Opinion
No. 99 Civ. 10115 (RWS)
February 7, 2003
SKADDEN, ARPS, SLATE, MEAGHER FLOM, New York, NY, By: KENNETH A. PLEVAN, ESQ., STEPHANIE J. KAMEROW, ESQ., ELENI M. ROUMEL, ESQ., Of Counsel Attorney for Plaintiffs.
BAKER BOTTS, New York, NY, By: RUSSELL H. FALCONER, ESQ., STEVEN R. GUSTAVSON, ESQ., Of Counsel Attorney for Defendants.
OPINION
Plaintiffs Citigroup Inc. and Citicorp (collectively "Citigroup") initiated this action against defendants City Holding Company and City National Bank of West Virginia (collectively "City Holding"), alleging that City Holding's "CITY" marks and blue trade dress infringe upon Citigroup's family of "CITI" marks and "Blue Wave" trade dress. Citigroup seeks cancellation of, and an injunction against the prosecution of, several CITY marks as well as money damages. After a trial before the Court and upon all the prior proceedings and the findings and conclusions set forth below, judgment will be granted in favor of Citigroup, in part, as set forth below.
The Issue
This action presents the contest between the aurally identical marks employed by one of the primary financial institutions in the nation and by a West Virginia bank that has had regional and national inspirations. Competing causes of action for trademark infringement, dilution and unfair competition have been whittled down into the remaining claims by Citigroup for infringement, unfair competition and cancellation.
Both parties prognosticate fearful results if the Court finds for the other side: City Holding augurs a world where no (small) business with CITY in its title will be safe from Citigroup's crack team of trademark lawyers, while Citigroup fears that in the absence of relief, the West Virginia-based defendant bank will create a "family" of CITY-marks that will track exactly all of its CITI-marks and create unimaginable mayhem in the minds of consumers. While both sides likely exaggerate, there is an important subtext to City Holding's argument. Businesses have been touting CITY in their titles and trademarks easily since the creation in the nineteenth century of the entity that has become Citigroup. Indeed, Citigroup, which began its existence as the City Bank of New York in 1812, quite intentionally differentiated itself from the pack with the distinctive second "I." As a result, Citigroup's primary claims of infringement must fail, as discussed below.
Prior Proceedings
This action was commenced on September 29, 1999, alleging claims including trademark infringement, dilution, unfair competition and false designation of origin under the Lanham Act, 15 U.S.C. § 1114(1), 1125(a) and (c), to which New York State and common law claims are appended.
On November 5, 1999, five weeks after this lawsuit was filed and before City Holding responded to it, City Holding filed a parallel lawsuit against Citigroup and Citicorp in the federal district court for the Southern District of West Virginia. Ten 3 days later, City Holding moved before this Court to dismiss Citigroup's complaint for lack of personal jurisdiction or, in the alternative, to transfer the case to the Southern District of West Virginia pursuant to 28 U.S.C. § 1404(a).
On January 25, 2000, Citigroup moved before this Court to enjoin prosecution of the later-filed, duplicative West Virginia action. City Holding cross-moved to stay proceedings in this Court pending decision on the motion to dismiss or transfer.
This case was originally assigned to the Honorable Charles S. Haight, but was reassigned to this Court on March 28, 2000, after Judge Haight recused himself.
On May 31, 2000, this Court denied City Holding's motion to dismiss for lack of jurisdiction and its motion to transfer the action to the West Virginia District Court and enjoined City Holding from prosecuting its action there. Citigroup, Inc. v. City Holding Co., 97 F. Supp.2d 549 (S.D.N.Y. 2000).
Upon the conclusion of discovery, on April 17, 2001, Citigroup moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure on their affirmative claims of trademark infringement, dilution and unfair competition and to dismiss City Holding's counterclaims. In an opinion dated October 30, 2001, the Citigroup motion for judgment on its claims was 4 denied, its federal and New York dilution claims were dismissed, and its motion to dismiss City Holding's counterclaims was granted. Citigroup, Inc. v. City Holding Co., 171 F. Supp.2d 333 (S.D.N.Y. 2001).
A non-jury trial was held on June 17 and 18, 2002, to address the several specific issues that remained following the October 30, 2001 summary judgment opinion. Citigroup called three witnesses (Anne MacDonald, the head of Citigroup's global consumer marketing group; Anne Moses, Citigroup's chief trademark counsel; and John Alderman, City Holding's general counsel) and City Holding called one witness (Craig Stilwell, City Holding's executive vice president and director of marketing and human resources). Oral argument was held on December 11, 2002, and post-trial submissions were finalized on February 5, 2003.
Findings of Fact I. The Parties A. Plaintiffs Citigroup and Citicorp
Citigroup Inc. is a Delaware corporation with its principal executive office located at 399 Park Avenue, New York, New York.
Citicorp, a Delaware corporation with its principal offices located at 399 Park Avenue, New York, New York, is a wholly-owned subsidiary of Citigroup Inc.
Citigroup Inc. was formed on October 8, 1998, following the business combination of Travelers Group Inc. ("Travelers") and Citicorp. Citicorp is the parent of Citibank, N.A. ("Citibank").
For many decades or more, Citibank has been one of the most prominent banking institutions in the United States and the world. Through its subsidiaries, Citigroup provides a broad range of financial services to consumers and corporate customers, including banking services such as checking accounts, savings accounts, loans, credit and debit cards, insurance, travelers checks, mortgages, bill payment services, brokerage services and investment advisory services.
Many of the products and services offered by Citigroup's businesses are described on, or available through, its websites, located atwww.citigroup.com, www.citibank.com,www.citi.com and others. Citigroup considers e-commerce to be an important aspect of Citigroup's continued growth and leadership in the financial services area.
B. Defendants City Holding and City National Bank
City Holding Company is a West Virginia corporation headquartered in Cross Lanes, West Virginia. City Holding Company is a bank holding company whose shares are traded on the NASDAQ Exchange.
City National Bank of West Virginia, a wholly-owned subsidiary of City Holding Company, is headquartered in Charleston, West Virginia. City National offers a broad range of banking and financial services. Its services are offered primarily to residents of West Virginia and two adjacent counties in Ohio.
II. The CITI Marks A. The History of Citibank
Citibank was originally chartered on June 16, 1812 under the banking laws of New York State as the "City Bank of New York." Citibank is one of the few private banking institutions in this country that has been in continuous operation since 1812.
In July 1865, Citibank converted its state charter to a national charter and changed its name to The National City Bank of New York.
In the 1890's, Citibank became the largest government depository bank and held more deposits from other national banks than any other U.S. bank.
By 1912, Citibank was the largest commercial lender to New York City businesses, and more than 400 foreign banks maintained their accounts with Citibank. By 1913, Citibank had also secured a leading position in investment banking.
Following passage of the Federal Reserve Act in 1913, Citibank began developing a system of foreign branches to provide corporate customers with banking services around the world. By 1917, no American bank came close to matching Citibank's system of 35 foreign branches. By the end of 1967, Citibank had become the largest U.S. banking presence in the world, having 208 foreign branches in 61 countries.
During the 1920's, Citibank became a pioneer in providing banking services, including checking accounts, savings vehicles and personal loans, to the general public. Also during the 1920's, Citibank, through a corporate affiliate, conducted what would be the first of its many national advertising campaigns. This campaign included advertisements in such prominent national publications as Harpers and Atlantic Monthly.
During the post-World War II business expansion, Citibank took a leading position in responding to the rising demand for credit among small businesses and the general public, more than doubling its commercial and industrial loans and tripling its personal loans to consumers from June 1945-1948. During the 1950's, Citibank's industrial and commercial loans increased more than four times.
In the mid-1960's, Citibank's management adopted the strategic goal of diversifying Citibank's domestic business to offer a more comprehensive array of financial products and services. As a first step, Citibank's shareholders formed a one-bank holding company named First National City Corporation. The holding company was officially renamed Citicorp in March 1974.
The new holding company provided a vehicle through which to expand in the rapidly growing market for financial services by building upon Citibank's well-established business. For example, in 1969, plaintiffs opened the Citicorp Venture Capital business, and in the 1970's, they established the Citicorp Leasing business, a commercial leasing service. These businesses operated across the country.
In 1979, Citicorp founded Citicorp Mortgage, headquartered in St. Louis, Missouri. Throughout the 1980's, Citicorp Mortgage expanded its business in mortgage origination and 9 mortgage servicing. In the late 1980's, Citicorp Mortgage was the country's number one issuer of new first mortgages.
During the 1970's, Citicorp acquired Nationwide Financial Services, a consumer finance corporation based in St. Louis, Missouri with offices in approximately 14 states. This division was named Citicorp Person-to-Person Consumer Financial Services. By 1982, there were approximately 150 Person-to-Person Centers across the country.
In 1979, Citicorp Industrial Credit Corp. was formed with offices in 29 cities to provide asset-based financing worldwide.
By 1982, Citicorp Capital Investors, Ltd. provided long-term debt and equity financing worldwide, and Citicorp Investment Management Inc. provided portfolio investment advice. Citicorp Business Credit, Inc. had 11 domestic offices that offered financing and other services to middle market companies.
During the 1970's and 1980's, consumers throughout the country had exposure to Citicorp and Citibank through their travelers check and credit card businesses. For example, in the mid-1980's, more than 60 million travelers checks bearing the CITICORP mark were sold each year in all fifty states by more than 20,000 agents.
In the 1970's and 1980's, plaintiffs issued millions of MasterCard and Visa credit cards prominently bearing the CITIBANK or CITICORP marks. Millions more Americans received credit card solicitations in the mail each year as part of direct mail campaigns soliciting new credit card customers.
During the 1970's, Citicorp became the largest United States banking corporation in terms of loans and the largest non-governmental bank worldwide with 850 offices in close to 900 countries. By 1972, Citicorp's assets exceeded $30 billion.
By 1983, Citibank's consumer loan portfolio was valued at $29 billion and 90 percent of its consumer earnings were generated outside New York.
In 1984, Citibank and Citicorp had customers in every one of the fifty states, and relationships with approximately one out of every seven households in the country. As of 1990, Citicorp had business relationships with more than 17 million domestic households. That number grew to 22 million by 1997, the year before the Travelers/Citicorp merger.
B. The CITI Marks
On January 19, 1960, Citibank registered the mark CITIBANK with the United States Patent and Trademark Office 11 ("PTO"). Prior to that time, by the 1950's, Citibank had identified itself, and had been referred to in the banking/financial industry, as well as by the public, as "City Bank" or "Citibank." Indeed, as early as 1897, "CITIBANK" was used as the bank's cable address.
Citicorp began no later than the mid-1970's to build and expand upon a CITI-based family of marks. CITI was chosen as the foundation of the family because the general public and financial community already referred to Citibank by the coined term "Citi" and the name had naturally evolved into the company's trademark.
