Freedom Card, Inc. v. Jpmorgan Chase & Co.
| Decision Date | 22 December 2005 |
| Docket Number | No. 04-3874.,No. 04-3876.,No. 04-4285.,04-3874.,04-3876.,04-4285. |
| Citation | 432 F.3d 463 |
| Parties | * FREEDOM CARD, INC.; Urban Television Network, Inc., Appellants v. JPMORGAN CHASE & CO.; Chase Manhattan Bank USA, N.A. (Dist. of DE No. 03-cv-00432) Chase Manhattan Bank USA, N.A. v. Urban Television Network, Inc.; Freedom Card, Inc., Appellants v. JPMorgan Chase Bank; JPMorgan Chase & Co., Third Party Defendants (Dist. of DE No. 03-cv-00217). (Amended Per Clerk's Order Dated 12/2/04) |
| Court | U.S. Court of Appeals — Third Circuit |
Dana M. Campbell, (Argued), Owens, Clary & Aiken, L.L.P., Dallas, Texas, for Appellants.
Ethan Horwitz, (Argued), Leonard F. Lesser, Kandis M. Koustenis, Goodwin Procter LLP, New York, New York, Richard D. Allen, Morris, Nichols, Arsht & Tunnell, Wilmington, DE, for Appellees.
Before ROTH, MCKEE and FISHER, Circuit Judges.
Urban Television Network, Inc ("UTN")1 appeals from the district court's grant of summary judgment on the "reverse confusion" trademark infringement and unfair competition claims UTN brought against Chase.2 UTN asserted those claims in counterclaims it filed in response to Chase's declaratory judgment action. Chase filed that action to obtain a judicial declaration that its CHASE FREEDOM credit card did not violate any rights UTN had in its FREEDOM CARD trademark.3 The district court ruled that Chase had not violated UTN's trademark and this appeal followed. For the reasons that follow, we will affirm.4
In December 2000, UTN began offering its FREEDOM CARD in conjunction with CompuCredit Corporation. The FREEDOM CARD was offered to extend credit and financial services to the "sub-prime" credit market that is disproportionately comprised of African-American consumers. UTN focused its promotional efforts on "people who [had] bad credit or [had] filed bankruptcy recently and [were] looking to start all over." Chase Manhattan Bank, USA v. Freedom Card, Inc. 333 F.Supp.2d 239, 242 (D.Del.2004). UTN entered into a contract with Queen Latifah, a prominent African American entertainer, as part of its efforts to promote the FREEDOM CARD. The majority of FREEDOM CARD customers had credit lines of $300. On average, they were charged annual fees and interest amounting to 140% over and above their principal balance. Id.5 CompuCredit stopped marketing and issuing new accounts for the FREEDOM CARD card after December 2001. Id. at 242 n. 4. The district court found, FREEDOM CARD peaked at 28,193 accounts.
For a number of years, Chase and Shell Oil Company had issued a co-branded credit card called "CHASE Shell MasterCard." The card offered cash rewards on purchases of Shell gasoline. In March 2002, Shell notified Chase that it was terminating their relationship. Chase owned the Shell accounts and in order to retain those accounts it began developing a new credit card product that would serve existing accounts as well as generate new ones.
Chase's research eventually lead to a rewards program that allowed Chase's customers to use its card at any gasoline company's filling station and receive rebates on gasoline as well as other purchases. Chase claims that it named the card "CHASE FREEDOM card," because of the freedom it afforded cardholders to purchase gasoline wherever the cardholder chose. On January 11, 2003, Chase sent a letter to its Shell account holders notifying them that their Shell cards would be automatically converted to CHASE FREEDOM cards.
The CHASE FREEDOM card was officially announced in a January 27, 2003, advertisement in the Wall Street Journal, more than a year after the FREEDOM CARD card stopped being issued. "The CHASE FREEDOM card [was] a reissue of the CHASE Shell MasterCard." Chase, 333 F.Supp.2d at 242. The CHASE FREEDOM portfolio consisted of approximately 1.5 million converted Shell accounts and fewer than 10,000 accounts acquired after the January 27, 2003 launch.
Chase maintains that the converted account holders were generally between the ages of 46 and 55, had a FICO6 score of 800 or higher, owned their own homes, and were married with average annual incomes between $40,000 and $50,000. Of the acquired account holders, 80% owned their own home and 60% had a FICO score of 780 or higher. Chase claims that the majority of CHASE FREEDOM cardholders had credit lines of $5,000 — $10,000, with no annual fee and an annual percentage rate of between 12.4% and 14.4%. Id.
