Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
9-9-2004
Citizens Fin Grp Inc v. Citizens Natl Bank
Precedential or Non-Precedential: Precedential
Docket No. 03-2868
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PRECEDENTIAL District Judge: Honorable Donetta W.
Ambrose
IN THE UNITED STATES COURT OF ____________
APPEALS
FOR THE THIRD CIRCUIT Argued: April 21, 2004
____________
Before: SCIRICA, Chief Judge,
Nos. 03-2868 and 03-3175 ROSENN and GREENBERG, Circuit
____________ Judges
CITIZENS FINANCIAL GROUP, INC. (Filed: September 9, 2004)
v. Frederick W. Thieman (Argued)
Thieman & Farrell
CITIZENS NATIONAL BANK OF 436 Seventh Avenue
EVANS CITY; 2312 Koppers Building
CITIZENS INC; CITIZENS Pittsburgh, PA 15219
NATIONAL BANK OF
SOUTHERN PENNSYLVANIA David M. Kelly
Andrea Anderson
Citizens National Bank of Evans Finnegan, Henderson, Farabow, Garrett &
City and Citizens, Inc., Dunner
1300 I Street, N.W .
Appellants No. 03-2868 Washington, DC 20005
____________
Ray F. Middleman
CITIZENS FINANCIAL GROUP, INC. Malone, Larchuk & Middleman
Northridge Office Plaza
Appellant No. 03-3175 117 VIP Drive
Northridge Office Plaza, Suite 310
v. Wexford, PA 15090
CITIZENS NATIONAL BANK OF Counsel for Appellants in No. 03-
EVANS CITY; CITIZENS INC; 2868
CITIZENS NATIONAL BANK OF
SOUTHERN PENNSYLVANIA Paul F. Ware, Jr. (Argued)
____________ R. David Hosp
Goodwin Procter
Appeal from the United States District 53 State Street
Court Exchange Place
For the Western District of Pennsylvania Boston, MA 02109
D.C. No.: 01-cv-01524
Counsel for Appellant in No. 03- CNBEC branches, and in addition some of
3175 the branches in Butler County were located
____________ on the same streets. Upon learning of
CFG’s announcement of its plan to rename
OPINION OF THE COURT the Mellon Bank branches in Pennsylvania
____________ as Citizens Bank, CNBEC sent a cease and
desist letter to CFG requesting that CFG
not use “Citizens” as a name with respect
ROSENN, Circuit Judge.
to its Western Pennsylvania branches.
This appeal presents a number of CFG responded by filing this suit in the
questions arising out of a trademark United States District Court for the
infringement dispute between two banking Western District of Pennsylvania seeking
institutions. The dispute is an outgrowth a declaratory judgment that CNBEC could
of aggressive and expansionist banking not prevent it from using the name
f l o wi n g f rom the C ongressional “Citizens.” CNBEC answered the
liberalization in recent years of national complaint by asserting affirmative
banking laws. Citizens National Bank of defenses and a counterclaim alleging
Evans City (CNBEC) is a community bank trademark infringement and unfair
founded in 1878 in Evans City, competition under § 43(a) of the Lanham
Pennsylvania, north of Pittsburgh, under Act, 15 U.S.C. § 1125(a), and unjust
the name of Citizens Bank of Evansburgh. enrichment.
In 1907, the bank became federally
CNBEC then filed a motion for a
chartered and adopted its current name.
preliminary injunction, which the District
The bank also has refered to itself as
Court denied following an evidentiary
“Citizens’” in its advertisem ents,
hearing. On appeal, this Court affirmed
promotional materials, and customer
the denial. Citizens Fin. Group, Inc. v.
communications. CNBEC now has sixteen
Citizens Nat’l Bank of Evans City, 30 Fed.
branches in the Northwestern region of
Appx. 24 (3d Cir. 2002). The parties then
Pennsylvania.
proceeded to a jury trial at which CNBEC
The Citizens Financial Group, Inc. asserted three counter-claims. CNBEC
(CFG) is a subsidiary holding company of raised t w o claim s of trademark
the Royal Bank of Scotland. In July 2001, infringement, first that CFG’s “Citizens
CFG purchased the retail banking Bank” mark infringed its mark of the word
operations of Mellon Bank and announced “Citizens” standing alone, and second, that
that it would, and in December 2001 did, CFG’s “Citizens Bank” mark infringed its
conve rt all Mellon branches in full “Citizens National Bank” mark.
Pennsylvania to “Citizens Bank” branches. CNBEC also claimed that CFG’s conduct
CNBEC claimed that nine of these former constituted unfair competition due to the
Mellon Bank branches were located near confusing similarity of the marks and that
2
CFG had been unjustly enriched by its CNBEC maintains 16 local
infringement. branches in Northwestern Pennsylvania,
twelve in Butler County, three in Northern
With regard to CNBEC’s
Allegheny County, and one in Armstrong
infringement claims, the jury found that
County. CNBEC acknowledges that the
CNBEC had tradem ark rights in
majority of its customers live in Butler
“Citizens,” that CFG’s use of the “Citizens
County, but asserts that its Allegheny
Bank” mark in CNBEC’s market was
County customers account for about 13%
likely to cause confusion with CNBEC’s
of its total accounts, 20% of its total
mark “Citizens,” but that CFG’s “Citizens
combined deposit/loan volume, and about
Bank” mark would not likely be confused
30% of its profits. CNBEC claims that as
with CNBEC’s “Citizens National Bank”
of August 1, 2001, it had 64,132 accounts
mark. The jury rejected CNBEC’s claim
in Butler County, 9,886 accounts
for damages regarding unfair competition
representing about $50 million in deposits
and unjust enrichment.
in Northern Allegheny County, 2,806
The District Court thereupon accounts in Beaver County, and 1,170
considered CNBEC’s motion for a accounts in Armstrong County. Prior to
permanent injunction. The Court refused CFG’s entry into CNBEC’s marketplace,
to enjoin CFG’s use of its “Citizens Bank” CNBEC had been the only “Citizens”
mark in CNBEC’s market. Instead, it retail bank in the area.
molded the jury’s verdict of infringement
A. CNBEC Advertising
in favor of CFG on all of CNBEC’s claims
and sua sponte issued an injunction Over the years, CNBEC has spent
restraining CNBEC’s use of the “Citizens” millions of dollars in advertising its
mark. The injunction requires CNBEC services and diverse products under the
always to identify itself as “Citizens marks “Citizens National Bank” and
National Bank” in the text of promotional “Citizens.” It has advertised in Allegheny
material, advertisements and documents, County in the North Pittsburgh edition of
despite the jury’s finding that CNBEC the Post Gazette, the Tribune Review, and
maintained a protected interest in the the North Hills News Record, as well as
“Citizens” mark standing alone. CNBEC the Butler Eagle and some of the smaller
timely appealed, and CFG cross appealed. newspapers in Butler and Armstrong
We hold that the District Court abused its Counties. The number of advertisements
discretion by denying CNBEC’s motion has varied depending upon its campaigns
for injunctive relief and issuing an and targets at the time. From time to time,
injunction sua sponte against CNBEC. CNBEC has also sponsored local
Therefore, we will affirm in part and community events in its marketplace such
reverse in part. as football programs, ballets, and other
sporting events and musical performances,
I. Background
which have been a form of advertising.
3
CNBEC has also advertised “Citizens National Bank.” The record
campaigns on radio stations covering contains more than seventy-five CNBEC
Allegheny and the surrounding counties advertisements and promotional materials
and television station KDKA, which that refer to CNBEC as “Citizens”
covers Western Pennsylvania and the predating CFG’s acquisition of the Mellon
entire Greater Pittsburgh area. In addition, banks. In another fifty instances,
it has placed flyers in customer statements, “Citizens” appears as the first reference to
utilized billboards for outdoor advertising the Bank. During 2001, the year CFG
in the Gibsonia, Slippery Rock and Butler opened its doors in the CNBEC
areas, and for the past five years prior to marketplace as “Citizens Bank,” CNBEC
the jury trial, it has maintained a wall spent $366,000 for print advertising. In
painted on the Masonic Building in the the year 2002, it spent $247,000 on print
City of Butler with its logo, the name advertising.
“Citizens”and the tag line “The
B. Consumer Confusion
Uncommon Bank.” It also has placed
listings in numerous telephone directories In the town of Wexford in
circulated throughout the Pittsburgh area Allegheny County, and in Butler,
and has issued numerous press releases Zelienople, and Saxonburg in Butler
each year in its claimed market. CNBEC County, CFG’s branches are located on the
has issued hundreds of thousands of its same street as CNBEC’s branches. Both
checks and debit cards, carrying its mark, banks frequently refer to themselves
to its customers and merchants. simply as “Citizens. CFG’s full-page
newspaper announcement in the Pittsburgh
CNBEC witnesses testified that at
Post-Gazette of its acquisition of the
least since the 1950s, employees and
Mellon banks referred to itself as either
customers have referred to it as “Citizens.”
“Citizens” or “Citizens Bank” five times.