In February 1978, an enormously successful advertising campaign was launched for the new Citicard Banking Centers. Its slogan was "THE CITI NEVER SLEEPS." These centers spurred a technological revolution in consumer banking, and Citibank's role in introducing this technology reaffirmed its leadership in innovation in the financial services area. Citicorp federally registered THE CITI NEVER SLEEPS shortly after the 1978 campaign was launched. Since then, Citigroup has used a number of other slogans featuring the CITI mark, including "The CITI of Tomorrow" (1981), "The CITI at Your Front Door (1981), "It's your CITI" (1984), and "The CITI of Your Dreams" (1995).
For at least two or three decades plaintiffs have been referred to and known as "CITI" or "The CITI." On March 19, 1979, Citicorp filed a federal trademark application for CITI. The mark CITI was federally registered by Citicorp in 1981.
As of December 30, 1980, Citicorp owned 27 federally registered marks, including: (1) CITIBANK; (2) CITICARD; (3) CITICORP; (4) CITIDATA; (5) CITIPHONE; (6) CITIPLAN; (7) CITIQUOTE; (8) CITISHARE; and (9) THE CITI NEVER SLEEPS. Five years later, that number had grown to approximately 60 federally-registered CITI-prefixed marks, including (1) CITI; (2) CITI TREASURY MANAGER; (3) CITI$HOPPER; (4) CITIDOLLARS; (5) CITIFILE; (6) CITIFLEX; (7) CITILEASE; (8) CITISAVINGS; and (9) CITITREND. By December 31, 1990, CITI's family of approximately 60 federally registered marks also included: (1) CITIBANK PREFERRED; (2) CITICORP TRAVELLERS CHECKS; (3) CITIEXPRESS; (4) CITISPAN; and (5) CITISTAR.
By year-end 2001, there were approximately 140 marks, either registered or covered in pending federal trademark application, in the CITI family of marks.
Plaintiff's in-house Chief Trademark Counsel, Anne Moses ("Moses"), was responsible for clearance for each of the various CITI-names that were adopted by the plaintiffs over the years in which Moses was Chief Trademark Counsel. Moses is unaware of any United States CITI-prefixed marks that have not been cleared by plaintiffs' trademark attorneys.
The CITI mark is also used in vanity phone numbers, including 1-800-321-CITI, 1-800-441-CITI, 1-800-336-CITI and 1-800-CITIGOLD. The number 1-800-CITI-ATM was used in the 1980's.
The CITI mark is also incorporated into plaintiffs' domain names. The website www.citibank.com was established in 1995.
Despite the abundance of CITI marks, it was not until the merger with Travelers in 1998 that Citigroup developed a "master brand strategy," whereby the CITI mark, or "primary brand" is "use[d] to name all of [the] divisions and flagship products". (MacDonald Dep. at 65.) Prior to the merger, "Citibank, rather than Citi [was] the first level of . . . branding emphasis." (Id. at 68.) The post-merger branding strategy was based upon consumer research and the fact that the company was larger.
C. Certain CITI Policing Efforts
During the 1970's and 1980's, plaintiffs enforced their trademark rights with a series of lawsuits and opposition proceedings before the PTO. These policing efforts included such third party marks as CITIBANK, CITY BANK, CITYCARD, ITS YOUR CITY, and CITYLINK. According to the deposition testimony of Christopher York, Citibank's attorney who was charged with protecting the bank's trademarks, as a matter of practice Citigroup did not take 14 action against entities titled "City National Bank," and he could not recall such a name ever causing consumer confusion.
Between 1972 and 1980, Citigroup's predecessors initiated twenty-four instances of policing that did not lead to litigation and eleven lawsuits. Each of these examples involved either the CITIBANK mark or a phonetic twin, such as CITY BANK. There was also a 1980 matter involving Citi Savings and Loan Association of North Carolina.
One policing effort that was resolved by settlement involved First City Bancorporation of Texas ("First City"). Plaintiffs and First City entered into an agreement that required, among other things, that First City "refrain from any and all use of `City Bank' (or the phonetically similar word `Citi Bank') solely by themselves. . . ." The agreement further provided that First City was entitled to use the word "Bank" in combination with the prefix "First City," and that "City National Bank" and "First City National Bank" were acceptable, non-infringing uses "throughout the world . . . in connection with all business, goods and services." In the agreement, First City represented that it intended and desired that the public view its name and mark as "First City."
In another agreement, entered in 1977 between plaintiffs and City Federal Savings ("City Federal"), City Federal agreed to 15 cease all use of its marks "Citycard" or "CITYcard". In the 1980's, Citibank entered into another agreement requiring a business publication MCP Inc. ("MCP") to change its name from CITIBUSINESS to City*Business. Paragraph 9 of that agreement states that the "agreement shall continue in effect only so long as MCP is neither a financial institution nor affiliated with a financial institution and for so long as City*Business is used solely in connection with a general business publication. . . ."
In 1987, Citibank sent a cease and desist letter to a Citi Mortgage Co. in Georgia. The company wrote back in response that it had changed its name to City Mortgage Co.
In 1990, Citibank negotiated with Citi Mortgage Associates of Pennsylvania to change its name to CITY MORTGAGE ASSOCIATES. The Pennsylvania company complied, and simultaneously adopted a logo reflecting that fact, which it mailed to Citibank to verify its compliance with the settlement.
In the mid-1990's, Citibank negotiated with Citimortgage Co. of Washington State, which agreed to change its name to City Mortgage Corp.
In early 1998, Citibank's in-house Trademark Counsel, Eileen Kennedy, sent a cease-and-desist letter to the owner of an 16 intent-to-use trademark application for CITISAFE, covering safes, stating:
Safes . . . are intimately involved in the banking, finance and financial security industries. This fact, coupled with the fact that you have chosen a mark comprised of CITI, a famous designation in the banking and financial industries indicating products and services originating solely with Citicorp and its affiliates, concerns us. One could conclude that "CITI" was chosen as a result of the reputation and good will associated with that mark as a result of our long and extensive use of it. . . . Regardless of your intention, however, it is clear that consumers will mistakenly believe that your product originates with, is sponsored by, or is in some other way associated with, Citicorp or its affiliates, giving rise to a likelihood of confusion. We therefore must request that you either withdraw your present application or amend it to a mark that does not include our famous CITI prefix.
Plaintiffs' policing efforts have also included petitions and proceedings before the PTO. For instance, plaintiffs engaged in an opposition proceeding against federal trademark registration application for the service mark IT'S YOUR CITY. That opposition was resolved by the applicant withdrawing its application. In 1985, Citicorp filed with the PTO a Petition for the Cancellation of the mark CITYLINK for point-to-point telecommunications services. The parties entered into an agreement that provided that the registrant would, inter alia, (1) "always split or leave a space between the words CITY and LINK, equal to the type size of the letters used for those words, whenever and in whatever manner said mark is used, displayed or presented (e.g. CITY LINK) and further agrees to amend its United States Service Mark registration 17 accordingly"; (2) "limit all use of the mark CITY LINK solely to point-to-point telecommunications services in conformity with its current usage of that mark"; (3) limit the geographic scope of its use of the mark; and (4) "use its CITY LINK mark only in close conjunction with the words REPUBLIC, REPUBLIC TELECOM, MID AMERICAN and/or MID AMERICAN LONG DISTANCE whenever and in whatever manner the mark is used, displayed or presented."
Citicorp was successful in opposition proceedings in 1996 against registration of the marks CITYBROKER and CITYDEALER.
In 1997, Citicorp brought a PTO opposition proceeding involving the mark CITI HABITATS, INC.
In 1998, Citicorp commenced successful PTO opposition proceedings against the marks CITYHOME and Design and CITY CARD.
On May 25, 2000, Roseville PCS, Inc. abandoned its federal trademark application to register the mark CITYPHONE for wireless telecommunications and personal communications services, after counsel for Citicorp sent a letter to Roseville in February 2000 objecting to its registration of the CITYPHONE mark.
D. References to City Holding's Marks in Plaintiffs' Files
In September 1997, Citicorp obtained a search report for clearance purposes for the mark CITIFUND, to be used on mutual funds. The report revealed a number of marks, including City Holding's CITY FINANCIAL CENTER and CITY FINANCIAL CORP applications.
In April or May 1998, Citibank personnel obtained a copy of City Holding's solicitation for home equity loans. The CITY NATIONAL BANK logo was used, and the bank was identified as being from Charleston, West Virginia. The fax transmission on the copy of that solicitation indicates that Helen Danyo of Citibank, who had worked in the Trademark Counsel's office, passed the document on at that time to Joe Aglione, who is an investigator with the Stonegate Agency in New York, employed by Citibank from time to time to investigate companies and trademark usages.
In May 1998, Eileen Kennedy, plaintiff's Senior Trademark Counsel, received a copy of an advertisement for defendants' City Mortgage Services company from a Citicorp Mortgage attorney. This advertisement indicated that the company was located in Charleston, West Virginia.
Moses met with outside counsel in May 1999 to discuss City Holding's marks.
On July 6, 1999, a background memorandum prepared by outside counsel summarized the results of a comprehensive investigation which had been completed regarding City Holding's "infringing conduct."
On September 28, 1999, City Holding's outside counsel wrote to Moses, enclosing a copy of City Holding's CITY FINANCIAL CORP service mark registration and stated that actual confusion had been occurring as between CITY FINANCIAL CORP and CITIFINANCIAL. The letter concludes by stating that Moses was requested to contact outside counsel for City Holding "at your earliest convenience to discuss this matter in greater detail. We would like to work with you in formulating a joint resolution to this problem that enables us to co-exist as well as protect our respective customers from continued confusion."
Citigroup commenced this lawsuit on September 29, 1999.
In February, March and April of 1999, a series of requests to extend time to oppose City Holding's federal trademark applications to register CITY MORTGAGE SERVICES and CITY MORTGAGE CORP were filed in the PTO by Citigroup's Trademark Counsel and outside counsel Citigroup's behalf.
E. Adoption of Citifinancial and CitiMortgage Names and Marks
In November and December 1998, focus group testing was done for Citigroup in Ohio, Texas and South Carolina in order to assess the public's reaction to proposed names to replace the Commercial Credit Corporation, a consumer finance subsidiary that had been a Travelers Group company. The names tested were CITIFAMILY, CITIACCESS, CITILOAN, CITICREDIT, CITISOURCE, CITIFINANCE, and CITIFINANCIAL. The survey company concluded that "of the six names tested, CITIFINANCE and CITIFINANCIAL held the greatest potential."
A search report was ordered on December 22, 1998 with respect to CITIFINANCE and CITIFINANCIAL. Both were cleared. The report revealed 18 pages of listings of "City Finance" companies, including City Holding's CITY FINANCIAL CORP and CITY FINANCIAL CENTER.