The Wall Street Journal advertisement for CHASE FREEDOM card was the only advertisement that ever appeared. Upon seeing the Wall Street Journal advertisement the day it first appeared, Wesley Buford, UTN's Chief Executive Officer, contacted Chase and complained that Chase was infringing UTN's FREEDOM CARD mark. See n. 1, supra.7 After Buford objected, Chase immediately halted its advertising and marketing efforts for "CHASE FREEDOM," and refrained from acquiring any new customers.8
Thereafter, representatives of Chase and UTN met to discuss the problem. Chase claims that discussions broke down after UTN threatened to "have people protesting around [Chase's] branches" and to have demonstrations calling attention to "the evils of Chase and this Freedom Mastercard [sic]" and thereby "cause [Chase] a great deal of harm." Appellees' Br. at 6. UTN claims that these meetings were "positive and friendly" rather than confrontational and, based upon prior positive communication between the parties and Chase's prompt cessation of CHASE FREEDOM card, Buford still believed that the matter could be resolved amicably. Appellants' Br. at 12. As a consequence of that belief, UTN claims that it maintained its relationship with Queen Latifah and even executed another commercial production agreement with her on February 19, 2003.
On February 4, 2003, Chase filed the instant action in district court seeking a declaration that its use of the CHASE FREEDOM mark did not infringe any of UTN's rights in the FREEDOM CARD mark. UTN counterclaimed asserting third-party claims for trademark infringement in violation of 15 U.S.C. § 1114,9 and unfair competition in violation of 15 U.S.C. § 1125(a)(1)(A).10 UTN also sought a determination that Chase was in violation of a 1999 Mutual Confidentiality Agreement between Chase and UTN.11
At the close of discovery, Chase filed several motions including a motion for summary judgment on UTN's trademark infringement and unfair competition claims. The district court granted Chase's motion for summary judgment upon determining that there was no likelihood of confusion between "CHASE FREEDOM" and FREEDOM CARD. See Chase Manhattan Bank, supra. Thereafter, the district court issued another order clarifying that the prior order had disposed of all claims and that the judgment against UTN was therefore final. This appeal followed.12
As noted above, see n.1, supra, UTN relies upon two registrations of its FREEDOM CARD mark — Nos. 2,398,191 and 2,398,192. The United States Patent and Trademark Office ("USPTO") initially rejected UTN's applications for those marks because it was concerned about the likelihood of confusion with a prior registration of Parker Oil Company for the mark "Fuel Freedom Card." Parker also used that mark on a credit card. In order to overcome those concerns, UTN entered into a Consent Agreement with Parker Oil, and submitted that agreement to the USPTO. In the Agreement, UTN admitted there was no likelihood of confusion between "FREEDOM CARD" and "Fuel Freedom Card" because the marks "are dissimilar in appearance . . . dissimilar in sound . . . dissimilar in connotation . . . dissimilar in commercial impression" and "when considered in their entireties are not likely to be confused" with one another. The USPTO accepted the Consent Agreement and granted the registrations to UTN. Chase, 333 F.Supp.2d at 246.
UTN also submitted a one-inch thick exhibit of numerous other "freedom" marks in response to concerns the USPTO had with additional "freedom mark" registrations that UTN applied for. UTN argued that these marks, together with third-party marks cited by the USPTO, were "all existing together in the marketplace" and UTN therefore argued that "no one has the exclusive right to use the word `FREEDOM' alone." Id. at 246, n. 15. In response to concerns that UTN's FREEDOM CARD would be confused with Parkers "Fuel Freedom Card," UTN also represented to the USPTO that, because of such frequent third-party use, the addition of the descriptive term "fuel" "when used in conjunction with the FREEDOM CARD mark, eliminated concern that the marks FREEDOM CARD and FUEL FREEDOM CARD would be confusingly similar." Id. at 246.
Chase also provided the district court with substantial direct evidence of widespread, third-party use of the term "freedom." According to this undisputed evidence, there are approximately 20 MasterCard and VISA "freedom" credit cards and roughly 50 MasterCard and VISA "freedom" debit and ATM cards. There are also about 25 banks using "freedom" as part of their name or in connection with a banking product, as well as about 200 other financial companies that use "freedom" as part of their name.
UTN claims that CompuCredit approached it in October 2002, with an offer for the rights to the FREEDOM CARD name, and that CompuCredit's offer was then valued at $15 million. UTN maintains that the parties were close to resolving a few remaining issues and expected to execute the agreements at the end of January 2003. However, according to UTN, the negotiations between it and CompuCredit were interrupted by the introduction of the CHASE FREEDOM card on January 27, 2003. UTN contends that after the introduction of the CHASE FREEDOM card, CompuCredit believed that consumer confusion would depress the value of the FREEDOM CARD mark. Therefore, CompuCredit allegedly refused to proceed with UTN because it did not...
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