Competing banks in that market as well as
Another contained the headline “Welcome
the media also refer to CNBEC as
to Citizens,” and others referred to itself in
“Citizens.”
the text as simply “Citizens” with
Since at least 1995, the bank policy “Citizens Bank” and its logo at the bottom
with respect to the use of its name has of the page.
been that the first time the bank’s name
Similar to CNBEC, CFG also
was used, the entire bank name, Citizens
introduced many financial products with
National Ba nk, s hould be used.
“Citizens” and with “Citizens Bank” and
Subsequent uses can be either “Citizens”
logo at the bottom of the ad. Examples are
or “Citizens National Bank.” For
the introduction of banking products and
example, an advertisement offered in
services available for law firms, Citizens
evidence for CNBEC’s 18-month CD
SBA program, and Citizens business
carries at its top only “Citizens” but at the
owners, com merc ial banking and
bottom in much smaller print appears
4
international services “by one of the logos are remarka bly “similar in
largest banks in the world,” the Citizens appearance.” Dr. Morrin opined that the
Circle Money Market Account, Citizens word “national” in CNBEC’s name is not
Phone Bank, Citizens Fixed-Rate very helpful in enabling consumers to
Annuities, Citizens Circle Gold Checking differentiate between the two banks
Account, and Citizens Business Premium because “national” is commonly used in
Money Market Account. bank names, and it is an abstract word. It
is hard to visualize a concrete image of an
CNBEC produced testimony of
abstract word, she testified, and “humans
CFG customers mistakenly doing business
have a hard time storing and retrieving
with CNBEC branches, attempting to cash
abstract words in their memory.”
CFG checks, depositing money and
making loan payments on CFG loans. Based on a survey of consumers in
CFG customers also used CNBEC’s ATM the Pittsburgh area, Dr. Mital testified that
machines believing they were CFG’s and an overwhelming majority shortened the
called CNBEC branches with respect to bank’s name and referred to Citizens Bank
CFG accounts and promotions. CNBEC as “Citizens.” He also conducted a survey
employees alleged to have recorded more of adult banking consumers in the four
than 2000 instances of confusion during county area of Allegheny, Butler, Beaver,
the current litigation. and Armstrong. According to that survey
of 300 people, respondents supplied 1057
CNBEC also produced at trial as
bank names. Of the 1057 names, 71% of
expert witnesses, Dr. Maureen Morrin of
those names were shortened. With respect
Rutgers University and Dr. Vihas Mital of
to Citizens Bank, 76% “shortened the
the University of Pittsburgh. Dr. Morrin
name to just ‘Citizen’ or ‘Citizens.’”
testified that CFG’s mark is likely to cause
consumer confusion because Citizens CFG admitted that CNBEC
National Bank and Citizens Bank are customers tried to make deposits into CFG
essentially identical in consumers’ minds accounts, make payment on CNBEC loans,
due to consumers’ tendency to shorten cash CNBEC checks, or use ATMs at CFG
brand names in speech and memory. To branches, all under the belief that they
consumers, CFG’s and CNBEC’s marks were banking with CNBEC. However,
are both “Citizens.” Moreover, Dr. Morrin CFG claimed that the instances of
pointed out that both banks in their confusion were minimal and decreased
promotional materials, print ads and web after the conversion of Mellon branches to
sites commonly refer to themselves as just Citizens Bank branches was completed.
“Citizens.”
CFG offered into evidence its
Dr. Morrin also noted that another trademark registration of the name
contributing factor to the likelihood of “Citizens Bank” and its service mark in the
confusion is that the branch names and the United States Patent and Trademark Office
5
dated August 28, 2001, as well as federal C. Jury Instructions, the Verdict and the
trademark registrations for various service Injunction
marks such as Citizens Select Gold,
After instructing the jury generally
Citizens Circle and Citizens Nouvelle
on the law with respect to the burden of
Credit Program. All of these trademarks
proof, the Court informed the jury that it
and service marks were registered with the
would be the Court’s responsibility to
United States Patent Office between
determine whether CFG would prevail on
March 11, 1997 and March 18, 2003.
its claim seeking the right to use its
CFG leveled its attack on registered mark “Citizens Bank” in the
CNBEC’s claim of seniority to the use of disputed areas of Pennsylvania. The Court
“Citizens” by eliciting evidence through explained that the jury’s role would be to
cross examination of inconsistencies in the determine whether CNBEC would obtain
testimony of CNBEC’s witnesses, judgment on its claims of trademark
exaggerations in its geographic claims as infringement, unfair competition, and
to its market area, and the weakness of unjust enrichment.
“Citizens” as a mark. CNBEC’s president,
The Court provided the jury with a
Margaret Wier, admitted that CNBEC had
general background in trademark law,
no trademark in the words “Citizens Bank”
noting that the two major objectives in the
and had not used those words to represent
law regarding trademarks are to protect
her institution. CFG also offered in
customers from becoming confused or
evidence a communication from an
misled as to the source from which
assist a n t in CN BE C’s m arketin g
products or services originate, and to
department, Sue Kushonardit, to CNBEC’s
protect the owner’s value and business
branch managers and commercial loan
goodwill associated with his or her
managers, advising them that “CFG’s
trademark. The Court explained that even
corporate colors are green and the logo is
though CFG obtained federal registration
uniquely different from our own.”
for its marks, CNBEC can still prevent
Counsel for CFG developed CFG from using its registered marks in its
through cross examination of CNBEC’s market area by demonstrating that CNBEC
president that its principal advertising has a protected interest in the mark and
agency, Larson O’Brien Acumens, offered that a likelihood of confusion would result
some suggestions to its vice-president, if CFG also used the mark in the same
Betsy Rab, in February 2002, that would market area. On the other hand, the Court
add to the confusion of the public with noted that if there is no likelihood of
respect to the two banks, thereby confusion “between CFG’s Citizens Bank
strengthening CNBEC’s legal case. mark and CNBEC’s marks, then both
CNBEC’s president conceded that these parties can use their respective marks in all
suggestions amounted to dirty tricks but areas.”
CNBEC “did not implement any” of them.
6
The Court outlined for the jury the The Court concluded its jury
factors to be considered in determining instruction with an explanation of the
whether there was a likelihood of damages sought by CNBEC and the
confusion and the weight to be given to elements that must be proven for such
each. The Court explained that if CNBEC relief. The Court then submitted to the
has established the right to the word jury a verdict slip which contained fifteen
“Citizens” standing alone as a trademark, questions. The first six questions and the
the jury must place the mark into one of responses of the jury are pertinent to our
four groups in the spectrum of review.
distinctiveness. These four groups listed
QUESTION #1: Do you find that CNBEC
in order from the strongest to weakest are,
has proven by a preponderance of the
(1) fanciful and arbitrary, (2) suggestive,
evidence that CNBEC has used “Citizens”
(3) descriptive, and (4) generic. The Court
standing alone as a trademark?
commented that “fanciful or arbitrary and
suggestive marks are considered inherently JURY: Yes.
distinctive and are entitled to immediate
QUESTION #2: Do you find by a
protection.” See also Checkpoint Sys.,
preponderance of the evidence that the
I n c . v . C h e c k P o i n t S o f t w a re
mark “Citizens” standing alone is ... (A)
Technologies, Inc., 269 F.3d 270, 282 (3d
generic, (B) merely descriptive, (C)
Cir. 2001) (explaining the four levels of
suggestive or arbitrary or fanciful?
trademark distinctiveness). 1
JURY:(C)
[The Jury was directed to skip to Question
1
The Court also instructed the jury on #4]
the determination of whether CNBEC’s
QUESTION #4: Do you find by a
“Citizens” mark had acquired a
preponderance of the evidence that a
secondary meaning, whereby a
likelihood of confusion exists between
significant portion of the public
CFG’s Marks and CNBEC’s “Citizens”
associates banking services under the
standing-alone mark?
name “Citizens” as coming from a single
source. However, because the jury found JURY: Yes.
the mark “Citizens” to be either
QUESTION #5: Do you find by a
suggestive or arbitrary/fanciful on the
preponderance of the evidence that a
distinctive scale, it was not required to
likelihood of confusion exists between
address secondary meaning in order to
find that CNBEC had a protected interest
in the “Citizens” mark and that there was
a likelihood of confusion with CFG’s descriptive mark may be entitled to
marks. See Checkpoint Sys., 269 F.3d at strong protection if it has developed a
283 n.10 (describing how even a secondary meaning).