On January 15, 1999, Citicorp filed an application to register the CITIFINANCIAL mark, attesting that there were no other parties with the right to use that mark.
On January 27, 1999, a memo went out among Commercial Credit's executives regarding the CITIFINANCIAL name in the focus group testing. The memo stated that "[a]ll groups associated the citi-prefix with Citibank"; that the Legal department and other 21 will be "significantly affected by this [name change] project"; and that the executives should "develop contingency plans for markets subject to delay or rejection in obtaining rights to business use of the name."
On January 22, 1999, the General Counsel for Aristar Company, headquartered in Tampa, Florida, wrote to the General Counsel of Citigoup's Commercial Credit subsidiary, attaching a news article he had seen that reported that Citigroup was considering changing Commercial Credit's name to CitiFinance. Aristar wrote that Aristar's "City Finance subsidiary currently uses the mark CITY FINANCE at approximately 100 locations . . . and reserves the right to expand the use of its mark in the United States. The CITY FINANCE mark has been in use in commerce continuously since 1945 at retail locations throughout the southern United States." The Aristar attorney enclosed materials from the company that bore the City Finance logo.
In reply, Citigroup's counsel wrote: "As I am sure you know, business names comprised of combinations of `City' and `Finance' or `Financial' are common in the financial industry. . . . [W]e do not believe that our use of `CitiFinance' or a similar name . . . will violate any rights that may exist in your City Finance Co. name."
Aristar's counsel wrote back that he was "greatly troubled by your company's ongoing attempts to use the name City Finance [sic] before resolving the issue." Negotiations continued, with Citigroup arguing in March 1999 that, inter alia, "[l]ike City Finance Company, we have lived for years with corporate names composed of common and much used words in our industry such as `commercial', `credit', `city', and `loan' just as you have with `city' and `finance'. Both our businesses are thriving despite similarities between our names and those of numerous other companies, and that is likely to continue."
Citigroup's counsel wrote to Aristar later in September:
As you know, business names comprised of variations of "City" and "Finance", "Financial", "Loan", "Credit" and similar phrases are common in the financial industry. For example, Commercial Credit's Ohio subsidiary operates over 100 offices in Ohio under the name "City Loan Financial" and has used the "City" name since 1912. . . . [CitiFinancial] is a single word, as opposed to two words, and thus creates a very difference [sic] commercial impression than does "City Finance." Further, the emphasis is on the famous "Citi" portion of the mark, which assures that it will be understood by the public as a member of the famous "Citi" family and not with your company.
Citigroup and Aristar reached a commercial settlement.
On October 29, 1999, Citigroup's outside counsel wrote to the Ohio Secretary of State, seeking permission to reserve the CitiMortgage, Inc. corporate name in that state, and arguing that 23 no conflict existed with an existing reservation for "City Mortgage Company": "[T]he public will understand that Citimortgage, Inc. is associated with and part of the Citigroup family. Additionally, because `City' is a commonly used prefix for financial services corporations, Citigroup and its many subdivisions that bear the famous CITI prefix have coexisted with many `City' entities for years in virtually every jurisdiction."
In October 1999, after this suit had been filed, Citigroup's outside counsel wrote letters to Mr. John Alderman at a post office box in Cross Lanes, West Virginia. The purpose of the letters, and of phone calls that accompanied them, was to obtain the consent of City Mortgage Corporation to plaintiffs' reservation of the name Citimortgage, Inc. with the West Virginia Secretary of State. The following representations were made to Alderman: "`City' is a commonly used prefix for financial services corporations. . . . Citigroup and its many CITI companies have coexisted for many years with many `City' entities." Outside counsel was unaware at that time that there was a connection between City Mortgage Corp and City Holding, or that CITY MORTGAGE CORP was in any way related to other City Holding marks.
Kennedy, Citigroup's Senior Trademark Counsel, "generally tr[ies] to stay on top of other uses of C-I-T-Y and C-I-T-I prefixed marks in the financial services area." Although she does 24 not know how many are out there, she guessed that the number would be closer to 100 than 2.
III. City Holding's CITY Marks A. The History of City Holding
City National Bank of Charleston was chartered in West Virginia in 1957. As of 1982, City National had one location, which was in Charleston, West Virginia.
City Holding was formed in March 1983 as a holding company to take advantage of certain changes in banking law. On March 7, 1984, City National became a wholly owned subsidiary of City Holding.
Commencing in 1984, City Holding began to expand by acquiring community banks "within the triangular area formed by the cities of Charleston, Huntington and Parkersburg," West Virginia. City Holding operated these subsidiary banks as separate entities, using their historical bank names. As of 1990, City Holding operated five community bank groups in West Virginia, with two bank locations operating under the City National name.
B. City Holding's Adoption of a New Logo
In 1990 or 1991, City Holding retained a public relations firm to recommend a new logo for City Holding. The new logo enlarged the word "CITY" compared to the words "HOLDING COMPANY." This new logo format was also implemented for City National, which placed the word "City" directly above "National Bank" in a larger typeface. Signs at existing City National banks were changed to include the new format with the enlarged CITY. At this time, there were three bank locations, all in West Virginia, operating under the City National name.
From 1990 to 1997, City Holding continued to acquire community banks in West Virginia, operating most of them under pre-acquisition names, while advertising them all together. In 1998, following the acquisition of a West Virginia-based community bank that increased the size of City National, City Holding changed the name of "City National Bank of Charleston" to "City National Bank of West Virginia," and consolidated all of its community banks into the City National subsidiary under the City National Bank name and logo.
The testimony of Anne MacDonald, the head of Citigroup's global consumer marketing group, sought to establish that City Holding is moving away from a brand of "City National" to a brand focused on the word "CITY." However, there was no evidence from 26 City Holding indicating that this was in fact the case. The mere fact that the word "CITY" is larger than the accompanying "generic" words does not mean that the mark at issue is "CITY." Further, as discussed in the summary judgment opinion, the fact that City Holding is referred to in shorthand as "City" also does not reflect a move on the part of City Holding. Citigroup, 171 F. Supp.2d at 348. Finally, the vanity phone numbers and "CITY"-named services are insufficient to suggest that City Holding intends to be known as "City." As a result, it is concluded as a matter of fact that City Holding has not deliberately engaged in a branding effort to be known as "CITY."
C. City Financial Corporation
In October 1993, City Holding formed City Financial Corporation to market securities brokerage and investment advisory services.
As of September 2000, City Financial Corp. had eight employees, including six registered representatives, and approximately 1,400 customers, 90 percent of whom resided in West Virginia and 80-85 percent of whom were also customers of City National. At that time, it had revenues of approximately $525,000 and profits of $29,000. City Financial Corp. operated out of office space allocated to that business, with signage identifying 27 the company, in three to four City National bank locations in West Virginia.
On November 7, 2001, City Holding issued a press release announcing an agreement with Ferris Baker Watts ("FBW"), pursuant to which FBW acquired all of the broker dealer accounts of City Financial Corp. According to City Holding's CEO, Jerry Francis, the agreement reflected City Holding's "strategic initiatives to remove the Company from non-core business and fully focus on our core community banking operations." The transfer was commenced on November 26, 2001.
D. City Mortgage Corporation and City Mortgage Services
In 1993, City Holding established City Mortgage Corporation as a full service mortgage company located in a suburb of Pittsburgh, Pennsylvania. Several years later, this office was closed.
In the mid-1990's, City Holding began to develop a nationwide mortgage service and origination business. In July 1996, they created a "City Mortgage Services" division to facilitate the growth of defendants' mortgage servicing portfolio. City Mortgage Services was located in California, because City Holding considered California to be the "hotbed of mortgage banking."
In December 1996, City Holding acquired certain assets and liabilities of Prime Financial Corporation, a mortgage loan servicing company located in Costa Mesa, California. Prime Financial's assets were then integrated into City Mortgage Services.
In October 1997, City Holding acquired First Allegiance Financial Corporation, a mortgage company headquartered in Irvine, California. Also in 1997, it established an office of City Mortgage Services in Dallas, Texas. The business was conducted under the name of City Home Lending.
In 1998, City Holding increased its capacity to solicit new mortgages by acquiring a federally chartered savings bank, Del Amo Savings Bank, located in Torrance, California, and Frontier State Bank, headquartered in Redondo Beach, California.
During the years 1998-2000, City Holding sent out over 20 million direct mail solicitations to households throughout the United States for a "125" mortgage product (i.e., a second mortgage that had a loan value of up to 125 percent of the value of the mortgaged property). Among other marks, defendants utilized marks that utilized the word "City" in larger, bold type than the words it modified, such as "NATIONAL BANK," "Mortgage Services," and "Lending Services."
After experiencing financial problems with their nationwide mortgage origination and solicitation business, City Holding in March 2000 announced that it would exit the "Specialty Finance" (or "high loan to value") business and scale back its mortgage origination business.
On January 31, 2001, City Holding announced its withdrawal from the mortgage origination business, the sale of the West Coast banks, a cancellation of a quarterly dividend, and fourth quarter write-downs of more than $40 million.
E. City Holding's Trademark Applications and Registrations
City Holding owns federal service mark registrations and applications, all of which incorporate a first word of CITY. These marks do not comprise a legal family that would be protected by the family of marks doctrine.
In April 1997, City Holding hired its first in-house lawyer. Shortly after his arrival, the new general counsel recommended the filing of federal trademark applications for various of the CITY marks that City Holding was using or considering using at that time. Beginning in July 1997, City Holding filed federal trademark applications for nine CITY marks. The following chart identifies the marks and registration status:
Mark Date Filed Reg. No. CITY CREDIT SERVICES 07/15/97 2,226,376 CITY FINANCIAL CORP. 07/15/97 2,277,087 CITY HOLDING COMPANY 07/15/97 2,277,088 CITY MORTGAGE CORP. 07/15/97 2,268,160 CITY MORTGAGE SERVICES 07/15/97 2,244,249 CITY NATIONAL BANK 07/15/97 pending CITY CAPITAL RESOURCES 11/14/97 pending CITY FINANCIAL CENTER 07/15/97 pending CITY INSURANCE 03/12/01 pending The marks above primarily involved the provision of financial services. In each of the trademark applications, City Holding disclaimed all rights with respect to the non-CITY component of the mark, i.e., the descriptive words such as FINANCIAL OR MORTGAGE.City Holding has never used two of the marks and has abandoned their applications for federal registration thereof: CITY CAPITAL RESOURCES and CITY FINANCIAL CENTER. Further, Citigroup no longer seeks to cancel CITY HOLDING COMPANY, nor do they seek to enjoin the prosecution of the CITY NATIONAL BANK trademark application.
According to testimony from John Alderman, City National's general counsel, City Holding has not used the CITY CREDIT SERVICES and CITY MORTGAGE CORP. marks since 1997 or 1998. Alderman's testimony further revealed that City Holding had not made any concrete plans to resume use of those marks.
