Citibank, N.A. v. Citibanc Group, Inc.

• Decision Date: 16 February 1984
• Docket Number: No. 82-7214,82-7214
• Citation: 724 F.2d 1540,222 USPQ 292
• Parties: CITIBANK, N.A., Plaintiff-Appellee, v. CITIBANC GROUP, INC., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1540

724 F.2d 1540

222 U.S.P.Q. 292

CITIBANK, N.A., Plaintiff-Appellee, v. CITIBANC GROUP, INC., et al., Defendants-Appellants.

No. 82-7214.

United States Court of Appeals, Eleventh Circuit.

Feb. 16, 1984.

James B. Gambrell, Pravel, Gambrell, Hewitt, Kirk, Kimball & Dodge, Houston, Tex., for plaintiff-appellee.

Thad G. Long, Bradley, Arant, Rose & White, Linda Friedman, Birmingham, Ala., for defendants-appellants.

Appeal from the United States District Court for the Northern District of Alabama.

Before HILL and VANCE, Circuit Judges, and TUTTLE, Senior Circuit Judge.

JAMES C. HILL, Circuit Judge:

Citibanc Group, Inc., and eight of its subsidiaries, defendants in the district court (Citibanc or defendants) appeal from the judgment of that court in favor of plaintiff Citibank, N.A. (Citibank or plaintiff). Plaintiff sued defendants for infringement of its federally-registered trademark and service mark "Citibank," seeking an order prohibiting defendants from doing business as "Citibanc." The district court held plaintiff's mark valid and plaintiff's right to use the mark to be superior to any right that defendants might have in the mark. The court decided that neither laches nor estoppel bars plaintiff from relief and, finding that defendants had infringed plaintiff's mark, granted the requested relief. We find no error in the result reached by the district court.

Plaintiff, a wholly owned subsidiary of Citicorp, is a chartered national banking association with its principal office in New York City. Defendant Citibanc Group, Inc., is a bank holding company with its principal place of business in Alabama. Citibanc Group or its majority shareholders own in whole or in part the other eight defendants in this case, which, with one exception, are named "Citibanc of (name of town)". ¹ The eighth subsidiary is Citibanc Computer Systems, Inc. With the exception of the computer company, which performs services for the banks, the subsidiaries engage in normal banking operations in various cities in Alabama.

Plaintiff bases its suit on its claim of ownership of the trademark and service mark "Citibank," arguing that defendants' use of "Citibanc" infringes its rights. At trial, the defendants denied these allegations and asserted that laches and estoppel bar plaintiff from relief. Defendants also counterclaimed contending that plaintiff's mark is invalid for various reasons. On appeal, defendants have raised specific points of error, and we will discuss the facts necessary to our decision of each specific point below. Helpful to a basic understanding of the case, however, is a review of the name history underlying the contentions of both plaintiff and defendants.

Plaintiff first employed a derivative of the name "City Bank" when it was chartered as The City Bank of New York in 1812. In 1865, when the National Banking Act was adopted, the bank became nationally chartered and changed its name to The National City Bank of New York. Plaintiff used the name City Bank or a variation of the name for various purposes through the 1800's and into the 1900's. In 1955, the plaintiff merged with the First National Bank of New York to become The First National City Bank of New York. In 1962, plaintiff changed its name to First National City Bank. In 1960, plaintiff registered the mark Citibank for use in connection with banking services, and, in 1976, again changed its name, this time to Citibank, N.A.

The name history of the defendants begins in 1955 when the partnership of Wilbanks and Wilbanks purchased the controlling interest in The Peoples Trust & Savings Bank of Goodwater, Alabama. Subsequently, the partnership acquired controlling interests in the City Bank of Tuskeegee (1967), City Bank & Trust Company of Roanoke (1967), The Farmers and Merchants Bank of Lineville (1968) and the Covington County Bank of Andalusia (1969). The use of the term City Bank by the Roanoke bank began when it was incorporated in 1931; this use predates the use of any other defendant. Except for the City Bank of Tuskeegee, incorporated in 1933, no other predecessor to any defendant used the term in its name before 1969. During the 1960's, the other two banks changed their names to incorporate the term City Bank.

In 1972, Citibanc Group, Inc., was incorporated and approved by the Federal Reserve System as a bank holding company. The holding company exchanged its stock for the bank stock of the Wilbanks' partnership. During the next few years, the holding company acquired a majority interest in the other defendant banks and created the computer subsidiary. On January 23, 1977, the board of the holding company decided that each subsidiary should adopt a similar name using the terminology Citibanc of (name of town), and the various banks did so in February, 1977.

