Commerce Nat'l Ins. Serv. V. Commerce Ins. Agency

• Decision Date: 13 June 2000
• Docket Number: No. 99-5117,99-5117
• Citation: 214 F.3d 432
• Parties: (3rd Cir. 2000) COMMERCE NATIONAL INSURANCE SERVICES, INC.; COMMERCE BANCORP, INC. v. COMMERCE INSURANCE AGENCY, INC.; COMMERCE INSURANCE AGENCY OF SOUTH JERSEY, INC. (District of New Jersey (Camden) Civil 97-4600); COMMERCE INSURANCE AGENCY, INC. v. COMMERCE NATIONAL INSURANCE SERVICES, INC. (District of New Jersey (Camden) Civil 97-4750) Commerce Insurance Agency, Inc., and Commerce Insurance Agency of South Jersey, Inc., Appellants
• Court: U.S. Court of Appeals — Third Circuit

Page 432

214 F.3d 432 (3rd Cir. 2000)

COMMERCE NATIONAL INSURANCE SERVICES, INC.; COMMERCE BANCORP, INC. v. COMMERCE INSURANCE AGENCY, INC.; COMMERCE INSURANCE AGENCY OF SOUTH JERSEY, INC. (District of New Jersey (Camden) Civil 97-4600);

COMMERCE INSURANCE AGENCY, INC. v. COMMERCE NATIONAL INSURANCE SERVICES, INC. (District of New Jersey (Camden) Civil 97-4750)

Commerce Insurance Agency, Inc., and Commerce Insurance Agency of South Jersey, Inc., Appellants

No. 99-5117

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued December 8, 1999

Filed June 13, 2000

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

John F. Ward(Argued), Ward & Olivio, New York, New York.Kenneth L. Winters, John G. Gilfillan, III, Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, Roseland, NJ, Counsel for Appellants.

Laurence S. Shtasel(Argued), Dennis P. McCooe, Louis Charles Shapiro, Blank, Rome, Comisky & McCauley LLP, Philadelphia, PA, Counsel for Appellees.

Before: SLOVITER, NYGAARD, and ROSENN, Circuit Judges.SLOVITER, Circuit Judge, concurring

OPINION OF THE COURT

ROSENN, Circuit Judge.

In an era of aggressive commercial competition, this appeal raises unsurprising, although important, issues of trademark confusion in the banking and insurance industries.Commerce Insurance Agency, Inc.(CIA), a small corporation engaged in the insurance business in Southern New Jersey for over thirteen years, sought an injunction in the United Sates District Court for the District of New Jersey prohibiting Commerce National Insurance Services (CNIS), a recently formed corporation, from using the "Commerce" mark to promote its insurance business.CNIS is a wholly owned subsidiary of Commerce Bancorp, Inc.(CBI) which had used the "Commerce" mark in connection with its banking services prior to CIA's adoption of the mark.The District Court denied CIA relief on the ground that CIA could not assert rights to the mark against either CBI or CNIS because of CBI's prior use of the mark.CIA timely appealed.We will reverse.¹

I.

A.

Commerce Bancorp, Inc. commenced operations in 1973 with the opening of a single branch in Marlton, New Jersey.In December of 1974, it began offering credit life insurance and credit disability insurance in connection with its lending services.By 1983, CBI had opened six branches and controlled more than $ 100 million in assets.By the time this litigation was commenced, CBI had opened more than fifty branches and exercised control over nearly $ 3 billion in deposits.Since January of 1973, CBI has promoted its banking services under the Commerce mark.

Commerce Insurance Agency commenced its insurance business in April of 1983, with a single office in Cedar Brook, New Jersey.After five years of growth, CIA moved to larger offices in Sicklersville, New Jersey.Since its establishment in 1983, CIA has promoted its insurance services under the "Commerce" mark.

From 1983 until 1996, CBI and CIA coexisted amicably in Southern New Jersey despite their use of the same mark to identify their respective services.CIA opened business accounts in its name with CBI, secured lines of credit from CBI, and rented a safe deposit box from it.CIA and CBI also referred customers to each other during this span of years.CIA's principal, Robert Loser, established a "good" relationship with a CBI branch manager and a "personal" relationship with CBI's regional vice president.This relationship led to an invitation from CBI requesting CIA to participate in CBI's 5th Annual Commerce Golf Classic.CIA accepted the invitation, and CBI printed CIA's name as a contributor in CBI's annual program booklet as well as on a sign posted at the tournament.Throughout the thirteen year period between 1983 and 1996, neither CIA nor CBI were aware that anyone believed that the companies were business affiliates of each other.

