Chase Manhattan Bank, Usa, N.A. v. Freedom Card

Decision Date26 August 2004
Docket NumberNo. CIV.A.03-217-KAJ.,CIV.A.03-217-KAJ.
Citation333 F.Supp.2d 239
PartiesCHASE MANHATTAN BANK, USA, N.A., Plaintiff, v. FREEDOM CARD, INC. and Urban Television Network, Inc., Defendants/Third Party Plaintiffs, v. J.P. MORGAN CHASE & CO. and JP Morgan Chase Bank, Third Party Defendants.
CourtU.S. District Court — District of Delaware

Richard D. Allen, Esquire and James G. McMillan, III, Esquire, Morris, Nichols, Arsht & Tunnell, Wilmington, DE, counsel for Plaintiff. Of counsel: Ethan Horwitz, Esquire, Leonard F. Lesser, Esquire, and Kandis M. Koustenis, Esquire, Goodwin Procter LLP, New York City.

David A. Jenkins, Esquire, Roger D. Anderson, Esquire, and Joelle E. Polesky, Esquire, Smith, Katzenstein & Furlow LLP, Wilmington, DE, counsel for Defendants. Of counsel: Bill Campbell, Esquire, Williams, Parenti, Finney, Lewis, McManus, Watson & Sperando, Stuart, FL.


JORDAN, District Judge.


This is a trademark infringement case. Jurisdiction is proper under 28 U.S.C. § 1331. Presently before me is a Motion for Summary Judgment filed by the third-party defendants J.P. Morgan Chase & Co. and JPMorgan Chase Bank (collectively, "Chase"). (Docket Item ["D.I."] 329; the "Motion".) Also before me is Chase's Motion to Exclude the Expert Testimony of Michael F. Maloney. (D.I.330.) The defendants and third-party plaintiffs in this case, FreedomCard, Inc. ("FreedomCard") and Urban Television Network Inc. ("UTN")1 have filed a Motion to Consolidate and Realign the Parties for a Jury Trial on the Trademark Infringement Claim and to Strike an Expert Opinion as Untimely (D.I.323) and a Motion to Exclude the Expert Report of Pierce Sioussat (D.I.326). For the reasons that follow, Chase's Motion will be granted in part and denied in part and the remaining motions will be denied as moot.

A. Procedural Background

J.P. Morgan Chase & Co. is a Delaware corporation with its principal place of business in New York, New York. (D.I. 37 ¶ 36.) JP Morgan Chase Bank and Chase Manhattan Bank, USA, N.A. ("Chase USA") are wholly owned subsidiaries of J.P. Morgan Chase & Co. (D.I. 37 at ¶¶ 71-74.) JP Morgan Chase Bank is a New York corporation with its headquarters in New York City. (Id.) Chase USA is a national association organized under the laws of the United States and has its headquarters in Delaware. (Id.; D.I. 1 ¶ 2.) UTN and FreedomCard are Delaware corporations, both with their principal place of business in Marina Del Ray, California. (Id. ¶¶ 3, 4; D.I. 37 ¶¶ 34, 35.) UTN owns U.S. Trademark Registration Nos. 2,398,191 and 2,398,192 for "FREEDOM CARD" in International Class 36 for credit card services, and in International Class 16 for credit cards, respectively. (D.I. 37 ¶¶ 45, 46.) Both registrations were issued on October 24, 2000. (Id.) FreedomCard is the exclusive licensee of the FREEDOM CARD marks. (Id. ¶ 48.)

On February 4, 2003, Chase USA filed this action seeking a declaratory judgment that "its use of the word `freedom,' in combination with Chase's well-known CHASE mark on credit cards issued by Chase as CHASE FREEDOM credit cards, does not infringe" any of UTN's trademark rights. (D.I. 1 at ¶ 1.) Chase USA also seeks a declaratory judgment that it has not breached a 1999 Mutual Confidentiality Agreement between Chase USA and FreedomCard. (Id.) In response to Chase USA's complaint, UTN brought counterclaims against Chase USA and a third-party complaint against Chase for trademark infringement and unfair competition under the Lanham Act and New York and Delaware law.2 (See D.I. 37.) Chase filed its Motion for Summary Judgment on May 3, 2004. (D.I.329, 332.)

