Peoples Fed. Sav. Bank v. People's United Bank

• Decision Date: 10 February 2012
• Docket Number: No. 10–2053.,10–2053.
• Citation: 101 U.S.P.Q.2d 1663,672 F.3d 1
• Parties: PEOPLES FEDERAL SAVINGS BANK, Plaintiff, Appellant, v. PEOPLE'S UNITED BANK, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

101 U.S.P.Q.2d 1663

672 F.3d 1

PEOPLES FEDERAL SAVINGS BANK, Plaintiff, Appellant,

v.PEOPLE'S UNITED BANK, Defendant, Appellee.

No. 10–2053.

United States Court of Appeals, First Circuit.

Heard May 4, 2011.Decided Feb. 10, 2012.

Lee Carl Bromberg, with whom Erik Paul Belt, Lori J. Shyavitz, and McCarter & English LLP, was on brief for appellant.

David H. Herrington, with whom Lawrence B. Friedman, Arminda B. Bepko, Cleary Gottlieb Steen & Hamilton LLP, Nicholas B. Carter, and Todd & Weld LLP, was on brief for appellee.

Before TORRUELLA, SELYA, and LIPEZ, Circuit Judges.

TORRUELLA, Circuit Judge.

Plaintiff–Appellant Peoples Federal Savings Bank (“Peoples Federal”) challenges an interlocutory order denying its motion to preliminarily enjoin defendant-appellee People's United Bank (“People's United”) from using the mark “PEOPLES” in the rebranding of several recently acquired banks in Eastern Massachusetts. After careful consideration, we conclude that Peoples Federal's motion for a preliminary injunction was properly denied. Peoples Fed. Sav. Bank v. People's United Bank, 750 F.Supp.2d 217 (D.Mass.2010). We therefore affirm the decision of the district court.

I. Facts and Procedural History

A. Factual Background

Peoples Federal is a community bank that operates exclusively in Eastern Massachusetts.¹ It was chartered in 1888 and became a federally insured savings and loan institution in 1937. While its headquarters are in Brighton, it has grown over the years and now operates branches in Allston, Brookline, Jamaica Plain, Norwood, and West Roxbury.

Peoples Federal has been using the term “Peoples” in its name and service marks since 1937 and claims to be the only continuous user of the PEOPLES mark for banking services in Eastern Massachusetts since that time.² It owns six Massachusetts registrations for its marks, including PEOPLES, PEOPLES FEDERAL, and PEOPLES FEDERAL SAVINGS BANK, which were granted on June 15, 2010, the same day Peoples Federal filed suit in this case. It promotes its marks through advertising and marketing efforts, involvement in community activities, and charitable giving. The bank has attracted media attention and been portrayed favorably in the press.

Defendant–Appellee People's United was founded in 1842 in Bridgeport, Connecticut, and has used the word “People” in its name for at least eighty years. The bank was called “People's Bank” until 2007, when it changed its name to “People's United Bank” in consideration of its plans to expand beyond Connecticut and distinguish itself from other banks that also use the word “People” in their titles. People's United is a full-service, regional bank with over $22 billion in assets.

On April 16, 2010, as the result of a competitive bidding process, People's United acquired from the Federal Deposit Insurance Corporation (“FDIC”) the deposits and banking operations of the failed Butler Bank, which had branches in north central Massachusetts, and Butler Bank's subsidiary, Marlborough Cooperative, which had branches in Marlborough (collectively, “Butler”). On the following day (April 17, 2010), People's United began rebranding all former Butler branches and re-opened them under its own name. Specifically, it covered or otherwise replaced exterior signs at the former Butler branches with signs bearing the name and logo of “People's United Bank.” People's United also used its name and logo to replace the failed bank's interior posters and brochures, and to publish new marketing materials and newspaper advertisements for these branches. Butler's troubles were covered extensively in the press as the first Massachusetts bank to fail in sixteen years. The press also covered the related purchase and rebranding of all Butler branches by People's United.

B. Procedural History

On June 15, 2010, Peoples Federal filed suit against People's United alleging trademark infringement, trademark dilution, and unfair competition in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), as well as Massachusetts statutory and common law. One month later, on July 15, 2010, after unsuccessful negotiations with People's United, Peoples Federal presented its motion for preliminary injunction and temporary restraining order. Peoples Federal averred that People's United proposed to launch the rebranding of its former Butler branches on July 19, 2010 and that this would cause confusion among Peoples Federal's current and potential customers, damaging its goodwill and threatening irreparable harm to its name recognition in Eastern Massachusetts. It therefore sought to enjoin People's United from rebranding its newly acquired Butler branches—and any other branches that it might procure in Eastern Massachusetts—with the People's United name, logo or other PEOPLES-formative marks, pending adjudication of the parties' rights in the instant suit.