7
CFG’s Marks and CNBEC’s “Citizens the Court concluded that an injunction
National Bank” mark? would increase confusion rather than
prevent it. The Court reasoned that if CFG
JURY: No.
were required to change its name in
QUESTION #6: Do you find by a CNBEC’s market area as a result of an
preponderance of the evidence that injunction, it would still be required to
CNBEC has proven that is has been indicate to consumers that it was owned by
injured as a proximate result of CFG’s or otherwise affiliated with Citizens Bank.
infringement? Also contributing heavily to the Court’s
decision was a determination that there
JURY: No.
was evidence of “unclean hands” on the
After answering “No” to Question part of CNBEC in this litigation, and that
#6, the verdict slip informed that jury that such evidence “is significant.” The Court
it had found a verdict in favor of CFG and concluded that this factor weighed heavily
that its task was complete. against the granting of a full injunction. It
also believed that granting an injunction
Several days later, the Court
against CFG would be difficult, if not
considered CNBEC’s application for a
impossible, to enforce because it had its
permanent injunction. Although labeled a
own trademark rights in areas other than
hearing, there was no jury, no evidence
CNBEC’s market area. The Court asserted
presented, or oral argument. The Court
that the use of broad ranged media for the
concluded on the briefs submitted by
purposes of advertisements and the
counsel for the parties that an injunction
increasing use of internet banking added to
against CFG should not issue. The Court
the difficulty. Instead of granting an
arrived at this result by balancing the
injunction against CFG, the Court sua
equities and considering the factors
sponte concluded that the principles of
enumerated in §35 of the Restatement
equity and the record in this case
(Third) of Unfair Competition (1995). The
compelled it to impose an injunction
Court determined that CNBEC had not
requiring CNBEC to use the term
proven bad faith or that CFG had
“National” as part of its name when it first
deliberately infringed on CNBEC’s marks.
refers to itself in any document,
It concluded that a full injunction directed
advertising, or promotion, regardless of the
to CFG would have devastating effects on
type or medium used. The Court
its business and its customers, not only in
thereupon molded the verdict entered by
CNBEC’s market area but throughout
the jury and entered a verdict in favor of
Pennsylvania, a consequence even beyond
CFG on its declaratory judgment claim and
the scope sought by CNBEC. However, it
against CNBEC on all of its counterclaims.
did not offer a descriptive explanation for
this awesome prediction. II. Evidentiary Rulings
With respect to the public interest, The four issues raised by CNBEC
8
on appeal are: (1) the refusal of the was conducted outside of CNBEC’s
District Court to enjoin CFG’s use of its market. Reitter interviewed people at two
“Citizens Bank” mark after a jury malls in Allegheny County, Ross Park
determined that it infringed CNBEC’s Mall and Robinson Towne Center. The
“Citizens” mark; (2) the District Court’s Court agreed with CFG and excluded the
exclusion of CNBEC’s proffered expert testimony. CNBEC now appeals this
testimony regarding a likelihood of evidentiary ruling. The District Court’s
consumer confusion between the parties’ decision to exclude proposed expert
marks; (3) the District Court’s exclusion of testimony under Daubert v. Merrell Dow
e v i d e n c e of purported con s um er Pharms., Inc., 509 U.S. 579 (1993), is
confusion; and (4) the Court’s admission reviewed for an abuse of discretion.
of evidence of third-party use of the word Montgomery County v. Microvote Corp.,
“Citizens” in trademarks outside of the 320 F.3d 440, 445 (3d Cir. 2003).
relevant marketplace and the Court’s
The District Court was concerned
subsequent jury instruction that these
about the propriety and trustworthiness of
third-party marks were relevant to a
Reitter’s survey. A “universe” is “that
determination of the commercial strength
segment of the population whose
of CNBEC’s “Citizens” mark.
perceptions and state of mind are relevant
In its conditional cross-appeal to be to the issues in the case.” McCarthy on
considered only if this Court reverses any Trademarks and Unfair Competition §
of the District Court’s rulings, CFG 32:159 (4th ed. 2003). “A survey of the
contends that the District Court erred in wrong ‘universe’ will be of little probative
admitting generalized hearsay testimony value in litigation.” Id. The Court noted
concerning unspecified instances of that the proponent of the survey bears the
alleged confusion and in formulating its burden of proving that the universe is
jury instruction concerning the definition proper. Id.; see also 3A Callmann on
of “use” of the term “Citizens” for Unfair Competition, Trademarks and
purposes of acquiring trademark rights. Monopolies § 21:67) (4th ed. 2001).
We turn first to CNBEC’s It is not disputed that the consumer
arguments regarding the District Court’s confusion at issue here is known as
evidentiary rulings. “reverse confusion.” “Reverse confusion
occurs when a larger, more powerful
A. Exclusion of CNBEC’s Proffered
company [here, CFG] uses the trademark
Expert Testimony
of a smaller, less powerful senior owner
CFG filed a pre-trial motion to [here, CNBEC] and thereby causes likely
preclude proposed expert testimony of confusion as to the source of the senior
Robert Reitter on behalf of CNBEC on the user’s goods or services.” Fisons
ground that his survey relied on an Horticulture, Inc. v. Vigoro Industries,
“improper universe” because the survey Inc., 30 F.3d 466, 474 (3d Cir. 1994). The
9
District Court observed that “in reverse allow Reitter to conduct the survey there.
confusion cases . . . the appropriate Reitter also acknowledged that he could
universe is the ‘senior user’s [i.e. have conducted the survey somewhere else
CNBEC’s] customer base.” Citizens Fin. in Butler County, but it would have been
Group, Inc. v. Citizens Nat’l Bank of more difficult. How ever, “[t]he
Evans City, No. 01-1524, slip op. at 7 geographical area surveyed cannot be
(W.D. Pa. Apr. 23, 2003) (citing McCarthy based on mere sampling convenience
§ 32:159). rather than upon scientific or sampling
grounds.” McCarthy § 32:161.
The Court then considered
evidence showing that CNBEC operated The Court further disagreed with
sixteen branches in Butler County, no CNBEC’s argument that its “universe”
branches in Beaver County, one branch in should include all of Allegheny County
Armstrong County, and three branches in because it had a marketing presence
northern Allegheny County near the Butler beyond Butler County in the Greater
County line. The District Court stated Pittsburgh area. Specifically, the Court
“[f]or the past 108 years, CNBEC and its noted that “[t]he scope, media type,
predecessors in interest have offered retail volume, and frequency of [CNBEC’s]
banking services in this area and not advertising and promotional efforts
beyond. Thus, in this case there can be no regularly focus[ed] on Butler county, not
doubt that CNBEC’s customer ‘base’ is Allegheny county,” and that “the evidence
within Butler county and extreme northern indicates that CNBEC’s advertising and
Allegheny county rather than Allegheny marketing efforts outside of Butler County
county as a whole.” Id. The Court noted are sporadic.” Citizens Fin. Group, No.
that “[t]he closest CNBEC branches are 7 01-1524, slip op. at 9.The Court
and 17 miles, respectively, away from the determined that any customers that
malls,” and the remaining branches were CNBEC may obtain outside of their main
“further away.” Id. at 8. customer base of Butler County and
Northern Allegheny county would be “spill
The Court disagreed with
over” which would not be a part of
CNBEC’s argument that the universe at
CNBEC’s customer base. Id. The Court
issue consisted of potential customers of
also rejected some of the methodology
both parties because the universe in a
used by Reitter in his survey questions as
reverse confusion case should be limited to
being vague, imprecise, overly inclusive,
the senior user’s customer base. See
or overly exclusive. Id. at 9-10.
McCarthy § 32:159; 3A Callmann § 21:67.
The Court noted that Reitter testified, and Exercising its role as the
CNBEC acknowledged at the hearing, that “gatekeeper” regarding the proffered
he and CNBEC would have preferred to expert witness testimony, the Court
conduct the survey at Clearview M all in concluded that Reitter’s report was too
Butler County but that mall refused to fundamentally flawed to be admissible. Id.
10
at 10. The Court therefore excluded the of which relied on a single court decision,
proffered testimony under Daubert and Sterling Drug, Inc. v. Bayer AG, 14 F.3d
F e d e r a l R ule of Evidence 702. 733 (2d Cir. 1994), but that Sterling did
Alternatively, the Court excluded the not support the Court’s exclusion.
testimony under Federal Rule of Evidence
CNBEC also takes issue with the
403, concluding that the danger of unfair
Court’s factual findings, contending that
prejudice far outweighed the minimum
shoppers at both malls have access to its
probative value of Reitter’s testimony. Id.
banking services, and that Reitter’s
at 11. See, e.g., Trouble v. The Wet Seal,
methodology and use of a “screener”
Inc., 179 F. Supp. 2d 291, 306-308
question was proper. Finally, CNBEC
(S.D.N.Y. 2001). The Court explained
argues that the Court’s “critique” of
that “[i]f the universe is skewed, then the
Reitter’s methodology should affect only
conclusion will similarly be skewed. If an
its weight but not its admissibility. See
expert, a person with special knowledge
Southland Sod Farms v. Stover Seed Co.,
and expertise, testifies as to the skewed
108 F.3d 1134, 1143 (9th Cir. 1997),
results, a jury is likely to give special
United States v. 88 Cases, etc., 187 F.2d
weight to the skewed conclusion.” Id.
967, 974 (3d Cir. 1951); 5 McCarthy §
CNBEC argues that Reitter’s 32:162 (selection of an inappropriate
survey constitutes highly probative universe generally affects the weight of
evidence of likelihood of confusion and survey and not its admissibility).
that the Court erred in excluding the
In Sterling, 14 F.3d 733, a United
evidence from consideration by the jury.