The trial testimony also established that City Holding has recently ceased using the CITY FINANCIAL CORP. mark as a result of retrenchment and had no concrete plans to use that mark again. On November 26, 2001, City Holding announced the agreement, referred to above, by which FBW would acquire all the broker dealer accounts of CITY FINANCIAL CORP. and would provide investment services to City National's customers through a revenue-sharing agreement.
It also established that CITY MORTGAGE SERVICES continued to be used, even after City Holding decided to exit the business, albeit in a scaled-back manner. In 2001, City Holding publicly announced an exit from the City Mortgage Services business, which had been based in California. Alderman testified, however, that City Holdings continues to do business under the CITY MORTGAGE SERVICES mark, but only a "tiny little mouse"'s worth.
IV. Ownership and Strength of the CITI Marks
Citigroup's ownership of the service marks on which it relies for its trademark infringement claims is established by numerous federal registrations.
The CITI marks are famous for banking and financial services. That fame is established by a number of factors. First, plaintiffs have expended billions of dollars in advertising and marketing in support of the sale of services under the CITI marks. In 2000 alone, Citigroup spent $603 million.
Second, Citigroup has derived enormous revenues and income from services provided under the CITI marks. For instance, Citicorp's net income in 1997 was $3.6 billion, with a revenue of $21.6 billion.
Third, Citigroup has deeply penetrated the domestic market, with a growth from 4.3 million customers in 1980 (3.6 million of whom had a Citigroup credit card) to 22.8 million customers in 1997 (20.1 million of whom had a Citigroup credit card). A 1996 study revealed that 89 percent of U.S. consumers have heard of Citibank, and 51 percent of the public is familiar with the services provided by Citibank.
Fourth, Citigroup and its marks have received unsolicited media attention for decades, including hundreds of articles appearing in mass circulation newspapers, magazines and electronic media, including such publications as The New York Times, The Wall Street Journal and Forbes. Since at least the 1980's, some news stories have referred to Citigroup and/or its predecessors simply as "CITI."
Finally, the CITI family of marks enjoys great strength in West Virginia. Citibank has offered financial services in West Virginia since at lest 1980. As of 1980, approximately 6,800 households in West Virginia had a Citibank credit card. That number climbed to 116,000 by 2000. Citicorp Travelers Checks are sold in West Virginia as well as nationwide. Citicorp has offered mortgages to West Virginia households since at least 1980. In 2000, CitiMortgage originated 195 loans in West Virginia totaling $16 million, and as of December 31, 2000, CitiMortgage was servicing 1,800 loans in West Virginia totaling $127 million. As of 2001, approximately 21 branches of CitiFinancial were located in West Virginia.
V. Other City and City National Bank Entities
At least 37 third parties utilize marks that include the word CITY. For instance, there are at least two CITYBANKs — one in Hawaii and one in Washington. One Valley Bancorp of West Virginia has registered a mark, CITY NATIONAL BANK OF FAIRMONT (Reg. No. 2,023,268). A regional corporation, the National City Corporation, has registered a number of marks utilizing the word CITY, including NATCITY (No. 2,058,052); NATIONAL CITY (No. 1,904,621); NATIONAL CITY COMPLETE LOAN (No. 2,136,298); NATIONAL CITY CORPORATION (No. 1,913,729); NATIONAL CITY CORPORATE SELECT (No. 2,184,859), NATIONAL CITY INVESTMENT MANAGEMENT COMPANY (No. 2,317,245), NATIONAL CITY LEASING CORPORATION (No. 1,761,676), and NATIONAL CITY MONEY CARD (No. 1,960,920).
It should be noted that there are at least 18 other banks that use the mark "City National Bank." The oldest is the City National Bank and Trust Company, located in New York, which first used the mark City National Bank in 1887. The largest is the City National Bank, located in California, which has total assets of $10,096,337.
Conclusions of Law I. Jurisdiction
This Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 1338.
II. Citigroup Is Entitled to Cancellation of Some, But Not All, the CITY Marks
Citigroup seeks the cancellation of four of City Holding's five federally registered marks: CITY MORTGAGE CORP, CITY CREDIT SERVICES, CITY FINANCIAL CORP and CITY MORTGAGE SERVICES. In addition, Citigroup seeks to enjoin the prosecution of City Holding's federal applications with regard to three of its four marks that are in the process of being registered: CITY CAPITAL RESOURCES, CITY FINANCIAL CENTER and CITY INSURANCE. City Holding 35 has stated that it has abandoned its applications for the marks CITY CAPITAL RESOURCES and CITY FINANCIAL CENTER, and therefore it is unnecessary to address those marks.
A. Standards for Cancellation
The Lanham Act expressly provides that federal courts may cancel the registration of any federally registered trademark. 15 U.S.C. § 1119 ("In any action involving a registered mark, the court may determine the right to registration, order the cancellation of registrations, in whole or in part . . . and otherwise rectify the register with respect to the registrations of any party to the action."). To prevail in a claim for cancellation, a plaintiff must show that (1) it has standing to bring a cancellation claim, and (2) there are valid grounds for why the registration should not continue to be registered.
B. Standing
A plaintiff has standing to seek cancellation of a federally registered trademark if it has a real commercial interest in its own marks and a reasonable basis for its belief that it would be damaged in the absence of cancellation. Aerogroup Int'l Inc. v. Marlboro Footworks, Ltd., 977 F. Supp. 264, 266-67 (S.D.N.Y. 1997). This standard is met where, inter alia, (1) the trademark for which cancellation is sought has been cited against 36 the applications of plaintiff's own trademarks. E.g., Cerveceria Modelo, S.A. de C.V. v. R.B. Marco Sons, Inc., 55 U.S.P.Q.2d 1298, 1299-1300 (T.T.A.B. 2000), or (2) plaintiff is using the same or a similar mark for the same or similar goods, e.g., Selva Sons, Inc. v. Nina Footwear, Inc., 705 F.2d 1316, 1326 (Fed. Cir. 1983) (cancellation petitioner demonstrated "real interest" by alleging NINA trademark was confusingly similar to petitioner's NINO trademark).
Since the commencement of this lawsuit, at least four of Citigroup's federal registrations have been impeded as a result of City Holding's marks:
By letter dated July 16, 1999, the PTO informed Citigroup that it was not entitled to register CITIFINANCIAL because City Holding had already applied to register CITY FINANCIAL CENTER and CITY FINANCIAL CORP, and there may be a likelihood of confusion between the two marks pursuant to Section 2(d) of the Lanham Act, 15 U.S.C. § 1052(d).
By letter dated December 22, 1999, the PTO informed Citigroup that it was not entitled to register CITIMORTGAGE because it too closely resembled the marks in U.S. Registration Nos. 2,244,249 (CITY MORTGAGE SERVICES) and 2,268,160 (CITY MORTGAGE CORP), and there may be a likelihood of confusion between the two marks pursuant to Section 2(d) of the Lanham Act, 15 U.S.C. § 1052(d).
By letter dated March 9, 2001, the PTO informed Citigroup that it was not entitled to register CITICAPITAL because City Holding had already applied to register CITY CAPITAL RESOURCES, and there may be a likelihood of confusion between the two marks pursuant to Section 2(d) of the Lanham Act, 15 U.S.C. § 1052(d).
By letter dated December 6, 1999, the PTO informed Citigroup that it was not entitled to register CITICREDIT because City Holding had already applied to register CITY CREDIT SERVICES, and there may be a likelihood of confusion between the two marks pursuant to Section 2(d) of the Lanham Act, 15 U.S.C. § 1052(d).
While the denials of those four applications would seem to grant standing to Citigroup with regard to those marks that impeded its applications, City Holding argues that it is willing to consent to such registrations and acknowledge that their respective marks can co-exist in the marketplace. Such acknowledgements could lead to Citigroup's being able to register the above marks successfully. E.g., In re E.I. Du Pont de Nemours Co., 476 F.2d 1357, 1363, 177 U.S.P.Q. 563, 568 (C.C.P.A. 1973) ("[W]hen those most familiar with use in the marketplace and most interested in precluding confusion enter agreements designed to avoid it, the scales of evidence are clearly tilted. It is at least difficult to maintain a subjective view that confusion will occur when those directly concerned say it won't."). However, City Holding and Citigroup have not entered into any such agreements. Citigroup's registrations remain suspended. As a result, it cannot be said that Citigroup lacks standing on the above marks because City Holding was willing to make a deal that Citigroup apparently has not, and perhaps would not, accept.
In any case, even if City Holding's offer to consent to the registration of the CITI marks vitiates Citigroup's standing as conveyed through actual impediments to its registration, Citigroup can still establish a reasonable basis for its belief that it would be injured in the absence of cancellation because of the purported similarity between the marks and the fact that they are in the same financial services industry. E.g., Selva Sons, 705 F.2d at 1326. Citigroup argues that any CITY-prefixed mark in the financial services sector is "confusingly similar" to its CITI-prefixed marks. Therefore, although that argument is later rejected, Citigroup's reasonable belief that it has been damaged by the existence of CITY-prefixed marks is sufficient to confer standing.
C. Grounds for Cancellation
A plaintiff may bring a cancellation claim on two grounds: (1) the trademark is barred from registration under section 2 of the Lanham Act, or (2) the trademark comes within any of the specifically listed grounds in Section 14 of the Lanham Act under which a registration may be cancelled.
Citigroup argues that pursuant to Section 2 of the Lanham Act, City Holding's federally registered marks should be cancelled and its federal applications at issue enjoined because (a) pursuant to section 2(d), the City Holding marks create a likelihood of confusion, 15 U.S.C. § 1052(d); and (b) pursuant to section 2(f), the City Holding marks are likely to cause dilution of the CITI marks. 15 U.S.C. § 1052(f). It also argues that pursuant to section 14 of the Lanham Act, the registered CITY marks should be cancelled because they have been abandoned, and two of the pending applications should be enjoined due to purported fraudulent misrepresentations in the applications. 15 U.S.C. § 1064. The specific allegations regarding fraud and abandonment will be addressed first, to be followed by the more general allegations of likelihood of confusion and abandonment.
Procedurally, the Court cannot order the cancellation of marks that have not yet been registered. See GMA Accessories, Inc. v. Idea Nuova, Inc., 157 F. Supp.2d 234, 241 (S.D.N.Y. 2000) ("[B]y its terms, § 37 [of the Lanham Act] contemplates an action involving a registered trademark."). The Lanham Act does, however, invest a court with the power to grant injunctions according to the principles of equity "to prevent the violation of any right of the registrant" of a registered mark. 15 U.S.C. § 1116(a). Thus, courts have enjoined defendants from continuing to pursue federal registrations for marks that would, inter alia, result in likelihood of confusion. E.g., Grotrian, Helfferich, Schulz Th. Steinweg Nachf v. Steinway Sons, 523 F.2d 1331, 1343-44 (2d Cir. 1975) (affirming injunction preventing appellant from prosecuting any application for trademark registration in the United States involving disputed mark). Such logic makes sense and, were the Court to conclude that any CITY mark in the process of being registered would result in likelihood of confusion or dilution, an injunction would likely be appropriate. Because it does not, no injunction will issue.
