H&R Block, Inc. v. Block, Inc.

• Decision Date: 28 April 2022
• Docket Number: 21-cv-0913-NKL
• Court: U.S. District Court — Western District of Missouri
• Parties: H&R BLOCK, INC. AND HRB INNOVATIONS, INC., Plaintiffs, v. BLOCK, INC., Defendant.

H&R BLOCK, INC. AND HRB INNOVATIONS, INC., Plaintiffs,
v.
BLOCK, INC., Defendant.

No. 21-cv-0913-NKL

United States District Court, W.D. Missouri, Western Division

April 28, 2022

ORDER

NANETTE K. LAUGHREY UNITED STATES DISTRICT JUDGE

Pending before the Court is a Motion for Preliminary Injunction filed by Plaintiffs, H&R Block, Inc. and HRB Innovations, Inc. (together, H&R Block or Plaintiffs) against Defendant Block, Inc. (hereinafter Block, Inc. or Defendant). See Doc. 16. After extensive briefing, a full day of testimony, and multiple opportunities to hear the arguments of the parties, the Court GRANTS Plaintiffs' Motion for Preliminary Injunction in part.

I. BACKGROUND

Plaintiffs provide tax and other financial services to consumers and small businesses using the name "H&R Block" and various trademarks in which the word "Block" is prominently displayed. H&R Block also uses a green square logo (__) to identify itself and the financial services it offers.

1

Defendant Block, Inc. is a technology company made up of several business units, mostly focused on financial services. Prior to December 2021, Block, Inc. was named Square, Inc. Not long before it changed its name, Square, Inc. bought Credit Karma Tax. The acquisition added tax services to Square, Inc.' s offerings for the first time. For a time after the acquisition, Credit Karma Tax did business under its original name and logo (CK) and on its own platform. J-l¶31, Ex. K.

On December 1, 2021, Square, Inc. publicly announced its new name. Around the same time, Credit Karma Tax was integrated into Cash App, one of Square, Inc.'s preexisting internet-based products, best known for money transfer services. Credit Karma Tax was renamed Cash App Taxes and rebranded with Cash App's green square logo ($). After its name change, Block, Inc. launched a website and social media accounts containing the name "Block," and used those accounts, along with press releases, to discuss the name change. Defendant also filed an application with the United States Patent and Trademark Office ("USPTO") to register "Block" as a trademark, along with its new twisted cube logo (_). See D-1, at 49-62 (Exhibit E to Plaintiffs' Complaint, Block, Inc.'s trademark applications). In its application to the USPTO, Block, Inc. indicated that it planned to use the "Block" mark and logo for "[h]olding company services," including "business management, business administration, business promotion, and business consulting services for subsidiaries." Id.

On December 16, 2021, six days after Defendant's name change took effect, H&R Block filed a complaint against Block, Inc. for trademark infringement under the Lanham Act and Missouri law. On December 21, 2021, H&R Block filed a motion for a preliminary injunction.^[1]

2

H&R Block claims that Defendant's use of “Block” and a green square logo in connection with its tax service is likely to cause confusion because H&R Block and Block, Inc. both offer overlapping services, including tax preparation and filing, other related financial services, and charitable services. H&R Block claims it will be irreparably harmed by Block, Inc.'s use of “Block” and a green square logo in connection with these overlapping products and services, as it will undermine H&R Block's ability to control its public image and perception; consumers will incorrectly believe that Block, Inc.'s tax service comes from H&R Block, or that H&R Block is one of the “building blocks” in the Block, Inc. family of brands. H&R Block claims that consumers, the media and investors are already confused, and, as Block, Inc. completes the rebranding process, confusion will only increase. H&R Block seeks a preliminary injunction to restore and preserve the status quo, i.e., the way things were before Defendant's name change. Doc. 17 (Sugg. in Supp. of Pls.' Mot. for Prelim. Inj.), 13-24; Doc. 1 (Compl.) ¶¶ 6, 43-45, 47, 51-52; Doc. 68 (Sugg. in Further Supp. of Pls.' Mot. for Prelim. Inj.), 16-21.^[2]

Defendant claims that it does not use “Block” as part of the branding for Cash App or any of its consumer-facing brands; that it does not use its green square Cash App logo for tax services without the name “Cash App;” that there are several third parties that use “Block” or green square logos for financial services without confusion; and that there is no likelihood of confusion between

3

H&R Block and Block, Inc. Defendant claims that an injunction barring it from using its corporate name or requiring a change of the Cash App logo would be disruptive to its business. It further claims that it has spent over a year developing and implementing its “new corporate identity” and “[i]t cannot just flip a switch and go back to its former name”. Doc. 38 (Def.'s Sugg. in Opp. to Pls.' Mot. for Prelim. Inj.), pp. 1-2, 6-8, 14-26.

