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

• Decision Date: 24 January 2023
• Docket Number: 22-2075
• Citation: 58 F.4th 939
• Parties: H&R BLOCK, INC.; HRB Innovations, Inc., Plaintiffs - Appellees v. BLOCK, INC., Defendant - Appellant
• Court: U.S. Court of Appeals — Eighth Circuit

58 F.4th 939

H&R BLOCK, INC.; HRB Innovations, Inc., Plaintiffs - Appellees

v.BLOCK, INC., Defendant - Appellant

No. 22-2075

United States Court of Appeals, Eighth Circuit.

Submitted: September 21, 2022

Filed: January 24, 2023

Counsel who presented argument on behalf of the appellant was Kathleen M. Sullivan, of Los Angeles, CA. The following attorneys also appeared on the brief; Margret M. Caruso, of Redwood Shores, CA., Rachel Kassabian, of Redwood Shores, CA., Thomas B. Weaver, of St. Louis, MO., David A. Jermann, of Kansas City, MO., Robert M. Schwartz, of Los Angeles, CA., William B. Adams, of New York, NY.

Counsel who presented argument on behalf of the appellee was David H. Bernstein, of New York, NY. The following attorneys also appeared on the brief; Megan K. Bannigan, of New York, NY., Jared L. Kagan, of New York, NY., Marissa P. MacAneney, of New York, NY., Anthony J. Durone, of Kansas City, MO., Stacey R. Gilman, of Kansas City, MO.

Before GRUENDER, MELLOY, and ERICKSON, Circuit Judges.

ERICKSON, Circuit Judge.

Block, Inc. appeals from an order granting in part H&R Block, Inc. and HRB Innovations, Inc.’s (collectively, "H&R Block") motion for a preliminary injunction. The district court enjoined Block, Inc. from engaging in the following conduct:

1. from using "Block, Inc.," or "Block," or a close variant, such as "Blocks," in connection with or in close proximity to Cash App Taxes or the green square Cash App Taxes logo. This means that Defendant cannot operate Cash App Taxes as a feature of Cash App or be linked to Cash App through a separate application so long as Cash App also refers to Block, Inc. It also means that Cash App Taxes cannot be owned by a legal entity with the word "Block" in it.

2. from publicly communicating though advertising, press releases, social media, on its websites, or other public tools, that it is associated with Cash App Taxes or any platform or internet function that contains or embeds Cash App Taxes or other brands or products associated with taxes or tax services.

H&R Block claims that use of "Block" and a green square logo in connection with tax services: (1) 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; (2) has confused consumers, the media, and investors; and (3) will cause irreparable harm, as it will undermine H&R Block's ability to control its public image and perception and lead consumers to incorrectly believe Block, Inc's tax service is connected to H&R Block or one of the "building blocks" in the Block, Inc. family of brands. For the reasons stated below, we reverse and vacate the preliminary injunction.

I. BACKGROUND

H&R Block was founded in 1955 as a bookkeeping business. It now specializes in income tax preparation and other tax and financial services. Having invested billions of dollars on national advertising campaigns, H&R Block has developed a broad market presence, both in person and online. H&R Block's financial services include: pre-paid debit cards, lines of credit, loans, access to credit scores, money management, payment processing, and mobile banking platforms, such MyBlock. Under its "Block Advisors" brand, H&R Block offers tax, financial, accounting, bookkeeping, and payroll services to small businesses. H&R Block also operates a community impact program called "Make Every Block Better." The company asserts that it is known today as not only "H&R Block" but also "Block." As part of its branding, H&R Block owns several federal trademark registrations and uses a green square logo in connection with its products and services.

Square, Inc., founded in 2009, began with a product called "Square" that was a payment card reader and point-of-sale software, which allowed businesses and individual sellers to accept customer payments. Over time, Square, Inc. acquired or developed other businesses. One of its businesses is Cash App, which started in 2013 as Square Cash. Cash App is a peer-to-peer money transfer service that allows users to deposit and store money on the app. Cash App's name and logo are federally recognized trademarks in the form of a stylized white dollar sign surrounded by a green square logo with rounded corners. Cash App is purely digital, there are no brick-and-mortar stores, and the services are not available in online marketplaces. In November 2020, Square, Inc. acquired free tax service Credit Karma Tax, which was rebranded "Cash App Taxes" and integrated into the Cash App platform for the 2022 tax season. Cash App Taxes users must download and install Cash App to access the free tax services.