1. The Arguments Regarding Fraudulent Applications Are Denied as Moot
Citigroup argues that prosecution of the applications for CITY CAPITAL RESOURCES and CITY FINANCIAL CENTER should be enjoined due to purported misrepresentations to the PTO. Because City Holding has represented to the Court that it has withdrawn these applications, the argument is moot and need not be addressed. City Holding is hereby ordered to file an express abandonment of the marks with the PTO within ten (10) days of the issuance of this opinion. If City Holding fails to comply, Citigroup may raise the argument again and an injunction may issue against the two applications if deemed appropriate at that time.
In its opening memorandum, Citigroup argued that the CITY INSURANCE application should be enjoined. (Pls.' Mem. at 2.) Presumably, such request for injunction is based on the alternative grounds of likelihood of confusion and dilution, as Citigroup did not discuss the CITY INSURANCE application in the section of its brief addressing the fraudulent applications. (Id. at 26-30.)
It appears that City Holding erroneously represented to the PTO in five Requests for Extension of Time to file Statements of Use that they were engaged in "ongoing efforts" to make use of the marks CITY CAPITAL RESOURCES and CITY FINANCIAL CENTER even though that was not the case. At trial, Alderman testified that there had not been any such ongoing efforts and that they "did not do any formalized marketing efforts." (Tr. at 165.) The only analysis on either mark was an "analysis on the name" CITY FINANCIAL CENTER sometime in 1997. (Tr. at 172.)
2. All Four Registered Marks are Cancelled Due to Abandonment
Citigroup has argued that four of the five registered marks have been abandoned: CITY MORTGAGE CORP, CITY CREDIT SERVICES, CITY FINANCIAL CORP and CITY MORTGAGE SERVICES.
A registration may be cancelled at any time if it has been abandoned. 15 U.S.C. § 1064. The determination of abandonment is governed by Section 1127 of the Lanham Act, which states, in pertinent part, that a mark shall be deemed abandoned "[w]hen its use has been discontinued with intent not to resume such use," which intent "may be inferred from circumstances." 15 U.S.C. § 1127. Use of a mark means "the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark." Id.
The Lanham Act further provides that non-use of a mark for three consecutive years constitutes "prima facie abandonment," id., which, in the Second Circuit, creates a rebuttable presumption that the trademark owner has abandoned the trademark. Silverman v. CBS, 870 F.2d 40, 47 (2d Cir. 1989). The trademark owner then bears the burden of demonstrating "reasonable grounds for the suspension and plans to resume use in the reasonably foreseeable future when the conditions requiring suspension abate." Id.; see also Rivard v. Linville, 133 F.3d 1446, 1449 (Fed. Cir. 1998) ("To prove excusable nonuse, the registrant must produce evidence 42 showing that, under his particular circumstances, his activities are those that a reasonable businessman, who had a bona fide intent to use the mark in United States commerce, would have undertaken."). Absent such a showing of non-abandonment, the registration should be cancelled. Id. at 310. However, the burden of persuasion remains with the petitioner to prove abandonment. Rivard, 133 F.3d at 1449.
"A bare assertion of possible future use is not enough" to prove an intent to resume use. Silverman, 870 F.2d at 47; see also Imperial Tobacco Ltd. v. Phillip Morris, Inc., 899 F.2d 1575, 1581 (Fed. Cir. 1990) ("In every contested abandonment case, the respondent denies an intention to abandon its mark. . . . [O]ne must, however, proffer more than conclusory testimony or affidavits."); Rivard, 133 F.3d at 1449 ("A registrant's proclamations of his intent to resume or commence use in United States commerce during the period of nonuse are awarded little, if any weight.").
In addition, token or sporadic use is insufficient to overcome a showing of abandonment. Pilates, Inc. v. Current Concepts, Inc., 120 F. Supp.2d 286, 307-10 (S.D.N.Y. 2000) (finding that two to three sales, a single brochure and limited advertising over a three-year period were insufficient to overcome prima facie evidence of abandonment).
Without the benefit of such prima facie evidence, a party seeking cancellation must show that the trademark owner is not using the mark and that it has no intention to use the mark in the reasonably foreseeable future. Rivard, 133 F.3d at 1449; Stetson v. Howard D. Wolf Assocs., 955 F.2d 847, 850 (2d Cir. 1992); Hughes v. Design Look Inc., 693 F. Supp. 1500, 1506 (S.D.N.Y. 1988) (limited use is insufficient to establish trademark rights, and thus does not suffice to overcome showing of abandonment). "[S]elf-serving statements of an intent to resume [use of the mark] at some indefinite future time will not prevail over objective evidence of abandonment. Hughes, 693 F. Supp. at 1506 (citation omitted).
Because it constitutes a forfeiture of a property right, abandonment of a mark must be proven by clear and convincing evidence, and statutory aid to such proof must be narrowly construed. Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980); see also General Cigar Co. v. G.D.M., Inc., 988 F. Supp. 647, 658 (S.D.N.Y. 1997).
a. CITY CREDIT SERVICES
City Holding does not dispute that CITY CREDIT SERVICES has not been used since 1998. As a result, the presumption of abandonment applies, and it is City Holding's burden to rebut this presumption with evidence of a reasonable business explanation for the cessation and evidence of an intent to resume use. Depressed market conditions and the economic hardships faced by City National present a reasonable business explanation for ceasing use of a mark. E.g., Star-Kist Foods, Inc. v. P.J. Rhodes Co., 769 F.2d 1393, 1396 (9th Cir. 1985) (no abandonment where temporary cessation of use caused by changing or depressed market conditions). However, City Holding has nonetheless failed to present any "concrete plans to resume use," Silverman, 870 F.2d at 46, when the economic conditions abate. In fact, deposition testimony reveals 44 that City Holding has no current plans to use CITY CREDIT SERVICES. As a result, the CITY CREDIT SERVICES mark is deemed abandoned, and the mark is cancelled.
b. CITY MORTGAGE CORP
The testimony with regard to CITY MORTGAGE CORP leads to a similar conclusion. City Holding does not dispute that CITY MORTGAGE CORP has not been used since 1998. Therefore, the statutory presumption of abandonment applies. As above, while providing a reasonable business explanation for the withdrawal of the mark, City Holding has failed to rebut that presumption with any evidence of concrete plans to resume use of the mark.
As a result, the mark CITY MORTGAGE CORP is also cancelled as abandoned.
c. CITY FINANCIAL CORP
The three-year presumption of abandonment does not apply to this mark because City Holding has, at most, not used the mark since the end of 2001. Therefore, the burden is on Citigroup to establish abandonment by clear and convincing evidence by showing that City Holding is no longer using the mark and has no intent to resume use of it.
This evidence presented at trial is sufficient to show that City Holding no longer uses the CITY FINANCIAL CORP mark and does not have an intent to resume use of it. As set forth above, City Holding divested itself of its brokerage business through a November 26, 2001 transfer of its assets in City Financial Corp to Ferris, Baker Watts. As a result, City Financial Corp. has no employees or customer accounts and its signage at City National Bank branches has been replaced with that of FBW. Starting in November 2001, City Holding's press releases stopped listing City Financial Corp. as a subsidiary, and by the Spring of 2002, the City Financial Corp. website was no longer operational. In addition, City Holding has not come forward with any evidence of concrete plans to resume use of the mark in the reasonably foreseeable future. City Holding did conclusorily state that it had not "formed an intent to abandon the mark." (Defs.' Mem. at 43.) The mere fact that City Holding did not intend to abandon the mark is insufficient as a matter of law. Silverman, 870 F.2d at 46 (intent not to resume use is intent not to resume use in foreseeable future, rather than never to resume use at all); Stetson, 955 F.2d at 850 ("The `intent to abandon' language [used by the district court] directly contradicts Silverman's specific rejection" of that standard). To hold otherwise would be to sanction impermissible warehousing of marks. E.g., Imperial Tobacco Ltd. v. Philip Morris, Inc., 899 F.2d 1575, 1581 (Fed. Cir. 1990) ("[T]he Lanham Act was not intended to provide a warehouse for unused marks.").
Therefore, CITY FINANCIAL CORP is cancelled as it has been abandoned.
d. CITY MORTGAGE SERVICES
The three-year presumption of abandonment also does not apply to CITY MORTGAGE SERVICES. Therefore, it is also Citigroup's burden to prove abandonment by clear and convincing evidence by showing that City Holding no longer uses the mark and that it has no plans to resume use of the mark in the reasonably foreseeable future.
To meet this burden, Citigroup relies upon a public announcement that City Holding has ceased the mortgage servicing business under the CITY MORTGAGE SERVICES mark and that City Holding's press releases no longer list City Mortgage Services as a division of City National Bank. While acknowledging that the mark is still in use, Citigroup urges the Court to nonetheless deem that it is effectively not in use because of its "sporadic" use. City Holding's General Counsel testified at trial that defendants continue to service merely a "little tiny mouse"'s worth (Tr. at 147) of accounts under the CITY MORTGAGE SERVICES mark.
In response, City Holding points out that trial testimony revealed that City Holding still had a "moderate strip of mortgages that we still service on a daily basis that I work on probably on 47 a weekly basis" under the name City Mortgage Services. (Tr. at 140.) Despite the amount of work claimed to be performed under the City Mortgage Services mark, City Holding's General Counsel admitted that the amount of work had dropped precipitously. Further, there was no evidence that City Holding intended to "grow" the business under the CITY MORTGAGE SERVICES marks back to its former glory. Indeed, the fact that City Holding had retrenched and decided to focus on its banking business leads to the conclusion that there was no intent to resume use of the CITY MORTGAGE SERVICES mark.
As a result, the CITY MORTGAGE SERVICES mark is therefore cancelled as abandoned.
3. The CITY INSURANCE Application Will Not Be Enjoined Pursuant to Section 2 of the Lanham Act
Because of the findings above, the analysis below focuses only on the pending application for the CITY INSURANCE mark. As discussed above, a finding that likelihood of confusion or dilution exists under Section 2 of the Lanham Act may result in the injunction of a pending application of a mark.
It should be noted that the CITY INSURANCE application, dated March 12, 2001, was registered after the January 25, 2001 application of the CITIINSURANCE mark. Given the PTO's rejection of Citigroup's CITIFINANCIAL, CITIMORTGAGE, CITICAPITAL and CITICREDIT marks in light of similar CITY marks that were already registered or in the process of being registered, as discussed in Part II.B, it is likely that the PTO will similarly reject the CITY INSURANCE mark in light of the earlier CITIINSURANCE application. In any case, the arguments below are addressed.
