383 F.3d 110 (3rd Cir. 2004), 03-2868, Citizens Financial Group, Inc. v. Citizens Nat. Bank of Evans City

Docket Nº:03-2868, 03-3175.
Citation:383 F.3d 110
Party Name:72 U.S.P.Q.2d 1389 CITIZENS FINANCIAL GROUP, INC. v. CITIZENS NATIONAL BANK OF EVANS CITY; Citizens Inc; Citizens National Bank of Southern Pennsylvania Citizens National Bank of Evans City and Citizens, Inc., Appellants Citizens Financial Group, Inc. Appellant v. Citizens National Bank of Evans City; Citizens Inc; Citizens National Bank of Souther
Case Date:September 09, 2004
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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383 F.3d 110 (3rd Cir. 2004)

72 U.S.P.Q.2d 1389



CITIZENS NATIONAL BANK OF EVANS CITY; Citizens Inc; Citizens National Bank of Southern Pennsylvania Citizens National Bank of Evans City and Citizens, Inc., Appellants

Citizens Financial Group, Inc. Appellant


Citizens National Bank of Evans City; Citizens Inc; Citizens National Bank of Southern Pennsylvania.

Nos. 03-2868, 03-3175.

United States Court of Appeals, Third Circuit

September 9, 2004

Argued April 21, 2004.

As Amended Oct. 28, 2004.

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[Copyrighted Material Omitted]

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Frederick W. Thieman (Argued), Thieman & Farrell, Pittsburgh, PA, David M. Kelly, Andrea Anderson, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, DC, Ray F. Middleman, Malone, Larchuk & Middleman, Wexford, PA, for Appellants in No. 03-2868.

Paul F. Ware, Jr. (Argued), R. David Hosp, Goodwin Procter, Boston, MA, for Appellant in No. 03-3175.

Before SCIRICA, Chief Judge, ROSENN and GREENBERG, Circuit Judges.


ROSENN, Circuit Judge.

This appeal presents a number of questions arising out of a trademark infringement dispute between two banking institutions. The dispute is an outgrowth of aggressive and expansionist banking flowing from the Congressional liberalization in recent years of national banking laws. Citizens National Bank of Evans City (CNBEC) is a community bank founded in 1878 in Evans City, Pennsylvania, north of Pittsburgh, under the name of Citizens Bank of Evansburgh. In 1907, the bank became federally chartered and adopted its current name. The bank also has referred to itself as "Citizens" ' in its advertisements, promotional materials, and customer communications. CNBEC now has sixteen branches in the Northwestern region of Pennsylvania.

The Citizens Financial Group, Inc. (CFG) is a subsidiary holding company of the Royal Bank of Scotland. In July 2001, CFG purchased the retail banking operations of Mellon Bank and announced that it would, and in December 2001 did, convert all Mellon branches in Pennsylvania to

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"Citizens Bank" branches. CNBEC claimed that nine of these former Mellon Bank branches were located near CNBEC branches, and in addition some of the branches in Butler County were located on the same streets. Upon learning of CFG's announcement of its plan to rename 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 to its Western Pennsylvania branches. CFG responded by filing this suit in the United States District Court for the Western District of Pennsylvania seeking a declaratory judgment that CNBEC could not prevent it from using the name "Citizens." CNBEC answered the complaint by asserting affirmative defenses and a counterclaim alleging trademark infringement and unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and unjust enrichment.

CNBEC then filed a motion for a preliminary injunction, which the District Court denied following an evidentiary hearing. On appeal, this Court affirmed the denial. Citizens Fin. Group, Inc. v. Citizens Nat'l Bank of Evans City, 30 Fed. Appx. 24 (3d Cir. 2002). The parties then proceeded to a jury trial at which CNBEC asserted three counter-claims. CNBEC raised two claims of trademark infringement, first that CFG's "Citizens Bank" mark infringed its mark of the word "Citizens" standing alone, and second, that CFG's "Citizens Bank" mark infringed its full "Citizens National Bank" mark. CNBEC also claimed that CFG's conduct constituted unfair competition due to the confusing similarity of the marks and that CFG had been unjustly enriched by its infringement.

With regard to CNBEC's infringement claims, the jury found that CNBEC had trademark rights in "Citizens," that CFG's use of the "Citizens Bank" mark in CNBEC's market was likely to cause confusion with CNBEC's mark "Citizens," but that CFG's "Citizens Bank" mark would not likely be confused with CNBEC's "Citizens National Bank" mark. The jury rejected CNBEC's claim for damages regarding unfair competition and unjust enrichment.