States drug company sued Bayer AG, a
According to CNBEC, 152 of the 213
German drug company, for infringement
respondents, or 71%, exhibited “reverse
of the trademark “Bayer” in Sterling’s
confusion” either by identifying a CFG
market. Both companies held rights in the
location in response to the CNBEC
trademark for historical reasons. Id. at
advertisement or stating that the bank in
737. It was undisputed that Sterling was a
the CNBEC advertisement was affiliated
senior user of the trademark in its market.
with Mellon Bank.
Id. at 738. The Sterling court rejected
CNBEC argues also that the Court Bayer AG, the junior user’s, argument that
misinterpreted case law regarding the a consumer survey regarding likelihood of
composition of an appropriate survey confusion should include Bayer AG’s
universe in a reverse confusion case. customer base in the United States. Id. at
Specifically, it takes issue with the Court’s 741. The Court held that under the theory
conclusion that in a reverse confusion of reverse confusion, as opposed to the
case, the universe is limited to the senior traditional theory of confusion, the
user’s “customer base.” CNBEC argues universe was limited to the senior user’s
that the Court’s conclusion was based on customer base. Id.
two treatises, McCarthy and Callman, both
11
Sterling’s holding was cited with for a jury. The courts have held generally
approval by the two leading treatises and that mere technical unreliability goes to the
was the position adopted by the District weight accorded a survey, not its
Court here, that is, the proper universe admissibility. See, e.g., Southland Sod
under CNBEC’s theory of reverse Farms, 108 F.3d at 1143. The Court in
confusion was limited to CNBEC’s this case concluded that Reitter’s survey
customer base, not to CFG’s customer did not suffer from mere technical flaws,
base. CNBEC interprets Sterling to mean but from fatal flaws. Thus, the Court
that the universe should include consumers appropriately fulfilled its duty as a
whose perceptions are at issue and have gatekeeper in excluding this evidence.
access to the marks of both parties.
Finally, CNBEC has failed to show
However, in our view, Sterling does not
that the Court committed plain error in its
stand for such a proposition. The Sterling
findings of facts as to what constituted its
court stated that “[w]here, as here, the
customer base. The Court cited CNBEC’s
relevant issue is whether consumers
own documentary evidence to make the
mistakenly believe that the senior user’s
determination that it had business
products actually originate with the junior
primarily in Butler County and in the
user, it is appropriate to survey the senior
northern tip of Allegheny County.
user’s customers.” Id. at 741. Although
CNBEC has also failed to show that the
Sterling dealt with a difference between
Court committed plain error regarding
the junior and senior users’ customers
whether its shoppers at the two malls were
based on products, as opposed to different
within the universe of CNBEC’s customer
geographic regions, the rule is the same.
base and whether Reitter’s “screener”
The court should limit survey evidence in
question was proper. Accordingly, we
reverse confusion cases to the customers
hold that CNBEC has failed to show an
of the senior user. We do not believe that
abuse of discretion by the District Court
the District Court abused its discretion in
and affirm its ruling to exclude the
determining that the consumers surveyed
proffered expert testimony.
in this case were located outside of
CNBEC’s customer base. B. Exclusion of Certain Written
Evidence Purporting to Show Instances of
CNBEC’s argument that any
“Actual Confusion”
problems of Reitter’s survey should have
affected only its evidentiary weight but not
its admissibility is also unpersuasive. The
CNBEC also attacks the District
District Court excluded the survey because
Court’s establishment of guidelines to
Reitter’s methodology was fundamentally
insure that CNBEC’s “confusion log”
flawed and because the danger of undue
entries prepared by CNBEC’s employees
prejudice far outweighed the limited
satisfied the Federal Rules of Evidence
probative value of the survey, especially
before being admitted. CFG filed a
12
pretrial motion to exclude CNBEC’s In general, “actual confusion”
“confusion log” entries as inadmissible evidence collected by employees of a party
hearsay. CNBEC conceded that log in a trademark action must be viewed with
entries were hearsay, but argued that they skepticism because it tends to be biased or
fell within the present sense impression self-serving. See Checkpoint Sys., 269
exception under Fed. R. Evid. 803(1). The F.3d at 298 (“the District Court properly
Court granted in part and denied in part took into account the potential bias of the
CFG’s motion and established guidelines Checkpoint System’s employees who
for the admissibility of CNBEC’s log testified [regarding actual confusion].”); A
entries under the “present sense” & H Sportswear, Inc. v. Victoria’s Secret
exception. Stores, Inc., 237 F.3d 198, 227 (3d Cir.
2000) (“The District Court, while not
CNBEC does not dispute the
explicitly discrediting this evidence,
Court’s disposition of its argument
viewed it with great skepticism, given the
regarding the exceptions to the hearsay
interested sources and the inability to
rule. Rather, CNBEC specifically
cross-examine the supposedly confused
challenges the Court’s two guideline
individuals.”). It was, therefore, proper for
requirements: requiring log entries to (1)
the District Court here to establish
“specifically mention Mellon or CFG” and
guidelines to ensure that the evidence met
(2) “describe the specific evidence of the
the standards of the Federal Rules of
direct link to Mellon or CFG in either the
Evidence.
form of (a) ‘documentary evidence,’ such
as specifically referring to a deposit slip, Witnesses for both CFG and
or (b) ‘a clear and specific statement by the CNBEC acknowledged that customer
customer.’” Citizens Fin. Group, No. 01- confusion between banks frequently
1524, slip. op. at 14. The guidelines also occurred, regardless of bank names.
required exclusion of log entries that “Ownership of a trademark does not
reflected “the thought process, conclusion, guarantee total absence of confusion in the
analysis or interpretation” of the CNBEC marketplace. Selection of a mark with a
employees who recorded the entries. Id. at common surname naturally entails a risk of
15. CNBEC asserts that the Court “[cited] uncertainty and the law will not assure
no legal support and [articulated] no absolute protection.” Scott Paper Co. v.
rationale for its heightened evidentiary Scott’s Liquid Gold, Inc., 589 F.2d 1225,
requirements” and that the Court’s 1231 (3d Cir. 1978). The Court was
requirements were inconsistent with the familiar with the evidence gathered during
standards of admissibility under Fed. R. discovery and was in the best position to
Evid. 803(1). We review the District determine the safeguards for relevance and
Court’s guidelines for abuse of discretion. reliability in this case. The Court did not
United States v. Saada, 212 F.3d 210, 220 abuse its discretion in requiring CNBEC’s
(3d Cir. 2000). written evidence to specifically refer to
13
CFG or Mellon to ensure that the jury
received only relevant evidence. Saada,
CFG introduced evidence showing
212 F.3d at 220.
that “Citizens” was commonly used by
Likewise, the Court did not abuse banks both in Pennsylvania and throughout
its discretion in requiring CNBEC’s the United States: 8 banks, in addition to
evidence to exclude entries that reflected CFG, use “Citizens” in Pennsylvania;
the thought process, conclusion, or banks with “Citizens” in their name
interpretation of the CNBEC employees coexist in six zip codes in Pennsylvania;
who recorded the entries. It was proper for more than 350 FDIC-insured banks use
the Court to make such requirement under “Citizens” in their trade names throughout
Fed. R. Evid. 803(1). See United States v. the United States and they operate more
Guevara, 277 F.3d 111, 127 (2d Cir. 2001) than 2,400 separate branches; “Citizens” is
(upholding determination that hearsay the ninth most commonly used bank name;
statements did not qualify as “present and approximately 4% of FDIC-insured
sense impression” under Rule 803(1) banks have Citizens in their names.
because they “were conclusions based CNBEC appeals from the District Court’s
upon information [the recorder] had denial of its motion in limine to exclude
processed rather than contemporaneous or evidence of widespread third-party use of
spontaneous statements that were Citizens-formative trademarks outside its
inherently trustworthy”) reh’g denied, 298 market area.
F.3d 182 (2 nd Cir. 2002); Vitek Sys., Inc. v.
In this case, the jury found that
Abbott Labs., 675 F.2d 190, 194 (8th Cir.