According to the PTO's Trademark Electronic Search System, the CITY INSURANCE mark was in fact registered one week after the CITIINSURANCE mark was published for opposition on March 5, 2001.
a. City Holding Does Not Have a CITY Family of Marks
Citigroup's arguments to support a showing of likelihood of confusion and dilution rely on its assumption that its family of CITI marks is being challenged by another legal family of CITY marks (including, presumably, in addition to CITY INSURANCE the four that were found to be abandoned, the two applications that have been abandoned by City Holdings and the two marks that it does not contest) that is entitled to greater protection under trademark law. City Holdings, however, does not have a CITY family of marks. Indeed, after the above discussion, City Holdings owns just one federally registered mark and is in the process of registering two others.
It is true that in the summary judgment opinion, the CITY marks were referred to as a "family." However, the opinion did not engage in any legal analysis to determine whether City Holding would be entitled to the protections afforded by the family of marks doctrine. Instead, the use of "family" was more shorthand for the fact that City Holding had a number of marks sharing the same surname. Therefore, before addressing Citigroup's arguments, it is necessary to engage in that legal analysis.
It is now held that City Holding does not have a family such as would provide protection under trademark law under the family of marks doctrine because of the lack of distinctiveness of the CITY "surname" and the lack of any association between the common CITY surname and City Holding. According to the leading commentator:
By contrast, Citigroup owns a family of CITI marks. This is because, to use the examples discussed at oral argument, Citigroup's CITI surname is a rare spelling of a common surname, such as Smyth is a rare spelling of the common surname Smith. Further, the largesse of advertising has associated that distinctive spelling of CITI with Citigroup. City Holding, on the other hand, relies on the common spelling of "city," and is one Smith among many in the absence of any sort of effort to associate the plain spelling of CITY only with City Holding and its subsidiaries.
To be effective, the "family of marks" argument must rest in the ultimate analysis on proof . . . that the designation constituting the "surname" of the family is in fact recognized by the public as a trademark in and of itself. Usually this requires some proof that the "family surname" has been so extensively advertised that buyers would be likely to think that [the infringer's] product originates with [the owner of the family being infringed]. [T]his is a matter of fact, not supposition. The mere fact of registration of many marks with a common syllable does not in itself prove that a family of marks exists in fact.
3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 23:61, p. 23-170 (hereinafter "McCarthy"). There is no question that City Holdings has registered, or attempted to register, nine marks with a common surname of "CITY." There is no evidence, however, that consumers recognize CITY as a trademark in and of itself that belongs to City Holding. Indeed, it appears that counsel for Citigroup did not realize the association between City Mortgage Corp and other City Holding Company marks, as they wrote to City Mortgage Corp in October 1999, after the filing of this complaint. As Moses testified at trial, outside counsel "thought that they were writing to a local company using the name City Mortgage and so they would have no way of knowing that there was actually a larger issue in connection with that but just one of the many City Mortgage companies that they were writing to elsewhere in the United States dealing with the corporate name reservation issue." (Tr. 102-03.)
In the absence of any indication that consumers recognize that the nine marks are somehow related, however, City Holdings is not entitled to the added protections afforded by the family of marks doctrine.
b. Likelihood of Confusion
Pursuant to section 2(d) of the Lanham Act, cancellation of a registration for a trademark is appropriate if there is a 51 likelihood of confusion between that trademark and one or more of plaintiffs' trademarks. 15 U.S.C. § 1052(d).
In the Second Circuit, courts consider the Polaroid factors as a framework for evaluating whether there is a likelihood of confusion. Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961) (Friendly, J.). The factors to be considered here are the strength of the family of CITI marks, the degree of similarity between the CITI and CITY marks, the proximity of services, the likelihood that Citigroup will "bridge the gap," evidence of actual confusion, defendants' bad faith, the sophistication of customers and the quality of services. These eight factors are not exhaustive, nor is any single factor dispositive. Nikon Inc. v. Ikon Corp., 987 F.2d 91, 94 (2d Cir. 1993) ("Each factor must be balanced with the others to determine the likelihood of confusion."). "[T]he evaluation of the Polaroid factors is not a mechanical process where the party with the greatest number of factors weighing in its favor wins. Rather, a court should focus on the ultimate question of whether customers are likely to be confused." Paddington Corp. v. Attiki Importers Distribs., Inc., 996 F.2d 577, 584 (2d Cir. 1993) (internal citations omitted).
The analysis in the summary judgment opinion considered whether the group of CITY marks, as a whole, were likely to be considered part of the CITI family and thus confusing to the 52 consuming public. The analysis is equally applicable to the question presented here — whether a single CITY mark is likely to be considered part of the CITI family — and Citigroup has not presented any evidence to overturn that conclusion. As noted then and now, in determining whether there is a likelihood of confusion, "the I/Y distinction is critical, though the marks are aurally identical." Citigroup, 171 F. Supp.2d at 344-45. Indeed, Citicorp has argued similarly when the tables were turned.
When Aristar wrote to Citigroup to protect its City Finance mark, Citigroup wrote back stating that CitiFinancial was a different mark and would not be confused:
[CitiFinancial] is a single word, as opposed to two words, and thus creates a very difference [sic] commercial impression than does "City Finance." Further, the emphasis is on the famous "Citi" portion of the mark, which assures that it will be understood by the public as a member of the famous "Citi" family and not with your company.
Similarly, when seeking to reserve the CitiMortgage mark in Ohio, Citigroup differentiated it from an existing mark for City Mortgage Company: "[T]he public will understand that Citimortgage, Inc. is associated with and part of the Citigroup family. Additionally, because `City' is a commonly used prefix for financial services corporations, Citigroup and its many subdivisions that bear the famous CITI prefix have coexisted with many `City' entities for years in virtually every jurisdiction."
To summarize, it was held in the summary judgment opinion that the CITI family of marks is strong and distinctive. Id. at 345-47 ("In addition to inherent distinctiveness, the CITI family of marks has, through extensive advertising and promotion over the decades, garnered extraordinary acquired distinctiveness."). Further, even though the prefixes of the marks sound the same, in appearance the marks are significantly different, and, in the absence of a finding that City Holding is attempting to change its brand to CITY as opposed to CITY-prefixed brands, the marks are not similar. Id. at 347-48. In terms of proximity of services and "bridging the gap," it was held that although both parties offer financial services and that Citigroup, as senior user is likely to and has already entered the West Virginia market where City Holding is based, these factors were offset by economic and geographic realities. Id. at 348 ("[I]t is concluded that the markets in which the parties are operating are ships passing in the night, one for customers seeking national and international banking services and one for financial accommodations in West Virginia."). With regard to evidence of actual confusion, the differences discussed above with regard to appearance and services led the Court to the conclusion that confusion would not be assumed in the absence of any evidence thereto and that Citigroup had failed to present any such evidence. Id. at 349. It was also noted that no evidence had been presented with regard to the sophistication of the consumers. Id. In the end, the analysis focused on two Polaroid factors that "predominate[d]": the strength and suggestiveness of the CITI marks and the absence of any evidence of actual confusion. "The marks are dissimilar in appearance, and though the services are proximate, the national/regional gap has not been bridged. In the absence of bad faith, with purchasers who can be presumed to be more sophisticated than less as to services similar in quality but differentiated as to scope, the balance of Polaroid factors 54 requires the conclusion that the Lanham Act has not been violated." Id. at 350.
City Holding's case is stronger now, because it has only one mark at issue, instead of a group of marks involving the same or similar services. Further, the business of insurance draws a more sophisticated consumer, and one less likely to be confused by the I/Y distinction. It has also been determined after hearing the evidence that City Holding has not attempted to "brand" itself and its products as "CITY" rather than as CITY-prefixed marks. Therefore, although the summary judgment opinion relied on drawing inferences to that effect, the same conclusion now may be drawn based on the finding of fact above.
The only evidence on the record at trial in support of this argument is the conclusion of the head of Citigroup's global consumer marketing group based on certain marketing strategies. After looking at those particular advertising strategies and use of font, etc., as well as City Holding's testimony that City Holding does not and does not intend to use CITY alone as a trademark (Tr. at 203), it is concluded that City Holding is not attempting to "rebrand" itself as CITY.
Citigroup has attempted to alter the Court's earlier analysis based on evidence presented at trial in several ways. First, it points out that for the purposes of cancellation due to likelihood of confusion, actual geographic use of the mark is irrelevant. This is because the registration itself is national even if the usage is not. Jim Beam Brands Co. v. Beamish Crawford Ltd., 937 F.2d 729, 734 (2d Cir. 1991) (ignoring differences in visual appearance because "confusion is determined only as to the registerability of the applicant's mark exactly as shown in the application and only as to the goods listed, regardless of actual usage.") (quoting 2 McCarthy, supra, at § 32:31, at 737-38); see also Coach House Rest. v. Coach and Six Rests., 934 F.2d 1551, 1562 (11th Cir. 1991) (concluding that geographical remoteness is irrelevant to likelihood of confusion inquiry); Peopleware Sys., Inc. v. Peopleware, Inc., 226 U.S.P.Q. 320, 321 (T.T.A.B. 1985) ("[The] geographical separation of the parties' principal places of business cannot be considered to be of significance in determining registerability of applicant's mark since it seeks a geographically unrestricted application."). Thus, Citigroup appears to argue that the analysis of factors such as proximity of services in the summary judgment opinion, relying on the geographical disparity of the marks, is undone. Citigroup, 171 F. Supp.2d at 348-49. As discussed above, however, no single Polaroid factor is dispositive, and the ultimate emphasis lies on whether consumers are likely to be confused. E.g., Paddington Corp., 996 F.2d at 584. Moreover, the earlier analysis focused on two predominate Polaroid factors: "the strength and suggestiveness of the CITI marks and the absence of any evidence of confusion." Citigroup, 171 F. Supp.2d at 350. Citigroup has failed to present any evidence of actual customer confusion that the CITY INSURANCE mark is linked to the CITI family. Thus even if the Court must consider as nationwide scope a single CITY mark that is not yet federally registered and that is not yet in use therefore is 56 insufficient to swing the balance of the Polaroid factors to Citigroup's favor.