The District Court thereupon considered CNBEC's motion for a permanent injunction. The Court refused to enjoin CFG's use of its "Citizens Bank" mark in CNBEC's market. Instead, it molded the jury's verdict of infringement in favor of CFG on all of CNBEC's claims and sua sponte issued an injunction restraining CNBEC's use of the "Citizens" mark. The injunction requires CNBEC always to identify itself as "Citizens National Bank" in the text of promotional material, advertisements and documents, despite the jury's finding that CNBEC maintained a protected interest in the "Citizens" mark standing alone. CNBEC timely appealed, and CFG cross appealed. We hold that the District Court abused its discretion by denying CNBEC's motion for injunctive relief and issuing an injunction sua sponte against CNBEC. Therefore, we will affirm in part and reverse in part.

I. Background

CNBEC maintains 16 local branches in Northwestern Pennsylvania, twelve in Butler County, three in Northern Allegheny County, and one in Armstrong County. CNBEC acknowledges that the majority of its customers live in Butler County, but asserts that its Allegheny County customers account for about 13% of its total accounts, 20% of its total combined deposit/loan volume, and about 30% of its profits. CNBEC claims that as of August 1, 2001, it had 64,132 accounts in Butler County, 9,886 accounts representing

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about $50 million in deposits in Northern Allegheny County, 2,806 accounts in Beaver County, and 1,170 accounts in Armstrong County. Prior to CFG's entry into CNBEC's marketplace, CNBEC had been the only "Citizens" retail bank in the area.

A. CNBEC Advertising

Over the years, CNBEC has spent millions of dollars in advertising its services and diverse products under the marks "Citizens National Bank" and "Citizens." It has advertised in Allegheny County in the North Pittsburgh edition of the Post Gazette, the Tribune Review, and the North Hills News Record, as well as the Butler Eagle and some of the smaller newspapers in Butler and Armstrong Counties. The number of advertisements has varied depending upon its campaigns and targets at the time. From time to time, CNBEC has also sponsored local community events in its marketplace such as football programs, ballets, and other sporting events and musical performances, which have been a form of advertising.

CNBEC has also advertised campaigns on radio stations covering Allegheny and the surrounding counties and television station KDKA, which covers Western Pennsylvania and the entire Greater Pittsburgh area. In addition, it has placed flyers in customer statements, utilized billboards for outdoor advertising in the Gibsonia, Slippery Rock and Butler areas, and for the past five years prior to the jury trial, it has maintained a wall painted on the Masonic Building in the City of Butler with its logo, the name "Citizens" and the tag line "The Uncommon Bank." It also has placed listings in numerous telephone directories circulated throughout the Pittsburgh area and has issued numerous press releases each year in its claimed market. CNBEC has issued hundreds of thousands of its checks and debit cards, carrying its mark, to its customers and merchants.

CNBEC witnesses testified that at least since the 1950s, employees and customers have referred to it as "Citizens." Competing banks in that market as well as the media also refer to CNBEC as "Citizens."

Since at least 1995, the bank policy with respect to the use of its name has been that the first time the bank's name was used, the entire bank name, Citizens National Bank, should be used. Subsequent uses can be either "Citizens" or "Citizens National Bank." For example, an advertisement offered in evidence for CNBEC's 18-month CD carries at its top only "Citizens" but at the bottom in much smaller print appears "Citizens National Bank." The record contains more than seventy-five CNBEC advertisements and promotional materials that refer to CNBEC as "Citizens" predating CFG's acquisition of the Mellon banks. In another fifty instances, "Citizens" appears as the first reference to the Bank. During 2001, the year CFG opened its doors in the CNBEC marketplace as "Citizens Bank," CNBEC spent $366,000 for print advertising. In the year 2002, it spent $247,000 on print advertising.

B. Consumer Confusion

In the town of Wexford in Allegheny County, and in Butler, Zelienople, and Saxonburg in Butler County, CFG's branches are located on the same street as CNBEC's branches. Both banks frequently refer to themselves simply as "Citizens". CFG's full-page newspaper announcement in the Pittsburgh Post-Gazette of its acquisition of the Mellon banks referred to itself as either "Citizens" or "Citizens Bank" five times. Another contained the headline "Welcome to Citizens," and others referred to itself in the text as

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simply "Citizens" with "Citizens Bank" and its logo at the bottom of the page.

Similar to CNBEC, CFG also introduced many financial products with "Citizens" and with "Citizens Bank" and logo at the bottom of the ad. Examples are the introduction of banking products and services available for law firms, Citizens SBA program, and Citizens business owners, commercial banking and international services "by one of the largest banks in the world," the Citizens Circle Money Market Account, Citizens Phone Bank, Citizens Fixed-Rate Annuities, Citizens Circle Gold Checking Account, and Citizens Business Premium Money Market Account.

CNBEC produced testimony of CFG customers mistakenly doing business with CNBEC branches, attempting...

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