CNBEC had used the mark “Citizens,” that
1 9 8 2 ) ( c o n c lu d i n g t h a t h e a r s a y
the mark was very distinctive (either
memorandum did not qualify as present
“suggestive,” “arbitrary,” or “fanciful),
sense impression because company sought
and that there was a likelihood of
to elicit its employee’s evaluation of the
confusion between CFG’s marks and
customer’s thought process). Nonetheless,
CNBEC’s “Citizens” mark. Thus, the
the District Court’s guidelines permitted
jury found infringement by CFG, and
written hearsay evidence that reflected “an
CNBEC prevailed on this claim. Yet,
explanation or description of the event
CNBEC argues that the Court erred in
rather than a narration.” The guidelines
allowing evidence of widespread third
conformed to the requirements of Rule
party use because it “is not relevant to
803(1). We, therefore, conclude that the
determining the strength of CNBEC’s
Court did not abuse its discretion and did
mark within its marketplace.” We need
not err in setting up the guideline
not tarry on this issue. First, as a general
requirements.
rule, widespread use of even a distinctive
C. The Discussion of Evidence of mark may weaken the mark. See, e.g.,
Widespread Third-Party Use of the Word Petro Stopping Ctrs, L.P. v. James River
“Citizens” by Other Banking Institutions Petroleum, Inc., 130 F.3d 88, 93-94 (4th
14
Cir. 1997) (explaining how evidence of the case that makes the
broad third party use of a suggestive mark jury’s answers to special
may be relevant to show the weakness of interrogatories consistent,
the mark). Thus, we believe this evidence they must be resolved that
was likely relevant. Further, any way. For a search for one
conceivable error was harmless because possible view of the case
the jury found in favor of CNBEC on this which will make the jury’s
issue of infringement and the strength of findings inconsistent results
its mark. Accordingly, we will not reverse in a collision with the
the admission of this testimony. Seventh Amendment.
III. Molding the Verdict
Announcing its decision to deny Our circuit has interpreted Atlantic
injunctive relief to CNBEC, and instead to & Gulf Stevedores to mean that “a verdict
enjoin CNBEC, the District Court must be molded consistently with a jury’s
explained that it was “molding the verdict answers to special interrogatories when
entered by the jury and entering a verdict there is any view of the case which
in favor of CFG and against CNBEC on reconciles the various answers.” McAdam
the declaratory judgement claim and on all v. Dean Witter Reynolds, Inc., 896 F.2d
counterclaims filed by CNBEC against 750, 763 (3d Cir. 1990) (quoting Bradford-
CFG.” This “molding” is troublesome, White Corp. v. Ernst & Whinney, 872 F.2d
given that the jury found that CNBEC had 1153, 1159 (3d Cir. 1989), cert. denied,
a protected interest in the mark “Citizens,” 493 U.S. 993 (1989) (emphasis added).
and that there was a likelihood of Thus, trial courts must proceed “under a
confusion between the marks, constituting constitutional mandate to search for a view
CFG’s infringement on CNBEC’s mark. of the case that makes the jury’s answers
The District Court had informed the jury consistent.” McAdam, 896 F.2d at 764
during its instructions that “if you find that (quoting United States v. 0.78 Acres of
there is a likelihood of confusion caused Land, More or Less, 81 F.R.D. 618, 621
by CFG’s use of the mark Citizens Bank, (E.D.Pa. 1979) aff’d without opinion, 609
then CNBEC will be able to prevent CFG F.2d 504 (3d Cir. 1979).
from using the mark Citizens Bank in
In our view, the District Court’s
those areas where CNBEC has established
“molding” in this case has produced a
a significant market presence.”
collision with the Seventh Amendment.
The Supreme Court observed in T h e D is t r ic t C o u r t su b m i t t e d
Atlantic & Gulf Stevedores, Inc. v. interrogatories to the jury under Fed. R.
Ellerman Lines, Ltd., 369 U.S. 355, 364 Civ. P. 49(b) to decide those issues of fact
(1962): necessary for a verdict. In response to the
Court’s first interrogatory, the jury found
Where there is a view of
15
in the affirmative that CNBEC had proven The problem which triggered the
that it had used “Citizens” standing alone molding of the verdict originated with the
as a trademark. In response to the second Court’s framing of the sixth interrogatory.
interrogatory, it found that the mark The Court presided over the lengthy and
“Citizens” standing alone was suggestive, complex trial before the jury patiently and
arbitrary or fanciful. Skipping to the competently. In framing the sixth
fourth interrogatory, the jury also found in interrogatory, however, the District Court
the affirmative that a likelihood of erroneously formulated the question in
confusion existed between CFG’s mark terms of “injury,” rather than in terms of
and CNBEC’s “Citizens” standing-alone monetary damages or unjust enrichment.
mark. Taken together, these responses “Injury” is a much broader concept than
constituted a finding that CFG had the issues of money damages or unjust
infringed on CNBEC’s trademark. enrichment which were properly before the
However, in the sixth interrogatory, the jury in this case. An injury is “any wrong
jury found that CNBEC had not been or damage done to another, either to his
“injured” by the infringement, meaning person, rights, reputation, or property.”
that no money damages would be awarded. Black’s Law Dictionary (5th ed. 1979).
Restatement (Second) of Torts § 7 (1965)
defines injury as “the invasion of any
The critical question in “molding”
legally protected interest of another.” The
cases such as this is “whether the jury’s
jury, however, was not asked to decide the
answers in the verdict are necessarily
legal rights of the parties; its function was
inconsistent with each other.” Loughman
to find facts regarding infringement and
v. Consol-Penn. Coal Co., 6 F.3d 88, 104
arrive at a verdict regarding CNBEC’s
(3d Cir. 1993). Upon review, we hold that
claims for monetary relief. The District
the jury’s findings in this case were not
Court instructed the jury that if it found for
inconsistent, and no molding was
CNBEC on unfair competition and its
necessary to harmonize them. It is
trademark infringement claims, it must
completely feasible under trademark law
determine whether “CFG be required to
that a trademark owner may infringe on
pay CNBEC the monetary damages that
another’s mark, and yet the senior user
CNBEC sustained as a consequence of
may not suffer any economic damages.
CFG’s wrongful acts.” The Court defined
The “molding” in this case only became
actual damages as meaning “the amount of
necessary when the District Court decided
money that will reasonably and fairly
that despite the jury’s finding of
compensate CNBEC for an injury you find
infringement by CFG over CNBEC’s
was caused by CFG’s use of the mark
senior rights, it would still grant
‘Citizen’s Bank.’” Pursuant to its jury
declaratory judgment in favor of CFG,
instructions, the Court should have molded
thereby allowing CFG to use its registered
the jury verdict, as it may now be required,
trademark in CNBEC’s market area.
to reflect the sixth interrogatory to the jury
16
as though it were framed in terms of turn to the District Court’s ruling on
money damages and unjust enrichment CNBEC’s motion for a permanent
rather than “injury.” injunction.
We have clearly held that Several days after the jury returned
“trademark infringement amounts to its verdict, the District Court turned to
irreparable injury as a matter of law.” CNBEC 's motion for a permanent
Gucci Am., Inc. v. Daffy’s, Inc., 354 F.3d injunction to enjoin CFG from offering or
228, 237 (3d Cir. 2003) (quoting S & R advertising retail banking services under
Corp. v. Jiffy Lube Int’l, Inc., 968 F.2d the mark "Citizens Bank" in CNBEC's
371, 378 (3d Cir. 1992)). Therefore, the claimed market area. The judge apparently
jury’s finding of “no injury” must be had received memoranda on the issue, but
limited to the context of economic took no new testimony, evidence or oral
damages. The jury verdict may not be argument. Without citing any authority
used to supplant the principle that CFG’s except the factors set forth in Restatement
infringement constitutes a legal injury to (Third) of Unfair Competition § 35, the
CNBEC as a matter of law. The District judge delivered an oral opinion denying
Court’s molding of the jury’s verdict to CNBEC’s motion. Based on the jury
encompass a lack of injury beyond the verdict finding no likelihood of confusion
money damages was in error. It was this between CFG’s marks and CNBEC’s full
error that led the Court to enter judgment mark of “Citizens National Bank,” the
for CFG on its complaint for declaratory Court, sua sponte imposed an injunction
judgment. Accordingly, the District on CNBEC requiring it to use the term
Court’s molding of the verdict and the “National” as part of its name “when it
entry of declaratory judgment for CFG will first refers to itself in any document,
be reversed. Upon remand, the District advertising or promotion regardless of type
Court is instructed to vacate the judgment or medium used.”
and to enter judgment in accordance with
On appeal, CNBEC argues that the
the jury’s finding of infringement by CFG,
District Court erred by enjoining it from
consistent with this opinion.
using its shortened “Citizens” mark, and
IV. The Injunction failing to grant its application for a
permanent injunction against CFG.
Although we have stated that
Further, CNBEC argues that this Court had
trademark infringement is an “irreparable
never endorsed the “Restatement Factors”
injury as a matter of law,” id., we have
that the District Court relied on to reach its
also held that “the irreparable injury we
decision.
referred to was not intended to swallow the
remaining prongs of the permanent The Restatement (Third) of Unfair
injunction inquiry.” Gucci, 354 F.3d at Competition § 35(2), upon which the
237. With that admonition in mind, we District Court relied, states:
17
The appropriateness and scope of evaluate the “balance of harm” before the
injunctive relief depend upon a ultimate determination of infringement.
comparative appraisal of all the factors of AM Gen. Corp. v. Daimler Chrysler Corp.,
the case, including the following primary 311 F.3d 796, 804 (7th Cir. 2002); Lermer
factors: & Germany GmbH v. Lermer Corp., 94
F.3d 1575, 1577 (Fed. Cir. 1996).