Citigroup also argues that the Court should disregard the "insurance" portion of CITY INSURANCE because City Holding disclaimed rights to all aspects of their marks except for the CITY portion (i.e., the descriptive/generic terms such as FINANCIAL CORP, INSURANCE and NATIONAL BANK). Where a mark consists of two or more words, some of which are disclaimed, the word not disclaimed is generally regarded as the dominant or critical term for purposes of the confusion analysis. E.g., Quantum Fitness Corp. v. Quantum Lifestyle Ctrs., L.L.C., 83 F. Supp.2d 810, 824 (S.D.Tex. 1999) (finding that disclaimer of FITNESS from QUANTUM FITNESS mark required focus on QUANTUM word for the purpose of analyzing the likelihood of confusion and ruling as a result that prospective purchasers are likely to believe that the two uses are associated); Am. Throwing Co. v. Famous Bathrobe Co., 250 F.2d 377, 381-82 (C.C.P.A. 1957) (finding disclaimer of WIPER and KNIT from WIPER-KINS and KNIT-KINS marks respectively required relegation of disclaimed words to "minor importance" for confusion analysis).
Even assuming that the focus of the analysis should be on CITY and CITI, a consumer is not likely to assume that the CITY marks are associated with the CITI family of marks. As discussed in the earlier opinion, Citigroup has focused its advertising and policing efforts on marks with the distinctive second "I" (instead 57 of "Y") or on another characteristic typical of their family of marks, such as the word CITI or CITY immediately prior to "Bank," or CITI or CITY made into a prefix in a compound single word mark denoting a financial service, such as CITYBROKER. Citigroup, 171 F. Supp.2d at 347. These efforts have established a national and international presence of the word CITI, Citi/City Bank, and the prefix CITI or CITY immediately prior to a word (instead of as a separate word before the other word). Consumers have lived with CITY marks for the entire existence of Citibank. As a result, because of the strong branding of CITI, this argument also does not suffice to show likelihood of consumer confusion.
It would be different had Citigroup continuously policed the CITY usage. For instance, McDonald's Corporation — although it uses primarily the M.C. prefix — has policed usages of the MAC prefix. E.g., McDonald's Corp. v. McKinley, 13 U.S.P.Q.2d 1895 (T.T.A.B. 1990) (discussing M.C. and MAC family of marks)
Citigroup also suggests that in the absence of relief, City Holding would be free to adopt multiple CITY marks tracking exactly all of the CITI marks. As discussed above, the CITY INSURANCE application was filed after the CITIINSURANCE application. The delay likely means that the PTO will reject the application, just as it rejected Citigroup's CITIFINANCIAL and CITIMORTGAGE marks due to City Holding's earlier registrations of similar CITY marks. The same is also true for potential CITY marks such as CITY CARD, CITY FUNDS, CITY GOLD or CITY PHONE, because of the existence of CITICARD, CITIFUNDS, CITIGOLD and CITIPHONE.
Citigroup's last argument echoes the one above. It asserts that what is at issue are two competing family of marks — CITY and CITI marks — and that the likelihood of confusion is greater because a consumer may be faced not just with one CITY mark, but with a whole family of them. As discussed above, the CITY marks are not a legal "family of marks." In any case, the only mark at issue is CITY INSURANCE. This case hardly involves a situation where a large multinational financial services firm changes its name and services from, say, Chase, to City. A family of at most three CITY marks belonging to a West Virginia bank and holding company does not so greatly increase the risk of consumer confusion that cancellation is in order. It may, however, be presumed that Citigroup could protect its established family in the event of infringement or dilution by another family that would create a likelihood of confusion. That is not this case.
As a result, the application for CITY INSURANCE will not be enjoined on the grounds of likelihood of confusion.
c. Dilution
Cancellation of a registration for a trademark is also appropriate is a registered trademark is likely to dilute a famous and distinctive mark. 15 U.S.C. § 1052(f); Toro Co. v. ToroHead, Inc., 61 U.S.P.Q.2d 1164, 1172 (T.T.A.B. 2001). In discussing Citigroup's dilution claims in the summary judgment opinion, it was 59 held that the CITI mark had not been diluted by third party use of "various `CITY'-related marks." Citigroup, 171 F. Supp.2d at 352. Further, Citigroup's argument that a "family" of CITY marks would dilute the family of CITI marks was rejected because "that family activity was abandoned by City Holding in 2000," and that dilution could not occur "absent a national effort to advance a `CITY' mark." Id.
Citigroup now argues that this finding does not prejudice its claim because the analysis of whether a mark should be cancelled due to dilution is different from whether a mark is improperly being diluted. In the cancellation context, "the registered mark must be judged against challenging marks as if the registered mark was being used everywhere in the nation." Coach House, 934 F.2d at 1562 (concluding that relevant market is the entire United States). This argument is unsuccessful, however, because Citigroup again relies on the idea of two competing family of marks — a factual scenario that simply is not present here, for the reasons discussed above. Nationwide usage of CITY INSURANCE (and the additional use of two CITY marks) does not equate to a nationwide promotion of a "family" of CITY marks. As a result, the law of the case with regard to dilution of the CITI marks means that this argument must be rejected.
III. CITIGROUP'S INFRINGEMENT CLAIMS BASED ON CITY MARKS
In order to succeed on their trademark infringement claims, Citigroup must show that (1) the CITI family is comprised of valid marks entitled to protection under the Lanham Act; (2) City Holding's use of their CITY marks was subsequent to the creation of Citigroup's CITI family of marks; and (3) City Holding's use of their CITY family of marks is likely to cause confusion with Citigroup's CITI family of marks. Morningside Group, Ltd. v. Morningside Capital Group, L.L.C., 182 F.3d 133, 137-38 (2d Cir. 1999); 15 U.S.C. § 1114(1); 1125(a)(1)(A). As discussed above, courts consider the Polaroid factors in determining whether there is a likelihood of confusion. Polaroid, 287 F.2d at 495.
In order to show infringement, Citigroup relies on the family of marks doctrine. This is necessary because the marks at issue share an aurally identical prefix — CITI and CITY — but are not significantly similar to senior CITI marks. The family of marks doctrine holds that likelihood of confusion can exist even though a defendant's mark may not be significantly close to any one member of a plaintiff's family of marks. For instance, McDonald's Corporation has successfully blocked registration and/or enjoined the use of McPRETZEL, McDENTAL and M.C. CLAIM, even though McDonald's was not using the marks. E.g., JJ Snack Foods Corp. v. McDonald's Corp., 932 F.2d 1460, 1462 (Fed. Cir. 1991) (McPRETZEL); McDonald's Corp. v. Druck and Gerner, DDS., 814 F. Supp. 1127, 1139 (N.D.N.Y. 1993) (McDENTAL); McDonald's Corp. v. McClain, 37 U.S.P.Q.2d 1274, 1275 (T.T.A.B. 1995) (MC CLAIM). McCarthy describes the doctrine as follows:
It is the law of the case that Citigroup has a family of marks employing the CITI prefix. Citigroup, 171 F. Supp.2d at 350 ("Citicorp has appropriately claimed a family of marks employing CITI.").
A trademark owner may use a plurality of marks with a common prefix, suffix, or syllable. It has the opportunity to establish that it has a "family" of marks, all of which have a common "surname." It relies on this to argue that defendant's mark, which incorporates the "family surname," is confusingly similar to the total "family group." In effect, the family "surname" or distinguishing element is recognized by consumers as an identifying trademark in and of itself when it appears in a composite. Even though a junior user's mark may not be that close to any one member of the family, it may have used the distinguishing family "surname" or characteristic so as to be likely to cause confusion.
McCarthy, supra, at § 23:61 at 23-183-84. Whether an ordinary buyer is likely to think that a junior user's mark is a member of the senior user's family of marks is a matter of fact inherent in the determination of likelihood of confusion. Id. at 23-184.
In analyzing the eight Polaroid factors at the summary judgment stage, it was held that the CITI family of marks were strong and distinctive, and that the nature of services for which the parties' CITI and CITY marks are used is proximate. Citigroup, 171 F. Supp.2d at 349-50. The evidence presented at trial further supports this conclusion. It was concluded, however, as discussed above, that drawing all inferences in City Holding's favor, summary 62 judgment was precluded for three interlocking reasons: (1) City Holding's retreat from the national to the West Virginia market; (2) the I/Y distinction in the parties' marks; and (3) the inability to conclude as a matter of law that defendants used CITY as a dominant mark. Id. at 350.
Citigroup argues that evidence at the trial has shown that (1) the primary attribute of City Holding's marks is the CITY name, and that City Holding intends to use CITY as a brand; (2) the CITY marks are dissimilar from other CITY marks with which Citigroup coexists; (3) there is actual confusion between the parties in West Virginia with regard to the CITIFINANCIAL/CITY FINANCIAL and CITIMORTGAGE/CITY MORTGAGE marks; (4) City Holding has engaged in bad faith; (5) the I/Y distinction does not sufficiently dispel confusion; and (6) resulting harm to Citigroup.
The first argument has already been dealt with above. Because the Court has concluded that City Holding is not attempting to "rebrand" itself as the CITY, that argument fails. To the extent that CITI argues that what is at issue is a "family feud," that argument is rejected because, as discussed above, it cannot be said that consumers associate City Holding's marks with each other nor that consumers associate those marks with Citigroup. Citigroup also relies on the "family" nature of the CITY marks to differentiate the CITY marks at issue from other CITY marks which it has chosen not to police, or from which it has differentiated 63 its junior marks by arguing that the distinctive CITI mark eliminates any possibility of confusion. This argument also fails because of the finding that the CITY marks are not a family and are not recognized as such by consumers. The other arguments will be addressed below.
A. Actual Confusion
Citigroup points to deposition and trial testimony by City Holding employees as evidence of actual confusion. They do not, however, present any consumer surveys, e.g., Merriam-Webster, Inc. v. Random House, 35 F.3d 65, 72 (2d Cir. 1994) ("The lack of survey evidence counts against finding actual confusion."); E.S. Originals Inc. v. Stride Rite Corp., 656 F. Supp. 484, 490 (S.D.N.Y. 1987) ("that [plaintiff] did not undertake a consumer survey . . . strongly suggests that a likelihood of confusion cannot be shown" where there was ample opportunity to take such survey), or offer any evidence other than the sworn statements of City Holding representatives that were made at a time when City Holding was asserting counterclaims against Citigroup for infringement of its CITY marks.
Alderman, City Holding's counsel, was asked in his deposition about City Holding's counterclaims alleging infringement and actual confusion. Alderman specified that those claims were based on the entry of CitiFinancial and CitiMortgage into the West 64 Virginia market. Alderman Dep. at 56-57. He stated that "calls started coming in . . . right after [Citigroup] opened" its CitiFinancial offices in West Virginia, and that consumers "think we are you and they think you are us." Id. at 57. More calls were made regarding CitiFinancial than CitiMortgage. Id. at 59. In terms of specific confusion, Alderman referred to one specific customer's confusion, a coworker's confusion and his own confusion when hearing a CitiFinancial radio advertisement. Id. at 58-60. City Holding also made logs of phone calls received. Id. At trial, Anderson confirmed that he felt there was confusion prior to the Court's summary judgment opinion, which dismissed the counterclaims on legal grounds, but noted that some of the confusion was just an initial reaction to the new opening of the CitiFinancial offices in West Virginia. (Tr. at 186-87.)
