mark of Warren Federal Credit Union, “BETTER THAN A BANK” mark of ABNB Federal
Credit Union and “NOT A BANK-BETTER!” mark of United 1st Federal Credit Union.
This was sufficiently pled on a motion to dismiss—whether there
was actually use in commerce outside Illinois at the relevant time, or whether
use in Illinois by a federally regulated credit union was sufficient for “use
in commerce,” was not for the court to resolve on a motion to dismiss. Likewise,
though SDCCU can’t assert others’ rights, it sufficiently alleged that the
existence of those rights meant that CEFCU made a false statement in its registration
SDCCU also alleged damages in the form of company resources
expended to fight the claim. The harm must be proximately caused by the
fraudulent registration; CEFCU argued that its rights were not dependent on the
date of the registration and that this dispute would be happening anyway, thus
there was no proximate causation.  That
again was a factual dispute not appropriate for a motion to dismiss.
The court also dismissed claims based on false use of ®.  As to the actually (but allegedly fraudulently)
registered mark, use of ® was literally true; SDCCU’s remedy was to be found in
§1120, not in a false advertising claim. 
As to the unregistered mark, the use might be literally false, but a ®
symbol didn’t relate to the “nature, characteristics, qualities or geographic
origin” of CEFCU’s services, as required.

from Blogger

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