(a) the nature of the interest to be
protected; We review a District Court’s
decision to grant or deny a permanent
(b) the nature and extent of the
injunction under an abuse of discretion
wrongful conduct;
standard. A.C.L.U. of N.J. v. Black Horse
(c) the relative adequacy to the Pike Reg’l Bd. of Educ., 84 F.3d 1471,
plaintiff of an injunction and of other 1476 (3d Cir. 1996). “An abuse of
remedies; discretion exists where the District Court’s
decision rests upon a clearly erroneous
(d) the relative harm likely to result
finding of fact, an errant conclusion of
to the legitimate interests of the defendant
law, or an improper application of law to
if an injunction is granted and to the
fact.” Id. (quoting Int’l Union U.A.W. v.
legitimate interests of the plaintiff if the
Mack Trucks, Inc. 820 F.2d 91, 94 (3d Cir.
injunction is denied;
1987)). “[W]e will not interfere with the
(e) the interests of third persons district court's exercise of discretion
and the public; ‘unless there is a definite and firm
conviction that the court . . . committed a
(f) any unreasonable delay by the
clear error of judgment in the conclusion it
plaintiff in bringing suit or otherwise
reached upon a weighing of the relevant
asserting his rights;
factors.’” Morgan v. Perry, 142 F.3d 670,
(g) any related misconduct on the 683 (3d Cir. 1998) (citation omitted).
part of the plaintiff; and
We are hesitant to endorse any
(h) the practicality of framing and finite set of factors for consideration in
enforcing an injunction. determining the equities of injunctive
relief. In fact, the District Court prefaced
its consideration of these factors with the
CNBEC a r g ues that th e statement that “equity is the key
Restatement Factors have not been consideration in determining a proper
adopted by the courts because they are ill- remedy once a likelihood of confusion
suited for the task of crafting permanent exists.” Even the Restatement (Third) of
injunctive relief. The factors, it asserts, Unfair Competition § 35(2) explains that
are better suited in considering preliminary weighing injunctive relief requires “a
injunctions, which are extraordinary comparative appraisal of all the factors of
remedies requiring courts to carefully the case.” In order to determine whether
18
the District Court abused its discretion in jury, not the nature of the mark owner’s
this matter, however, we must review the interest to be protected. The District Court
Restatement Factors that were considered. should have focused instead on the actual
interests to be protected, i.e. the public
The first factor, the nature of the
interest in avoiding confusion and
interest to be protected, weighed in favor
CNBEC’s interest in maintaining control
of denying the injunction according to the
over its mark and avoiding injury to
District Court. The Court explained that
reputation and goodwill. We see nothing
even though the jury found “Citizens”
in this factor which favors the infringer.
standing alone to be CNBEC’s lawful
trademark, 12 U.S.C. § 22 requires that As to the second factor, the nature
CNBEC “include in its name the word and extent of the wrongful conduct, the
‘national’ when identifying itself.” Court was not persuaded that CFG acted in
However, this federal statute relating to the bad faith or that it deliberately infringed on
organization’s Certificate of National CNBEC’s mark. CFG may not have acted
Banking Association only requires that in bad faith, but it deliberately advertised
persons uniting to form such associations in the marketplace where CNBEC had
“shall . . . make an organization certificate engaged in banking for over one hundred
which shall specifically state: first, the years without any trademark infringement.
name assumed by such association; which CFG did not enter CNBEC’s marketplace
shall include the word ‘National.’” 12 inadvertently; its conduct was deliberately
U.S.C. § 22. Nothing in this statutory conceived, planned and implemented by a
language inhibits a national bank from large and aggressiv e fina ncial
using a diminutive of its name for organization. Thus, although we accept
advertising purposes, especially when it is the District Court’s determination that
so known by its customers or the CFG did not act in bad faith, we see
community it serves. Moreover, the nothing in this factor that weighs against
statute expressly requires that the name an injunction.
“National” be used in the organization
Regarding the third factor, the
certificate; it does not address other
relative adequacy to CNBEC of an
situations in which the name may be used,
injunction, the Court again relied on its
and certainly not in advertising media. We
overly broad interpretation of the federal
see no basis in the statute to support the
statute requiring the inclusion of the word
District Court’s assertion.
“National” in CNBEC’s name. The Court
The Court also explained under the concluded that CNBEC “can protect the
first factor that hundreds of banks values of its trademark” without a
throughout the United States use permanent injunction prohibiting CFG
“Citizens” in their name. Yet, this inquiry from using its mark. For the reasons we
is appropriate for determining the strength set forth in our discussion of the first
of the mark, which was determined by the factor, this conclusion of law, although the
19
District Court stated it as a finding, is Such a limited injunction could in no way
without any legal or factual basis. Even “potentially prevent” CFG from using its
though CNBEC may be able to avoid some name throughout Pennsylvania. With a
confusion by using the word “National” in giant institution operating hundreds of
its name, the equities do not necessarily branches throughout the east coast of the
support forcing CNBEC to take such United States, it is an enormous stretch of
measures given that it is the senior user of imagination to conclude that an injunction
the “Citizens” mark and the victim of l i m i t e d t o s e v e r a l c o u n t i e s in
trademark infringement. Pennsylvania would have “devastating
effects on CFG’s business and customers.”
In the fourth factor, a balancing of
The record does not support this broad
the relative harm to the legitimate interests
statement.
of the parties if the injunction is denied,
the Court concluded that “[a] full Furthermore, in considering this
injunction would have devastating effects factor, the District Court ignored the jury’s
on CFG’s business and its customers” and finding that CFG’s use of the “Citizens
that “it would potentially prevent CFG Bank” mark in the CNBEC market area
from using its name not just in CNBEC’s created a likelihood of public confusion
market area, but throughout Pennsylvania that could harm CNBEC’s interest in its
. . . .” There is nothing in the record to mark. The Court simply stated in
support these conclusions. First, CNBEC conclusory fashion that CNBEC “has
seeks to enjoin CFG, at most, from failed to demonstrate damage to its
offering or advertising retail banking reputation and goodwill” as a result of
services under the mark “Citizens Bank” CFG’s infringement. This statement
only in Allegheny, Armstrong, Beaver and disregards the record that undisputably
Butler counties, and not the rest of shows CNBEC has operated as a bank, at
Pennsylvania. The District Court also least in Butler County, for over one
noted that CNBEC did not prove it had hundred years and has built substantial
penetrated the market in Armstrong and community goodwill that it seeks to
Beaver counties and in the Greater protect in the future. As we noted in
Pittsburgh area. Commerce Nat’l Ins. Servs., Inc. v.
Commerce Ins. Agency, Inc., a similar
Thus, an injunction could be easily
case involving reverse confusion, “[w]e
tailored to CNBEC’s proven market area,
think it a reasonable inference that during
a modest part of Western Pennsylvania.2
persons eighteen years and older; Beaver
2
According to the United States County, 140,350; Butler County,
Federal Census of 2000, of which we 131,235; and all of Allegheny County,
take judicial notice, all of Armstrong including the Greater Pittsburgh Area,
County had only a population of 55,818 1,000,490.
20
those thirteen years, [the senior user] was Jaycees v. Phila. Jaycees, “avoidance of
able to build up substantial goodwill for its confusion should always be a major
general insurance services under [its] concern of a court in a trademark case,”
mark.” 214 F.3d 432, 443 (3d Cir. 2000) and “actual confusion need not be shown.
(footnote omitted). In this case, too, we Rather, only the likelihood of confusion is
believe that after the use of CNBEC’s required.” 639 F.2d 134, 142 (3d Cir.
trademark name in a limited rural area of 1981). We further stated in that case,
Western Pennsylvania over many years, its “[p]rotection of infringers is not a purpose
expansion in that area during this period, of the Lanham Act. On the contrary, the
and the record of its consistent and broad Act’s objective is the protection of the
advertisement of its business and name trademark and the public.” Id. We
over those many years, one can reasonably recognize the District Court’s legitimate
infer that infringement against CNBEC’s concern that a strict injunction against
trademark will adversely affect its CFG could cause further public confusion
reputation and goodwill. Balancing the for CFG’s customers, particularly
relative harm to the legitimate interests of considering CFG’s national scope and the
the parties clearly favors CNBEC and not proliferation of internet banking.
the infringer. However, potential public confusion
should not be considered to the exclusion
As to the fifth factor, the interest of
of trademark protection. Rather, we
third parties and the public, the District
believe that in this case this factor should
Court was of the opinion that a permanent
be read as a mandate to craft injunctive
injunction, as requested, would increase
relief that will minimize confusion, rather
confusion rather than prevent it. It reached
than abandoning injunctive relief all
this conclusion on the supposition that an
together.
injunction would require CFG to change
its name, but CFG still would be required As to the sixth factor, delay in suing
to indicate to consumers “that it was the infringer, the Court found no delay on
owned by or otherwise affiliated with the part of CNBEC in bringing its claims.