Plaintiffs did not submit copies of those logs as part of their trial exhibits, so the Court was unable to gauge whether they recorded numerous or few calls. Alfred M. King, chairman of the board of Valuation Research Corporation, which performed a valuation study for City Holding in connection with this lawsuit, testified at his deposition that he was told that City Holding had received "a significant number of phone calls and mail," and that the frequency was "accelerating." (King Dep. at 25.) His testimony also failed to quantify the number and frequency of such calls, however.
Michael T. Barickman, president of City Financial Corp., testified at his deposition that after he received an announcement about the opening of CitiFinancial in West Virginia, he "felt that there could be a great deal of confusion created" with regard to City Financial and CitiFinancial's names. Barickman Dep. at 25. He also testified that he had received about twenty phone calls intended to be made to CitiFinancial, id. at 36, and approximately ten to fifteen letters or documents intended for CitiFinancial were mailed to City Financial by mistake. Id. at 29. However, he concluded by stating that he was unaware of any confusion between City National and CitiFinancial. Id. at 26-27.
Finally, David Vida, president of City Mortgage Services, testified in his deposition that the City Mortgage call center had received some calls regarding confusion with CitiMortgage, but that he was not sure how many such calls had been received. (Vida Dep. at 49.)
Citigroup has proved too little. CIT Group, Inc. v. Citicorp, 20 F. Supp.2d 775, 790 (D.N.J. 1998) (finding no evidence of actual confusion between Citigroup and CIT Group based upon a misdirected e-mail, a dissatisfied customer's televised complaints about Citigroup instead of CIT Group, a number of telephone calls, a misdirected gas bill, financial analyst's reports directed to Citigroup.com instead of CIT Group's website, and the transfer of an employee's 401K plan to "Citibank Trust for Citigroup" instead of to "Citibank as trustee for the CIT Group where all the mistakes were promptly rectified and none were made in the context of sales or solicitations of financial services). This evidence in any case consists of self-serving statements made by City Holding employees when their employer had a counterclaim based on trademark 66 infringement. Certainly if those counterclaims had not been dismissed, Citigroup would not be content to rely on City Holding's proffer of belief that there was confusion. The above evidence in any case boils down to a handful of phone calls and misdirected mail, as well as a small regional company — which banked on its reputation as a locally-operated business — fearing that it would be associated negatively with the behemoth international CITI family.
Even if the evidence above were accepted as proof that there was actual confusion, the confusion would exist only as to the specific marks City Financial and CitiFinancial and City Mortgage and CitiMortgage. There is absolutely no indication of any other actual confusion between City Holding's CITY marks and Citigroup's family of CITI marks. In any case, if City Holding were to be bound by statements made prior to the dismissal of counterclaims, it seems only fair that Citigroup also should be bound by its assertions that there was no actual confusion between its two marks and City Holding's marks. Plaintiffs' Reply to Defendants' Counterclaims, ¶¶ 11, 12; Plaintiffs' Memorandum of Law in Support of Their Motion for Summary Judgment, at page 22 ("Citigroup is unaware of instance of actual confusion between the CITI and CITY marks.").
In the absence of more substantial evidence, such as consumer surveys, Citigroup has failed to demonstrate actual confusion of the CITY and CITI marks. Therefore, this argument does not alter the earlier determination.
At trial, Citigroup's MacDonald noted that Citigroup had considered and discussed with counsel commissioning such a survey, but "concluded that it would be very difficult to design such a survey to show what we need to show . . . and have it stand up to scrutiny." (Tr. at 124.) It is also worth noting that Citigroup's marketing department has not sought any similar surveys concerning "CITI" and "CITY" confusion. (Id. at 51.)
B. Bad faith
Citigroup argues that City Holding intentionally adopted the CITY marks in order to capitalize on Citigroup's success and reputation. Such intent may be considered in the likelihood of confusion analysis. E.g., Stern's Miracle-Gro Prods., Inc. v. Shark Prods., Inc., 823 F. Supp. 1077, 1087 (S.D.N.Y. 1993) (considering "whether the defendant adopted its mark with the intention of capitalizing on plaintiff's reputation and goodwill and on any confusion between his and the senior mark's product").
This argument ignores that City National Bank had used the CITY mark in its title since its inception in 1957. There is no evidence that City Holding's use of the CITY mark, with which it had been identified for almost half a century, was in order to identify with Citigroup and its products. Indeed, Alderman testified that he feared when CitiFinancial entered the West Virginia market that consumers would be confused and, thinking there was a connection between City Financial and CitiFinancial, be turned off. Alderman Dep. at 64-65 ("We have always prided ourselves in being a local West Virginia franchise in the community with banking, with brick-and-mortar banking, and with kind of brokerage operations. And now our customers are confusing us with one of the largest companies in the world, and that's not the franchise we have given to these people and built upon.").
Indeed, all the evidence shows that when potential customers confused City Financial with CitiFinancial, the City Financial employees clarified the mistake and directed them to CitiFinancial. Certainly if City Financial had intended with bad faith to build upon the CITI reputation, they would have parlayed the customer's mistakes into further business for City Holding.
The only evidence of bad intent is that City Holding attempted to register a "family" of CITY marks beginning in 1997. As explained in the undisputed facts submitted prior to trial, the decision to register was based on a plan of nationwide expansion and the hiring of an in-house counsel for the first time, who suggested the move. It was not until 1998, in any case, that Citigroup (after the merger with Travelers) decided to focus on a brand strategy whereby all of its divisions would be redubbed with CITI titles. In 1997, City Holding could not have known that Citigroup intended or was likely to create a CitiFinancial or a CitiMortgage. Indeed, Citigroup's history of policing prior to the Travelers merger would support City Holding's good faith attempt to register CITY marks. Because, for instance, Citigroup had permitted other "City Mortgages" to exist, there was no reason for City Holding to assume that its City Mortgage registrations would cause such a maelstrom.
All the applications at issue were initiated in 1997, except for City Insurance, which application was commenced in 2001. City Holding began using the mark in October 2000, however, and thus began using it prior to Citibank's CITIINSURANCE application in January 2001.
As found above, in 1990, Citibank negotiated with Citi Mortgage Associates of Pennsylvania to change its name to CITY MORTGAGE ASSOCIATES. The Pennsylvania company complied, and simultaneously adopted a logo reflecting that fact, which it mailed to Citibank to verify its compliance with the settlement. Similarly, in the mid-1990's, Citibank negotiated with Citimortgage Co. of Washington State, which agreed to change its name to City Mortgage Corp.
Indeed, Citigroup attorneys had knowledge of various CITY marks in 1997 and early 1998 and did not flag them as problematic until the end of 1998, after the Travelers merger. In addition, when applying to register the CitiFinancial marks on January 15, 1999, Citigroup stated under oath that there were no other parties with the right to use that mark, notwithstanding the fact that it had obtained a report revealing City Holding's CITY FINANCIAL CORP and CITY FINANCIAL CENTER marks, along with 18 pages of other "City Finance" companies.
The mere fact that the CITY marks are on a blue background similar to that that Citigroup uses is insufficient as well to suggest bad faith. The background has been used for more than a decade, well before the registrations and uses at issue.
C. Harm to Citigroup
In the absence of any real showing of consumer confusion, Citigroup's arguments with regard to harm to Citigroup fail.
As a result, Citigroup has failed to highlight any evidence presented at trial that was not considered at the summary judgment phase that would alter the opinion of the Court that infringement had not occurred. The I/Y difference is significant enough so that, in the absence of any real evidence of customer confusion as a result of the CITY marks, the claim for infringement must be denied.
Citigroup's claims for unfair competition pursuant to Section 43(a) of the Lanham Act are denied for the same reasons stated above. E.g., Cartier, Inc. v. Deziner Wholesale, L.L.C., No. 98 Civ. 4947 (RLC), 2000 WL 347171, at *2 (S.D.N.Y. April 3, 2000) (unfair competition and trademark infringement brought under §§ 1114 and 1125(a) claims rely on same facts and can be analyzed together).
IV. CITIGROUP'S INFRINGEMENT CLAIMS BASED ON THE "BLUE WAVE"
Two of the registered trademarks that form the bases of Citigroup's complaint are Reg. Nos. 1,957,180 and 2,005,506. These are set forth as embodying the "Blue Wave" trade dress, which "features graduated shades of blue fading from dark blue to light blue."Citigroup focuses its attack on the CITI marks and essentially ignores its Blue Wave claims, except to urge the court to enjoin usage of City Holding's purportedly similar trade dress. (Pls.' Reply at 17.) Citigroup has failed to establish that any consumer confusion results from City Holding's use of a blue background (even in conjunction with the extremely large "CITY" on the blue background). Indeed, Citigroup's MacDonald testified that the "Blue Wave" that formed the basis of Citigroup's complaints is no longer the trade dress used by Citigroup. Instead, since the complaint was filed, "[t]he blue wave has changed in a number of ways. The biggest is that we have liberated the blue wave out of the little stripe on the building . . . to make sure that we use it in a more disciplined fashion. . . . The other piece is that the blue wave, with the old Citibank logo . . . went from dark to light. . . . When we added the secondary color of red, the little red arc, we had to flip the blue wave so that is went from light to dark, allowing the red to pop out of that blue wave on the retail store." (Tr. 54-55.)
City Holding has been using its blue background for about ten years. An examination of that background (Pls.' Exhibit 134) reveals that it goes from dark to light and does not include any red elements. Indeed, as City Holding points out, the new Citigroup Blue Wave now looks more similar to one of Citigroup's main competitors in New York, Chase, which uses a dark blue background with a red stripe.
In any case, Citigroup cannot, with more proof of consumer confusion, attempt to corner the market on the use of blue 72 in advertising. While the Blue Wave (in its present or past incarnation) may be distinctive and may be associated strongly with Citigroup, that does not necessarily prove that a consumer looking at City Holding's blue background would assume that it was associated with Citigroup.
As a result, Citigroup's action for trade infringement based on the Blue Wave is rejected.
Conclusion
Based upon the findings of fact and conclusions of law set forth above, Citigroup is not entitled to judgment on its unfair competition and trademark infringement claims, nor on its claim for an injunction against the CITY INSURANCE federal application. It is entitled to judgment on its cancellation claims against City Holding with regard to the following marks: CITY CREDIT SERVICES, CITY FINANCIAL CORP., CITY MORTGAGE CORP and CITY MORTGAGE SERVICES. The issue of whether an injunction should apply as against the pending applications for CITY CAPITAL RESOURCES and CITY FINANCIAL CENTER was not addressed due to City Holding's representation that such applications had been abandoned.
Settle judgment in accordance with this opinion as of March 1, 2003, upon ten (10) days notice.
It is so ordered.
.