I. THE VALIDITY OF THE PLAINTIFF'S RIGHTS

A. The Common Law and the Lanham Act.

Defendants argue that plaintiff cannot assert its rights under the Lanham Act because defendants' common law rights predate both the plaintiff's 1960 registration and the 1947 passage of the Act; thus, argue defendants, their rights are preserved by section 33(b)(5) of the Act, 15 U.S.C. Sec. 1115(b)(5) (1976), section 15 of the Act, 15 U.S.C. Sec. 1065 (1976), or section 2(d) of the Act, 15 U.S.C. Sec. 1052(d) (1976). The defendants contend that the name of each bank in Alabama can be traced to the names of the two Alabama banks using the term City Bank prior to 1947. Defendants argue that, because Citibanc is a mere variation of City Bank, they may "tack on" to the rights of those two banks and use Citibanc throughout the state of Alabama.

The plaintiff maintains that defendants' common law rights to City Bank were frozen at the time of the registration in 1960 because plaintiff was the senior user of the mark. The defendants, according to the plaintiff, thus could use "City Bank" only in two relatively small towns in Alabama. Not willing to concede this use to the defendants, however, the plaintiff argues that by changing their names to Citibanc the defendants wrongly changed their names "closer" to the registered mark Citibank and abandoned any rights they possessed in the two-word version of the name. The district court substantially adopted the plaintiff's argument.

The various arguments set forth by both parties are complex, and, to a large degree, they focus on issues we need not address to decide this case. The issue before us is whether defendants can use the term Citibanc in Alabama. We need not decide whether the defendants would be able to use the term City Bank in Alabama except to the extent that use of this term allows defendants to use Citibanc under one of the various grandfather provisions of the Lanham Act. We, however, do not perceive this issue to be of great difficulty. Assuming for the moment that plaintiffs validly registered and obtained trademark rights to Citibank in 1960, defendants, regardless of their right to use the term City Bank, could not in 1967 adopt the term Citibanc. See Holiday Inns, Inc. v. Holiday Inn, 364 F.Supp. 775 (D.S.C.1973), aff'd mem. 498 F.2d 1397 (4th Cir.1974).

In Holiday Inns, the defendant had acquired local rights to use the mark "Holiday Inn" before the plaintiff's Lanham Act registration. After the registration, however, the defendant embarked on a campaign to associate itself with the plaintiff in the public eye. For example, defendant constructed and installed a sign virtually identical to plaintiff's well-known, nationally-used sign. 364 F.Supp. at 783. The court enjoined this action by the defendant. Id. at 786-87. We think this case presents substantially the same problem as the Holiday Inns case. Defendants have adopted a mark--Citibanc--substantially more similar to plaintiff's mark than the two-word version--City Bank. We are mindful that the two versions sound alike, but we perceive a difference between the two terms. Citibanc and Citibank are "manufactured" words. They are "not to be found in the dictionary." See Sweetarts v. Sunline, Inc., 380 F.2d 923, 927 (8th Cir.1967) (discussing term "Sweetarts"). We do not decide that the two affected defendants could have continued to use the term City Bank in the two Alabama towns, nor is the issue now before us as to the right of the other defendants to incorporate such term in their names. It is clear that defendant has run afoul of the principle stated in Holiday Inns by adopting a term much closer to plaintiff's registered trademark than the term it previously used.

B. Fraud in the Registration.

Defendants contend that plaintiff may not rely on the 1960 registration because that registration is invalid. Defendants argue principally that plaintiff, in obtaining registration of the mark Citibank, fraudulently misrepresented to the Patent and Trademark Office that no other banks were using City Bank as part of their names. Defendants also argue that plaintiff misrepresented that its services were "banking services" when the services were in actuality a "Ready-Credit loan plan" and that plaintiff fraudulently filed section 8 and section 15 continuous use affidavits when plaintiff had not continuously used the mark for five years.

In reviewing defendants' claims, we review findings by the district court that plaintiff did not commit fraud; these findings are findings of fact and the clearly erroneous standard of Federal Rule of Civil Procedure 52(a) applies. For defendants to have proven fraud, they must necessarily have proven a false, material statement by the plaintiff of a fact that would have constituted grounds for denial of the registration had the truth been known. See, e.g., Giant Food, Inc. v. Malone & Hyde, Inc., 522 F.2d 1386 (C.C.P.A.1975); Hollowform, Inc. v. AEH, 515 F.2d 1174 (C.C.P.A.1975). ²

As to the first claim of defendants, "[i]n the absence of a showing that there is a prior third-party use, any common law rights resulting from an innocent subsequent use ..."...