At an emergency hearing convened on July 16, 2010, People's United informed the district court that the rebranding of the former Butler branches had already occurred and had been in place for the past three months. Regardless, it agreed to refrain from taking further action, i.e., make any additional changes to branch facades or marketing or advertising materials, in the immediate future. People's United explained that the July 19 date must have been based on a misunderstanding because People's United had no plans to execute any further rebranding on that date.³ Once satisfied that the status quo would be maintained, the district court scheduled a status conference and motion hearing for July 29, 2010. At the motion hearing, the court announced its preliminary findings and invited argument from the parties. On August 9, 2010, after considering the parties' written submissions and oral arguments, the district court issued a memorandum and order denying Peoples Federal's motion.

1. Denial of Preliminary Injunctive Relief

In assessing Peoples Federal's motion, the district court weighed the four preliminary injunction factors: (1) the plaintiff's likelihood of success on the merits, (2) the likelihood of irreparable harm, (3) the balance of relevant equities, and (4) the effect of the court's action on the public interest. See Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 32 (1st Cir.2011). Ultimately, it found against Peoples Federal on each of these factors.

As to likelihood of success on the merits, the district court first rejected Peoples Federal's argument that its PEOPLES mark was entitled to a presumption of protectability, i.e., inherent distinctiveness,⁴ based on its six Massachusetts trademark registrations. Peoples Fed. Sav. Bank, 750 F.Supp.2d at 222. It so held in part because Peoples Federal's registration of the mark was filed on the same day that suit was brought in this case, and only after People's United had begun its rebranding process in Massachusetts. The court also considered as relevant the fact that another Massachusetts bank by the name of “PeoplesBank” had operated as a local bank in Massachusetts since 1885, and had registered a mark that included the dominant word “Peoples” prior to Peoples Federal.⁵ The district court determined that this registration “substantially outdates Peoples Federal's recent, litigation-driven registrations.” Id.

The court nevertheless considered whether, independent of its Massachusetts registrations, the PEOPLES mark was inherently distinctive. It concluded that the PEOPLES mark is properly classified as “descriptive” rather than “suggestive” because it did not require a stretch of the imagination to associate the term “People” with banking services.⁶ Id. at 223. In reaching this conclusion, which the district court characterized as “a close call,” it distinguished another district court opinion, Commerce Bank & Trust Co. v. TD Banknorth, Inc., 554 F.Supp.2d 77 (D.Mass.2008), in which the word “Commerce” was found to be suggestive in the banking context. The Commerce Bank & Trust Co. court had found that, unlike “Commerce,” words such as “Community,” “National,” and “Mutual” are “descriptive of a specific characteristic” of a banking institution. Id. at 84. Similarly, the district court in this case concluded that “the term ‘Peoples' is a straightforward way to describe a bank as ‘people-oriented.’ ” Peoples Fed. Sav. Bank, 750 F.Supp.2d at 223. The district court also concluded that the frequent use of the term “People” in connection with banking services cuts in favor of defining the mark as descriptive. See id. (noting that “people” ranks as the twelfth most commonly used word in bank names on the FDIC's website, appearing in the names of 159 banks in the United States).

Having found the mark to be descriptive, the district court then determined whether the same had acquired secondary meaning sufficient to entitle it to protection. The court looked at the bank's advertising budget, the nature and extent of its promotion efforts, and evidence of the bank's growth, per this Court's guidance in Boston Beer Company Limited Partnership v. Slesar Brothers Brewing Company, 9 F.3d 175 (1st Cir.1993), in which we listed factors to be taken into account when assessing a showing of secondary meaning. See Peoples Fed. Sav. Bank, 750 F.Supp.2d at 223–24 (citing Boston Beer Co., 9 F.3d at 181–82). The district court found that, although Peoples Federal had demonstrated that its mark had acquired secondary meaning within the neighborhoods where it has branches, it had not done so beyond those areas. Specifically, although it had developed plans to open branches in Suffolk, Middlesex, and Norfolk counties, Peoples Federal had not shown that a substantial portion of the consuming public in those areas recognized the PEOPLES mark. Its advertising efforts and community involvement, though significant, were found to be highly localized within the Boston city limits and nearby urban areas. Therefore, the district court concluded that Peoples...