On July 25, 1996, CBI announced its intention to enter into the general insurance services industry.Within one month of that announcement, CIA began taking steps designed to shore up its position for a potential trademark dispute.On August 26, 1996, CIA filed a service mark registration application with the United States Patent and Trademark Office seeking federal registration of the "Commerce" mark for insurance services.The application was granted.On August 28, 1996, CIA filed a service mark registration application with the New Jersey Secretary of State (the "Secretary") seeking state registration of the business name "Commerce Insurance Agency."The Secretary registered the name on September 3, 1996.On the same day, CIA filed a service mark registration application with the Secretary seeking registration of the business name "Commerce National Insurance Agency."The Secretary registered the name on September 11, 1996.

By November of 1996, CBI had acquired two existing insurance agencies from which CBI formally established CNIS.At this time, CNIS began promoting its services under the names "Commerce National Insurance Services" or "Commerce Insurance."In December of 1996, CBI purchased two additional insurance agencies and added them to CNIS.These additions made CNIS the 58th largest insurance agency in the United States, having a customer base of more than 38,000 individuals and businesses and maintaining more than $ 150 million of insurance coverage.

Instances of confusion between CIA and CNIS began to develop in 1997.In the early part of that year, CIA contacted an insurance carrier to track down a missing policy.On the assumption that CIA had been acquired by CBI, the carrier asked what CIA's agency code number had been prior to its purchase by CBI.Later, in May of that year, CNIS and CIA began to receive each other's mail.CIA also began to receive telephone calls intended for CNIS.When CIA brought these instances of confusion to the attention of CNIS in June of 1997, CNIS denied the existence of any confusion.

B.

Shortly thereafter, however, CBI and CNIS filed a petition for cancellation of CIA's federal registration of the "Commerce" mark.CBI and CNIS also filed a complaint in the United States District Court contending, inter alia, that CIA's use of the Commerce mark infringed CBI's rights in the mark.CIA responded to the actions of CBI and CNIS by commencing an action of its own.In its complaint, CIA alleged, inter alia, that CNIS's use of the Commerce mark infringed CIA's rights in that mark.

The District Court consolidated the two actions, and the parties filed applications for preliminary relief based solely on the federal trademark issue.²CBI and CNIS sought preliminarily to enjoin CIA from using the Commerce mark to promote its insurance services.CIA, in turn, sought a preliminary injunction prohibiting CNIS from promoting its insurance services under the Commerce mark.After reviewing the parties' briefs and hearing oral argument, the District Court issued an opinion and order in which it declined to grant either CBI's and CNIS's request preliminarily to enjoin CIA from using the Commerce mark or CIA's request preliminarily to enjoin CNIS from using the Commerce mark.

In reaching its decision, the District Court first determined that CBI's rights in the Commerce mark were senior to those of CIA.The District Court concluded that as of 1983, the time CIA began its use of the Commerce mark, CBI had established secondary meaning in the Commerce mark.SeeCommerce Nat'l Ins. Servs. v. Commerce Ins. Agency, 995 F. Supp. 490, 499(D.N.J.1998).Additionally, the Court found that CIA's use of the Commerce mark in 1983 was likely to create confusion, because reasonable consumers dealing with CIA "would have assumed that they were dealing with CBI or some CBI affiliate or offshoot."Id. at 499-501.Accordingly, the District Court concluded that CBI's rights to the Commerce mark were senior to those of CIA and that CBI's rights to the mark "encompassed" both the banking and insurance services industries.Seeid. at 501.

After reaching this conclusion, the District Court proceeded to determine whether CBI was entitled to preliminarily enjoin CIA from using the Commerce mark.In addressing this issue, the Court reasoned that CBI's fourteen year delay in enforcing its rights constituted laches and that therefore CBI was not entitled to the injunctive relief it sought.Seeid. at 503.Nevertheless, the District Court recognized that although CBI was estopped from invoking its right to prevent CIA from using the mark, it had not lost its rights in the mark altogether.Seeid. at 505.Accordingly, the Court held that although CBI was not entitled to a preliminary injunction against CIA, CBI's wholly owned subsidiary, CNIS, could not be preliminarily enjoined from using the Commerce mark by CIA.Seeid.

C.

Approximately eleven months later, the parties returned to the District Court seeking a final disposition of their claims.They entered into a stipulation requesting the District Court to enter a final judgment based on: (1) the record created in connection with the parties' cross applications for preliminary relief; (2) their respective expert reports (but without any testimony from either expert); and (3) supplemental briefs directed to the admissibility of those reports.The District Court obliged, and on January 20, 1999, it issued a final judgment in which it again declined to grant any party's request for injunctive relief with respect to the Commerce mark.

II.

On appeal, CIA contends that the District Court erred in concluding that CBI, by virtue of its use of the Commerce mark within the banking industry, acquired rights in the mark that extend to the insurance services industry.More specifically, CIA argues that the District Court committed clear error in finding that as of 1983 CBI had established: (1) secondary meaning in the Commerce mark within the insurance services industry; (2) ownership of the Commerce mark within the...