First Sav. Bank, F.S.B. v. First Bank System, Inc., s. 95-3246

Decision Date27 November 1996
Docket Number95-3331,Nos. 95-3246,s. 95-3246
PartiesFIRST SAVINGS BANK, F.S.B., Plaintiff-Appellant, v. FIRST BANK SYSTEM, INC.; First Bank, F.S.B., Defendants-Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

John M. Collins (Thomas H. Van Hoozer with him on the briefs) of Hovey, Williams, Timmons & Collins, Kansas City, MO, for Plaintiff-Appellant.

Peter M. Lancaster (Ronald J. Brown and Elizabeth C. Buckingham with him on the brief) of Dorsey & Whitney, P.L.L.P., Minneapolis, MN, for Defendants-Appellees.

Before ANDERSON, McWILLIAMS and ENGEL, * Circuit Judges.

STEPHEN H. ANDERSON, Circuit Judge.

This case involves a service mark dispute between two banks competing in east-central Kansas. First Savings Bank, F.S.B., ("First Savings") sued First Bank System, Inc., and its member institution, First Bank, F.S.B., for service mark infringement, unfair competition, and false designation of origin under the Lanham Act and Kansas state and common law. Specifically, First Savings sought to prevent the defendants from using within a local trade territory FIRST BANK, FIRST BANK KANSAS, FIRST BANK SYSTEM or any other mark confusingly similar to its own FirstBank mark. Among other things, the defendants raised First Bank System's 1971 federal registration of "First Bank System" and design as a defense to the action, claiming that the registration prevented First Savings from ever acquiring superior rights in FirstBank.

After hearing cross-motions for summary judgment, the district court granted summary judgment in favor of the defendants, concluding (1) that First Bank System's 1971 federal registration put First Savings on constructive notice that it could not adopt any confusingly similar mark, and (2) that FirstBank was, in fact, confusingly similar to the 1971 federal registration. First Savings Bank, F.S.B. v. First Bank System, Inc., 902 F.Supp. 1366 (D.Kan.1995). First Savings appeals from that judgment, as well as from three separate orders of the district court relating to a discovery dispute.

We hold that the district court employed the wrong legal analysis when passing upon First Bank System's motion for summary judgment. Upon applying the proper analysis to the record created by the parties, we reverse the grant of summary judgment, and further hold that a reasonable jury could not conclude that the FirstBank mark is confusingly similar to the 1971 federal registration "First Bank System" and design. Therefore, the 1971 registration cannot serve as a defense in this case. We remand for further proceedings on the remaining issues.

BACKGROUND
A. The Service Marks
1. First Savings' "FirstBank" Mark

The plaintiff-appellant, First Savings, is a federally chartered savings bank based in Manhattan, Kansas, with branch offices in Junction City and Lawrence, Kansas. First Savings was originally chartered in 1887 as the First National Bank of Manhattan. From 1887 to 1983, it was known in the region primarily as "First National Bank."

In 1983, First Savings adopted a new marketing name and logo. The mark consists of "FirstBank" next to a number one that appears in motion (the "walking one"). First Savings prominently advertised the change as a "new name, a new logo, a new look." J.A. Vol. III at 867.

First Savings became a federal savings bank in 1986 and changed its legal name from the First National Bank of Manhattan to the current First Savings Bank, F.S.B., but it retained FirstBank as its marketing name. That same year, with plans to expand into Lawrence, Kansas, First Savings discovered that a bank in Lawrence already held a state registration for FIRST BANK. First Savings purchased the service mark rights of the Lawrence bank, and took assignment of the state registration, which it still holds. Id. at 881.

As a result, from 1983 to the present, First Savings has used the FirstBank mark without interruption in connection with its banking services, and now claims exclusive rights to the mark within a five-county trade territory. 2 On bank signs, advertisements, documents, etc., the mark appears as follows:

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See Id. at 877. This is the most prominent mark used by First Savings. However, First Savings does not have a federal registration for the mark, and apparently has never attempted to obtain one.