B. Factual Background3

UTN launched the FREEDOM CARD credit card, in conjunction with CompuCredit Corporation, in December 2000,4 to provide credit and financial services, primarily to members of the African American community. (D.I. 343 at 3; D.I. 332 at 6.)5 As Wesley Buford, UTN's Chief Executive Officer, testified, UTN targeted consumers in the "sub-prime" market by issuing "a sub-prime product [that] is usually for people who have bad credit or have filed bankruptcy recently and are looking to start all over." (D.I. 343 at 3; D.I. 332 at 5.) According to Chase, this means that UTN focused on the low end of the credit quality spectrum, especially consumers with FICO6 scores under 580, and that the majority of FREEDOM CARD credit card holders have credit lines of $300. (D.I. 332 at 5-6.) The number of FREEDOM CARD credit card holders peaked at 28,193 sometime between April 2001 and December 2001. (D.I. 343 at 4.) Chase also says, and UTN does not dispute, that, on average, FREEDOM CARD credit card holders were charged annual fees and interest that cost the card holder approximately 140% over and above the borrowed amount. (D.I. 332 at 5-6.) The FREEDOM CARD credit card does not offer any rebates or awards to its card holders. (Id.)

Chase is a provider of financial services, including banking and credit card services. (D.I. 1 ¶ 8.) In January 2003, Chase launched a promotion effort for a new credit card, known as the CHASE FREEDOM credit card. (Id. ¶ 9; D.I. 343 at 5.) The CHASE FREEDOM credit card is a reissue of the CHASE Shell MasterCard.7 (Id. ¶ 10.) The CHASE FREEDOM credit card portfolio consists of approximately 1.5 million converted CHASE Shell MasterCard accounts (the "Converted Accounts") and approximately 10,000 accounts acquired after the January 2003 launch of the card under the name "Chase Freedom" (the "New Acquisition Accounts"). (Id.; D.I. 332 at 4.)

In general, the Converted Account holders are between the ages of 46 and 55, have a FICO score of 800 or higher, own their own home, are married, and have an average annual income between $40,000 and $50,000. (D.I. 332 at 5.) Eighty percent of the New Acquisition Account holders own their own home and 60 percent have a FICO score of 780 or higher. (Id.) The majority of CHASE FREEDOM credit card holders have credit lines of $5,000 to $10,000, with no annual fee and an annual percentage rate ("APR") between 12.4% and 14.4%.8 (Id.)

Mr. Buford contacted Chase on the day the CHASE FREEDOM credit card was launched and objected to Chase's use of CHASE FREEDOM in connection with the credit cards. (D.I. 1 ¶¶ 18, 19; D.I. 332 at 5; D.I. 343 at 6.) UTN informed Chase that, in UTN's opinion, Chase was infringing UTN's registered FREEDOM CARD trademarks and that Chase's actions violated a 1999 Mutual Confidentiality Agreement ("Confidentiality Agreement") between FreedomCard and Chase USA.9 (Id. ¶ 22; D.I. 332 at 5.) After UTN objected to the CHASE FREEDOM credit card, Chase stopped its advertising and marketing efforts for the CHASE FREEDOM credit card. (Id.) By May 2003, Chase launched the CHASE PERFECTCARD credit card to replace the CHASE FREEDOM credit card. (D.I. 332 at 8.)


Pursuant to Federal Rule of Civil Procedure 56(c), a party is entitled to summary judgment if a court determines from its examination of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c) (2004). In determining whether there is a triable dispute of material fact, a court must review all of the evidence and construe all inferences in the light most favorable to the non-moving party. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976). However, a court should not make credibility determinations or weigh the evidence. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).

To defeat a motion for summary judgment, Rule 56(c) requires the non-moving party to

do more than simply show that there is some metaphysical doubt as to the material facts...In the language of the Rule, the non-moving party must come forward with specific facts showing that there is a genuine issue for trial.... Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.

Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal quotation marks omitted). Accordingly, a mere scintilla of evidence in support of the non-moving party is insufficient for a court to deny summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).


Chase advances several arguments in its Motion. First, Chase says that, on the basis of arguments UTN made before the U.S. Patent and Trademark Office ("USPTO"), UTN should be estopped from asserting that its use of CHASE FREEDOM on its credit cards infringes the FREEDOM CARD mark. (D.I. 332 at 9-12.) Second, Chase argues that UTN cannot establish a likelihood of confusion between the two marks.10 (Id. at 12-24.) Third, Chase seeks a declaratory judgment that it has not breached the 1999 Confidentiality Agreement.11 (Id. at 24-25.) Finally, Chase says that it is entitled to partial summary judgment on UTN's claims for monetary damages. (Id. at 25-35.)

UTN opposes Chase's Motion and argues that Chase has "misconstrued and misapplied" the doctrine of judicial estoppel, and that UTN did not take any position before the USPTO that is inconsistent with the arguments it is asserting in this litigation. (Id. at 13-17.) UTN also says that Chase's use of the CHASE FREEDOM mark on its credit cards causes a likelihood of confusion with its federally registered FREEDOM CARD mark. (Id. at 20-32.) UTN asserts that it is entitled to monetary damages in this case. (Id. at 33-39.) Because the issue of likelihood of confusion is dispositive, the following discussion focuses primarily on that point.

"The law of trademark protects trademark owners in the exclusive use of their marks when use by another would be likely to...

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