Citizens Bank.” A tailored permanent Thus, the Court did not consider this factor
injunction, however, need not affect the important. Because CNBEC did act
name for CFG’s hundreds of branches promptly to protect its rights, we believe
outside of the limited area constituting that if this factor is to be given any weight,
CNBEC’s market area. A permanent it would favor CNBEC’s application for
injunction need not require that CFG injunction.
operate any branches in CNBEC’s
The Court considered that the
marketplace, nor would it bar CFG from
seventh factor, misconduct on the part of
operating an independent affiliate under a
CNBEC, weighed heavily against the grant
different name in the enjoined areas.
of an injunction. CFG alleges that
As we stated in United States CNBEC dropped the word “National” in
21
its advertisements following CFG’s p l a i n ti f f a g a i n s t t h e
entrance in the market in order to increase transgression which, it is
confusion and advance its litigation c o n t e n d e d , s e rves to
strategy. The Court concluded that there foreclose that right.
was evidence in e-mails and memos from
CNBEC’s marketing team and other
employees “that indicated that CNBEC Id.
took affirmative actions aimed at
In a trademark infringement action,
increasing confusion to further their own
“the court must show solicitude for the
efforts in this case.” These efforts, the
public in evaluating an unclean hands
Court found, all occurred after CFG
defense.” Donoghue v. IBC/USA
announced its intention to enter the
(Publications), Inc., 886 F. Supp. 947, 954
market. The Court believed this “clear
(D. Mass. 1995). Because a central
evidence of unclean hands is significant.”
concern in an unfair competition case is
Although there is some evidence of protection of the public from confusion,
at least consideration of a plan by CNBEC courts require clear, convincing evidence
to enhance their litigation position, the of “egregious” misconduct before
District Court took a severe view of the invoking the doctrine of unclean hands.
evidence and allowed this evidence to Ciba-Geigy Corp. v. Bolar Pharm. Co.,
overshadow the merits of the plaintiff’s Inc., 747 F.2d 844, 855 (3d Cir. 1984).
claim and the public’s interests. See Furthermore, “the extent of actual harm
Republic Molding Corp. v. B.W. Photo caused by the conduct in question, either to
Utilities, 319 F.2d 347, 350 (9th Cir. 1963) the defendant or to the public interest, is a
(“Unclean hands, then, does not stand as a highly relevant consideration.” Republic
defense that may be properly considered Molding Corp., 319 F.2d at 349-350.
independent of the merits of the plaintiff's
There is very little evidence in this
claim . . . .”).
case that the thoughts or suggestions of
In the interests of right and CNBEC’s advertising agencies or its
justice the courts should marketing team were ever implemented or
not automatically condone carried into effect. Whether CNBEC
the defendant’s infractions executives disapproved or rejected those
because the plaintiff is also ideas or suggestions is not clear in this
b lam ew or th y, ther e by record, but it is clear that any actual
having two wrongs implementation of this strategy was minor.
unremedied and increasing The District Court, in its oral opinion,
the injury to the public. referred to evidence of e-mails from
Rather the court must CNBEC’s marketing teams and its ad
weigh the substance of the agencies “regarding a change in the ads to
right asserted by the make its ads seem more like those of
22
CFG.” The Court, however, did not point evidence that CNBEC employees
to any advertisements that CNBEC used to discussed amendments to a limited number
implement these changes. of advertisements in order to enhance its
litigation position, the evidence does not
CFG argues that CNBEC amended
support “egregious” conduct on the part of
its policy of referring to itself in the first
CNBEC to create consumer confusion.
instance as “Citizens National Bank,” and
This evidence may also be explained as
began using “Citizens” alone more
CNBEC’s attempt to hold its ground by
frequently to highlight the similarity with
utilizing its “Citizens” mark, rather than
CFG’s marks. CFG points to one ad that
conceding the name to CFG. Any effort
was run originally in 2000, and again in
by CNBEC to assert the name “Citizens,”
2002, where the 2002 version shortened its
which CNB EC spent many years
name in the text of the add from “Citizens
cultivating as a recognizable trademark,
National Bank” to “Citizens.” CNBEC
does not automatically require a finding of
counters this claim, explaining that its
unclean hands. Furthermore, the
internal communication guidelines from
speculative evidence presented by CFG
1995, prior to CFG’s entrance, state clearly
does not include any actual instances of
that the bank will refer to itself as either
consumer confusion based on CNBEC’s
“Citizens National Bank” or “Citizens” in
actions. We do not believe that the
all c o m mu nications. Theref ore ,
isolated documents produced by CFG and
particu larly w h e n C N B E C ’s ads
relied on by the District Court constitute
prominently display the CNBEC logo with
clear, convincing and u nequ ivocal
“Citizens National Bank” in large print in
evidence that would reasonably support a
the layout as a first reference, the bank
finding of unclean hands. Kearney &
may refer to itself with either its full or
Trecker Corp. v. Cincinnati Milacron, Inc.,
shortened name in the text of an ad and
562 F.2d 365, 371 (6th Cir. 1977). We
still be within its guidelines.
hold that the District Court’s heavy
CFG also argues that CNBEC reliance on the doctrine of unclean hands
created a welcome letter for new to justify its denial of injunctive relief
customers stating “[y]ou may have already improperly weighted that evidence to the
noticed that Citizens is not your ordinary exclusion of the merits of CNBEC’s claim
bank,” in an attempt to create confusion and the public interest, and constituted an
with CFG’s tagline of “not your typical abuse of discretion.
bank.” However, CNBEC explained that
The District Court also concluded
this sentence referred to a marketing
that the last factor, the practicality of
phrase “Beyond the Ordinary,” which
framing and enforcing an injunction,
CNBEC had used well before CFG entered
weighs in favor of denying a permanent
the market.
injunction. It observed that CFG “is a
We believe that although there is large bank with many branches and
23
consumers spanning a large geographical mark in “Citizens” standing alone and the
area over many states” and that injunctive likelihood of confusion between that mark
relief “would be difficult, if not impossible and CFG’s. Thus, these factors, even
to enforce.” At the utmost, CNBEC seeks when combined with the Court’s reliance
injunctive relief in only four counties. An on the other factors to which it deferred, is
injunction limited to the area of CNBEC’s not a sufficient ground to support the
market penetration would not require Court’s denial of injunctive relief.
enforcement in the rest of Pennsylvania or
Accordingly, we conclude that
the United States. The numerous branches
CNBEC is entitled to enjoin CFG from the
and geographical dispersion of the
use of the mark “Citizens” in CNBEC’s
infringer’s network does not provide it
marketplace. “The law of trademark
with a blanket insulating it from action
protects trademark owners in the exclusive
against its infringement. No infringer is
use of their marks when use by another
immune from challenge because of its size.
would be likely to cause confusion.”
Neither the principles of equity nor the
Interpace Corp. v. Lapp, Inc., 721 F.2d
federal Constitution favor the rights of the
460, 462 (3d Cir. 1983). Although
powerful over the rights of the weak
CNBEC’s mark is unregistered, the jury
merely because of size.
found that CFG had a protected interest in
Referring to consumer protection the mark, and that CFG infringed on
as the “foremost purpose of trademark CNBEC’s use creating a likelihood of
law,” the Court again referred to CNBEC’s consumer confusion. The concurrent use
alleged unclean hands as the cause of the of a trademark where a likelihood of
consumer confusion. As we stated confusion exists damages the public
previously, we see no evidence to support interest. Jiffy Lube, 968 F.2d at 379. A
this assertion. The Court was further finding of infringement or the likelihood
influenced by its interpretation of 12 of confusion with the concurrent use of the
U.S.C. § 22 requiring CNBEC to use infringed trademark implicitly signifies a
“National” in its name, plus the jury’s loss of expectation and goodwill as well.
finding of no likelihood of confusion The infringement amounts to borrowing
between defendant’s marks and the the senior user’s reputation and goodwill,
“Citizens National Bank” mark. We have which is an injury in and of itself, even
already addressed our disagreement with without evidence of actual loss of
the District Court’s interpretation of 12 goodwill. See Opticians Ass’n of Am. v.
U.S.C. § 22, and there is no need to repeat Indep. Opticians of Am., 920 F.2d 187,
it here. Reliance on the jury’s finding of 195 (3d Cir. 1990) (citing Ambassador E.,
an absence of confusion between CFG’s Inc. v. Orsatti, Inc., 257 F.2d 79, 82 (3d
marks and the “Citizens National Bank” Cir. 1958)).
does not respond to the jury’s finding of
When we consider CNBEC’s
infringement with respect to CNBEC’s
reverse confusion harm in light of the
24
foregoing, the engagement of the parties in of advertising. Under these factors,
the same line of business, CFG’s CNBEC maintains an injunction should
awareness of the senior’s use of the mark, encompass the entire four-county area,
and the jury’s verdict, there can be no including the Pittsburgh metropolitan
doubt of a strong likelihood of reverse region. CNBEC asserts that this relief is
confusion in this case despite CNBEC’s necessary to protect the public interest and
use of the term “National.” CFG’s ability its rights.
to promote its mark, in light of its
CFG, on the contrary, points out
enormous resources and many branches, is
that CNBEC’s branches are located in and
significantly greater than CNBEC’s.
immediately adjacent to Butler County.