2. The First Bank System Marks

The defendant-appellee, First Bank System, Inc., is a large, interstate financial holding company headquartered in Minneapolis, Minnesota, with branch banks scattered across the nation. Because it is a holding company with many diverse member institutions, First Bank System has used, and still uses, many different marks. Of these many marks, the most important to this appeal is First Bank System's 1971 federal registration of "First Bank System" and design. As amended in 1972, the federal registration appears as follows:

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Id. at 997. Historically, First Bank System's member banks used this registered mark to show their affiliation with the larger organization. For instance, the First State Bank of Saint Paul, one of First Bank System's flagship banks, would commonly include the registered mark on advertisements or documents, along with its own individual name. See, e.g., J.A. Vol. II at 580. The 1971 registered mark also appeared on the documents and advertisements of First Bank System divisions that did not provide branch banking, such as FBS Mortgage and FBS Financial.

In 1979, First Bank System apparently decided that the mark contained in the 1971 registration no longer served its purpose. It quit using the registered mark altogether, and adopted a new marketing plan and new graphic standards for its member banks. Under the new plan Member banks show their affiliation with First Bank System by using a new composite mark consisting of the "first mark" and a "logotype." J.A. Vol. VI at 2062. The first mark is a symbol drawn by five solid strokes, with the middle stroke forming the number one. 3 The logotype is the words FIRST BANK (or FIRST BANKS). For example, according to the graphic standards, the First State Bank of Saint Paul would now advertise by prominent and primary use of the first mark, and the words FIRST BANK SAINT PAUL or, at times, FIRST BANK per se. The legal name, First State Bank of Saint Paul, would appear, if at all, only in much smaller print. On advertisements or bank documents, the words "Member First Bank System" would also likely appear in small print. The apparent goal of these graphic standards is to have consumers refer to the bank as FIRST BANK, rather than as the First State Bank of Saint Paul. It was thought that by having The shelved 1971 registration expired in 1991. In 1989, First Bank System obtained a federal registration for FIRST BANK SYSTEM in a normal left-to-right, block letter configuration without any design. In 1990, First Bank System federally registered a composite mark consisting of the octagonal first mark and the words MEMBER FIRST BANK SYSTEM. First Bank System has not claimed to hold, and the record does not reveal, any federal registration for FIRST BANK per se.

each member bank make a similar, prominent use of the octagonal first mark and FIRST BANK logotype, a common nationwide identity would be created in First Bank System even though the member banks have disparate legal names.

3. The Dispute in East-Central Kansas

Friction between First Savings and First Bank System began when First Bank System acquired branch banks in east-central Kansas. In January, 1995, First Bank System merged with Metropolitan Federal Bank ("Metropolitan"), a holding company that owned savings banks in many states, including Kansas. One Metropolitan branch was located approximately a block away from First Savings' Manhattan location. First Bank System changed the legal name of nearly all the former Metropolitan branches, including those in Kansas, to "First Bank, F.S.B." In order to achieve consistency with the marketing plan and graphic standards previously mentioned, First Bank System also decided to use FIRST BANK as the marketing name for former Metropolitan branches in most locations.

First Bank System did something slightly different, however, with respect to the marketing name in Kansas. There, First Bank System decided to use FIRST BANK KANSAS as the marketing name for the former Metropolitan branches, rather than FIRST BANK per se. 4 First Bank System has represented that it will use FIRST BANK KANSAS on exterior bank signs and in communications to prospective customers, but will use FIRST BANK per se for communications to existing customers, so that it can benefit from a nationwide standardization of bank forms and mass communications. Appellee's Br. at 2 n. 1. Thus, as it relates to this appeal, the practical result of First Bank System's merger with Metropolitan was that its branch bank in downtown Manhattan, Kansas, would soon have exterior signs and advertisements bearing FIRST BANK KANSAS (and probably the octagonal first mark), while the First Savings branch a block away has signs and advertisements bearing FirstBank.

First Savings immediately sued First Bank System, Inc., and the new First Bank, F.S.B., seeking to enjoin First Bank System from using within the territory FIRST BANK, FIRST BANK KANSAS, FIRST BANK SYSTEM or any other mark confusingly similar to FirstBank. 5 As mentioned, First Bank System claimed, as a defense, that the 1971 registration provided nationwide constructive notice to all persons that no party could adopt a mark confusingly similar to the registration without First Bank System's permission. Thus, First Bank System argued, First Savings never had the right to adopt the FirstBank mark in 1983 because it was confusingly similar to the 1971 registration.

In reply, First Savings argued that the FirstBank mark...

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