At the preliminary injunction hearing, Plaintiffs offered testimony from Jeffrey J. Jones II (H&R Block, Inc.'s CEO), and Defendant offered testimony from Chrysty Esperanza (Block, Inc.'s General Counsel) and Owen Jennings (Head of Business and Product for Cash App and President of Cash App Taxes). The parties also submitted declarations of several expert witnesses: for Plaintiffs, E. Deborah Jay, Sarah Butler, and David Reibstein, and for Defendant, Ravi Dhar and Yoram (Jerry) Wind. Block, Inc. also submitted a survey report from Professor David Franklyn (which was attached to Prof. Wind's sur-rebuttal declaration) and a fact declaration from Claudia Ng (Senior Production Designer at Block, Inc.). The parties submitted additional documents through various attorney declarations. The Court also permitted each party to submit proposed orders. On March 1, 2022, the Court held a supplemental hearing to address various questions raised by those proposed orders.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. Plaintiff, H&R Block

H&R Block was founded in 1955 by brothers Henry and Richard Bloch. Originally founded as a bookkeeping business, H&R Block now specializes in income tax preparation, along with a range of other tax and financial services. Today, H&R Block is known not only as “H&R Block, ” but also as simply “Block.” J-1 (Jones Decl). ¶¶ 8-16; J-4 (Jones Rebuttal Decl.) ¶¶ 10-21. As Mr. Jones explained, this is a “contemporary way” that H&R Block, the media, and

4

consumers refer to the brand. Tr. at 59:12-59:25 (Jones Direct). H&R Block uses both its name H&R Block and the name “Block” in its business and marketing. It has developed a range of trademarks that incorporate both iterations of its name, several of which H&R Block has registered as trademarks with the United States Patent and Trademark Office. See, e.g., J-1 ¶ 5.

H&R Block has a broad market presence, both online and in person. H&R Block currently has over 9, 000 “H&R Block” locations in the United States, with an additional 1, 500 international offices, and more than 300 “Block Advisor” locations, where it offers a variety of tax and other related financial services and products. J-1 ¶¶ 3-4, 13; Tr. at 52:21-53:7, 57:15-57:19 (Jones Direct). H&R Block also offers its products and services through its websites, www.hrblock.com and www.blockadvisors.com, and on its mobile application, MyBlock. Through these platforms, customers can prepare and file their taxes and get virtual access to H&R Block's tax professionals for assistance. Customers also can prepare and file their taxes through H&R Block's do-it-yourself (“DIY”) software, which is available online and through retail stores nationwide. J-4 (Jones Rebuttal Decl.) ¶ 20.

In addition to tax preparation and filing, H&R Block offers a variety of related financial services in association with “H&R Block” and under “Block” based branding (such as “MyBlock” and “Block Advisors”), including pre-paid debit cards, lines of credit, loans, access to credit scores, money management, payment processing and mobile banking platforms. J-1 ¶¶ 4, 5, 9, 14; J-4 ¶¶ 22-30.

Under its “Block Advisors” brand, H&R Block offers a variety of tax, financial, accounting, bookkeeping and payroll services to small businesses. In 2021 alone, H&R Block served more than two million small businesses under the “Block Advisors” brand. J-1 ¶ 13; J-4 ¶ 16; Tr. at 54:4-54:14, 57:15-57:19, 58:10-58:11 (Jones Direct).

5

H&R Block also offers charitable, philanthropic, volunteer, community service, and humanitarian services in the many communities in which it operates, including through a community impact program called “Make Every Block Better.” J-1 ¶ 15; Tr. at 61:14-61:16, 65:14-65:25 (Jones Direct); 112:21-112:22 (Jones Cross).

H&R Block pervasively markets itself using its trademarks and has invested billions of dollars on national advertising campaigns on television, in print, on the radio, on the Internet and on social media, including on Twitter, Instagram, Facebook, Tik Tok, and LinkedIn. Over the last three years, H&R Block has spent nearly half a billion dollars advertising its products and services. J-1 ¶ 7; J-4 ¶¶ 4, 6, 15, 20; Tr. at 61:3-62:8, 63:9-64:25, 66:1-67:11 (Jones Direct). H&R Block's advertising makes varied uses of “Block” without “H&R, ” including through taglines like “Block Has Your Back, ” in which H&R Block has invested over $100 million, and “It's Better with Block, ” in which H&R Block invested over $50 million during 2020. H&R Block also uses “Block” on its social media accounts, including a recent advertising campaign on Tik Tok with the hashtag “#DIYwithBlock, ” which generated billions of views; in connection with its “Block Advisors” brand for small businesses; in signage in its H&R Block retail offices; in its diversity and inclusion initiatives, including through its “Belonging@Block” program; in recruiting employees at “Block Days;” and in its growth and transformation strategy called “Block Horizons 2025.” J-1 ¶¶ 11, 14, 16; J-4 ¶¶ 11, 13; Tr. at 58:22; 61:14-61:20; 62:2-62:6; 63:19-63:22, 66:7-...