“Without the recognition of reverse
Almost all of its customer accounts are in
confusion, smaller senior users would have
Butler and Northern Allegheny counties.
little protection against larger, more
Dr. Crane, a Harvard business professor
powerful companies who want to use
testifying on behalf of CFG as an expert
i d e n t ic a l o r confusingly simila r
witness, explained that CNBEC’s market
trademarks.” Fisons Horticulture, 30 F.3d
should be limited to its core locations in
at 475. Section 43(a) of the Lanham Act
Butler and Northern Allegheny Counties
has been interpreted by this and other
because “75% of customers open a
circuits to protect against s uch
checking account within four miles of
infringements by large entities, and we
where they live or work.”
will uphold that principle here. Id.
Accordingly, the District Court’s refusal to Looking at CNBEC’s share of
enjoin CFG’s infringement constituted an market deposits, Dr. Crane found that
abuse of discretion, and we will reverse. CNBEC accounts for about 13% of
deposits in Butler County, 2% in
The more difficult problem arises
Armstrong county, less than 1% in
in the framing of the injunction. CNBEC
Allegheny County, and less than 1% in
asserts that an injunction should embrace
Beaver County. On cross-examination,
all of Allegheny, Armstrong, Beaver and
Dr. Crane also acknowledged that if an
Butler counties. It claims that the District
injunction issued against CFG because of
Court’s advisory ruling that CNBEC’s
the likelihood of confusion caused by the
trademark rights extend only as far as the
use of its name, federal regulations would
location of its physical branches is legally
not bar CFG from using a different name
erroneous. It argues that in determining
on its branches in the enjoined territory.
injunctive relief under Natural Footwear,
Ltd. v. Hart, Schaffner & Marx 760 F.2d CNBEC had approximately 9,886
1383, 1398-99 (3d Cir. 1985), the extent accounts in northern Allegheny County as
should be governed by (1) the senior user’s of August 1, 2001. Those accounts
value of the sales, (2) growth trends, (3) represented approximately $50 million in
market shares, and (4) amount and scope deposits and approximately $90 million in
25
loans. Don Shoney, CEO and Chief we are hesitant to enunciate the ultimate
Operating Officer of CNBEC, testified that contours of the injunction. As we noted
the branch in Northtowne Square in above, the District Court identified valid
Northern Allegheny County was CNBEC’s concerns regarding potential confusion
southernmost facility. He also testified among CFG’s customers in the region, as
that the banks consumer market centered well as confusion that may arise from
around its branches but that a much required disclosure of the name “Citizens
broader market existed for its business Bank” for customers using ATMs outside
accounts and for its non-traditional of the region or internet banking. Upon
products such as life insurance, trust remand, we will instruct the District Court
services and brokerages, where there is no to explore these issues and develop the
need to be linked to a physical location. specific limitations in the injunction that
will mitigate these potential sources of
Although CNBEC lays claim to a
confusion.
four-county market largely because its
advertising in print and broadcast media V. Cross-Appeal
reaches this area, we do not agree that its
CFG filed a conditional cross-
market extends this far. This Court stated
appeal in the event that this Court should
in Natural Footwear that “the senior user
reverse the District Court’s injunction. We
of a common law mark may not be able to
now address that appeal.
obtain relief against the junior user in an
area where it has no established trade, and A.
hence no reputation and good will.” 760
CFG challenges the District Court’s
F.2d at 1394. On the other hand, as we
evidentiary ruling allowing testimony from
pointed out in Scott Paper Co., 589 F.3d at
CNBEC tellers regarding their experiences
1231, the grant of a monopoly to CFG by
with customers confused between the two
virtue of the federal registration under the
banks. CFG claims this testimony was
Lanham Act should not be liberally
inadmissible hearsay. “To the extent the
construed. The rights granted to the
district court's admission of evidence was
registered user should not be extended.
based on an interpretation of the Federal
We believe the District Court correctly
Rules of Evidence, our standard of review
found CNBEC’s market penetration
is plenary. But we review the Court's
included Butler County and the Northern
decision to admit the evidence if premised
part of Allegheny County. We do not at
on a permissible view of the law for an
this time express any opinion as to the
abuse of discretion.” United States v.
market penetration in Armstrong and
Pelullo, 964 F.2d 193, 199 (3d Cir. 1992).
Beaver counties, and we leave that
determination for the District Court upon CFG points to no specific instances
remand. As an appellate court one of a teller testifying to out-of-court
step removed from the facts of this case, statements asserted for their truth. Even
26
by CFG’s description, the tellers described that had the instruction required a temporal
their personal experiences with customers finding, the jury would not have found that
at the bank, which is not inconsistent with CNBEC obtained trademark rights in
Fed. R. Evid. 801(c). Furthermore, “the “Citizens.”
plaintiffs' own testimony about the actual
CFG’s argument relies upon a
behavior of their customers is not
single passage from the instructions that
hearsay.” Calahan v. A.E.V., Inc., 182
does not include a temporal instruction
F.3d 237, 253 (3d Cir. 1999). In this case,
regarding CNBEC’s use of “Citizens.”
the tellers described what they saw and the
However, the scope of review for a jury
action they took with respect to customers
instruction is whether, when taken as a
who appeared to be confused with respect
whole, they properly apprise the jury of the
to CFG and CNBEC. This is not hearsay.
issues and the applicable law. Khorozian,
Further, Fed. R. Evid. 803(3) allows
333 F.3d at 508 (explaining that courts
statements, otherwise excluded as hearsay,
review “the totality of the instructions and
to be received to show the declarant’s
not a particular sentence or paragraph in
then-existing state of mind. Id. at 251. To
isolation.”); Everett v. Beard, 290 F.3d
the extent that any of the customers’
500, 512 (3d Cir. 2002); Tigg Corp. v.
statements may be deemed hearsay, we
Dow Corning Corp., 962 F.2d 1123 (3d
believe Rule 803(3) would apply. Thus,
Cir. 1992).
the District Court did not abuse its
discretion by admitting this testimony. Upon review of the instructions, it
is clear that the District Court instructed
B.
the jury specifically that in order to be a
CFG also complains that the senior user of a mark, CNBEC’s rights
District Court erred in its jury instruction should be evaluated prior to CFG’s entry
concerning the determination of CNBEC’s into the disputed market area in July, 2001.
rights in the mark “Citizens” standing In describing secondary meaning, the
alone. CFG asserts that the District Court explained that the jury must consider
Court’s instruction did not require a consumer perception of the mark “prior to
finding that CNBEC had consistently used CFG’s entry.” This Court presumes that
“Citizens” as a trademark over time prior the jury followed the Court’s instructions.
to CFG’s entry in the market. The legal United States v. Givan, 320 F.3d 452, 462
accuracy of jury instructions are reviewed (3d Cir. 2003), United States v. Syme, 276
de novo. See United States v. Khorozian, F.2d 131, 155 (3d Cir. 2002). Thus, we
333 F.3d 498, 507-08 (3d Cir. 2003). presume that the jury considered
CNBEC’s use of “Citizens” prior to CFG’s
CFG argues that the undisputed
entrance to the market in determining that
evidence shows that CNBEC started using
CNBEC had a protected interest in the
the mark standing alone consistently only
trademark.
after CFG entered the market. CFG argues
27
The District Court’s evidentiary specific contours of CNBEC’s market area
ruling and the challenged jury instruction in the other three disputed counties.
raised in CFG’s cross-appeal will be
The District Court is directed to
affirmed.
strike from its opinion its statement that
VI. Conclusion “future actions by CNBEC based upon
additional evidence of consumer confusion
In accordance with the foregoing,
occurring after November 1, 2002, would
the evidentiary rulings and jury
be frivolous and unwarranted.”
instructions of the District Court during
the jury trial and the order denying the Sixty percent of the costs will be
motion for a new trial are affirmed. taxed against CFG.
However, the judgment of the District
Court entered in favor of Citizens
Financial Group’s (CFG’s) complaint for
a declaratory judgment will be vacated.
The case will be remanded to the District
Court to mold the verdict to reflect that
Citizens National Bank of Evans City
(CNBEC) has not proven that it has
suffered money damages as a proximate
result of CFG’s infringement, but also with
directions to enter judgment in favor of
CNBEC on the declaratory judgment
claim, stating that CFG is not entitled to a
declaratory judgment allowing its use of
“Citizens” in CNBEC’s market area.
The District Court’s denial of
CNBEC’s motion for injunctive relief, and
the subsequent injunction issued against
CNBEC requiring its use of the term
“National” as part of its name when it first
refers to itself in any document or
advertising, will be vacated. On remand to
the District Court, it is directed to enter an
order permanently enjoining CFG from
offering or advertising retail banking
services under the mark “Citizens Bank”
in Butler County and to conduct an
evidentiary hearing to determine the
28
Citizens Fin Grp Inc v. Citizens Natl Bank
Combined Opinion