Square, Inc. was renamed Block, Inc. in December 2021. The company filed an application to register the name "Block".¹ In its trademark application, Block stated its intention to use the new name and logo for "holding company services," including business management, administration, promotion, and consulting services for subsidiaries. It selected the name "Block" for a number of reasons, including its association with "building blocks, neighborhood blocks and their local businesses, communities coming together at block parties full of music,² a blockchain, a section of code, and obstacles to overcome[,]" and in connection with the adoption of a "House of Brands" marketing architecture, which involves separating the corporate identity from the names of the businesses or products the business owns. Block, Inc.’s chief executive officer publicized the name change on his Twitter account, which has over six million followers. The company's business units, such as Cash App, Square, and TIDAL, were included in publicity surrounding the name change. References to Block, Inc. now appear on the Cash App website and in connection with its mobile applications.

After announcement of the rebrand, some social media users posted comments about whether the name change was too close to H&R Block, while others opined that people know the difference between H&R Block and Block, Inc. Some articles linked Cash App and its new tax services to "Block." Other publications contained stories about Cash App under profiles about H&R Block. H&R Block's chief executive officer testified that he was not concerned about the green square logos of Cash App and Credit Karma³ until Block, Inc.’s name change and its acquisition and integration of Credit Karma Tax into Cash App Taxes.

Fifteen days after the name change was announced, H&R Block commenced this action alleging infringement on its trademark rights, in violation of the Lanham Act, 15 U.S.C. § 1114, and Missouri law. Shortly after commencing the action, H&R Block moved for a preliminary injunction. After analyzing the familiar Dataphase ⁴ factors, the district court granted in part H&R Block's request for a preliminary injunction. Block, Inc. timely filed this interlocutory appeal. We granted Block, Inc.’s motion for a stay and expedited the appeal.

II. DISCUSSION

A preliminary injunction is an "extraordinary remedy never awarded as of right." Progressive Techs., Inc. v. Chaffin Holdings, Inc., 33 F.4th 481, 485 (8th Cir. 2022) (quoting Winter v. Nat'l Res. Def. Council, Inc., 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) ). A plaintiff seeking a preliminary injunction bears the burden of showing that such extraordinary relief is warranted. Dataphase, 640 F.2d at 113. Under the familiar Dataphase analysis, a party seeking a preliminary injunction must demonstrate: (1) the threat of irreparable harm; (2) the state of the balance between the harm and the injury granting an injunction will inflict on other parties; (3) the probability it will succeed on the merits; and (4) the public interest. Calvin Klein Cosmetics Corp. v. Lenox Laboratories, Inc., 815 F.2d 500, 503 (8th Cir. 1987) (citing Dataphase, 640 F.2d at 113-14 ).

While mindful that a movant carries a "heavier" burden when granting a preliminary injunction has the effect of awarding the movant substantially the relief it could obtain after a trial on the merits, see id., we review the district court's ultimate ruling on a preliminary injunction "for abuse of discretion, with factual findings examined for clear error and legal conclusions considered de novo ." Brakebill v. Jaeger, 932 F.3d 671, 676 (8th Cir. 2019). "An abuse of discretion occurs when a relevant factor that should have been given significant weight is not considered; when an irrelevant or improper factor is considered and given significant weight; and when all proper factors, and no improper ones, are considered, but the court, in weighing those factors, commits a clear error of judgment." Novus Franchising, Inc. v. Dawson, 725 F.3d 885, 893 (8th Cir. 2013) (quotation omitted).

A. Probability of Success on the Merits

Trademark infringement may be established by showing "the use of similar marks on similar or related products or services if such use creates a likelihood of confusion." Select Comfort Corp. v. Baxter, 996 F.3d 925, 932 (8th Cir. 2021). To establish trademark infringement, H&R Block must show: (1) it has a valid, protectible mark, and (2) there is a likelihood of confusion between its mark and the marks that Block, Inc. is using.

Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc., 908 F.3d 313, 322 (8th Cir. 2018) ; see also 15 U.S.C. § 1125(a)(1)(A).

Assuming, without deciding, the disputed issue of whether H&R Block has a valid, protectible mark for "Block", we turn to the second prong required for establishing trademark infringement. The district court's determination on likelihood of confusion is a finding of fact that we review for clear error. Select Comfort, 996 F.3d at 934. The "core inquiry" when assessing the likelihood of confusion is "whether the relevant average consumers for a product or service are likely to be confused as to the source of a product or service or as to an affiliation between sources based on a...