Midwest Guaranty Bank v. Guaranty Bank
| Decision Date | 05 June 2003 |
| Docket Number | No. 02-CV-74722-DT.,02-CV-74722-DT. |
| Citation | 270 F.Supp.2d 900 |
| Parties | MIDWEST GUARANTY BANK, a Michigan corporation, Plaintiff, v. GUARANTY BANK, a Wisconsin corporation, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
George T. Schooff, Troy, MI, for plaintiff
Mark Cantor, Southfield, MI, for defendant.
ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
Now before the Court is Plaintiff Midwest Guaranty Bank's motion for preliminary injunction. The Court held an evidentiary hearing on May 27, 2003 and heard final oral argument on May 28, 2003. Having considered the entire record, and for the reasons that follow, the Court GRANTS Plaintiffs motion for preliminary injunction. Specifically, pending a final trial on the merits. Defendant Guaranty Bank is hereby RESTRAINED and ENJOINED from using the mark GUAANTY BANK in conjunction with its banking and related financial services offered in southeast Michigan. Defendant Guaranty Bank, however, shall have 30 days from the date a security bond is posted by Plaintiff Midwest Guaranty Bank to terminate its operations under the name Guaranty Bank.
The underlying facts giving rise to this litigation are relatively straightforward. Plaintiff, Midwest Guaranty Bank ("Midwest Guaranty" or "Plaintiff) has provided financial services and products to Michigan customers since 1989.1 (Compl.¶ 7-9.) Midwest Guaranty has five Detroit metropolitan area branches located in Troy, Beverly Hills, Livonia, Bloomfield Township, and Farmington Hills, Michigan. (Id.; Maxson Dec. ¶ 12.)
Defendant Guaranty Bank ("Guaranty" or "Defendant"), based in Wisconsin, has been providing retail banking and residential mortgage services since 1923. (Def.'s Prel. Inj. Resp. Br. at 6.) Specifically, Guaranty began operating under the name "Guaranty Building and Loan Association" in 1923. It operated under this name until 1951, when it changed its name to "Guaranty Savings & Loan Association." In February, 1989, Guaranty, once again, changed its name, this time to "Guaranty Bank for Savings, S.A." This name only lasted for approximately one year; in May, 1990, Guaranty changed its name to "Guaranty Bank, S.S.B." Finally, in June, 2002, Guaranty converted to a federal savings bank under the name "Guaranty Bank." (PL's Exh. 75.)
Approximately five years ago, Guaranty opened a "convenience banking location" in a Kohl's supermarket in Mequon, Wisconsin. Guaranty subsequently opened additional banking locations in other Kohl's supermarkets. (Id.) After years of discussions, Guaranty decided, in 2002, to expand its in-store banking business into Michigan, executing agreements with both the Farmer Jack and Kroger supermarket chains. (Id. at 7-8.) Guaranty has opened banking locations in the Detroit metropolitan area and is planning further expansion into this market. According to Guaranty Chairman Gerald Levy's testimony at the May 27, 2003 evidentiary hearing, Guaranty has now opened twenty in-store branches in southeast Michigan, and intends to open approximately twenty more in-store branches in the near future.
Midwest Guaranty contends that Guaranty's use of the name Guaranty Bank has created a likelihood of confusion among Midwest Guaranty customers and others as to the source of Guaranty's financial services and products, as well as the financial services and products of Midwest Guaranty. (Id. ¶ 17.) Midwest Guaranty has documented numerous misdirected phone calls and other inquiries intended for Guaranty Bank, and/or Midwest Guaranty customers mistakenly assuming that Guaranty was part of Midwest Guaranty.
Midwest Guaranty filed the instant fourcount complaint on November 26, 2002: Count I—Lanham Act § 43(a) Unfair Competition [15 U.S.C. § 1125(a) ]; Count II—Common Law Unfair Competition; Count III—Common Law Trademark Infringement; and Count IV—Violation of the Michigan Consumer Protection Act M.C.L.A. § 445.903.
On January 29, 2003, Midwest Guaranty filed the instant motion for preliminary injunction. The parties filed proposed findings of fact and conclusions of law on Friday, May 23, 2003. The Court held an evidentiary hearing on Tuesday, May 27, 2003, and heard final oral argument on Wednesday, May 28, 2003. Having considered the entire record, including the testimony and evidence presented during the evidentiary hearing, the Court is now prepared to rule on Midwest Guaranty's motion for preliminary injunction.
The granting of a preliminary injunction is committed to the sound discretion of the trial court. United States v. Any And All Radio Station Transmission Equip., 204 F.3d 658, 665 (6th Cir.2000). The plaintiff has the burden of proof in seeking an injunction. Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70 of Alameda County, 415 U.S. 423, 441, 94 S.Ct. 1113, 39 L.Ed.2d 435 (1974); Garlock, Inc. v. United Seal, Inc., 404 F.2d 256 (6th Cir.1968). "A preliminary injunction is an extraordinary remedy which should be granted only if the movant carries his or her burden of proving that the circumstances clearly demand it." Overstreet v. Lexington-Fayette Urban County Government, 305 F.3d 566, 573 (6th Cir.2002); see also Leary v. Daeschner, 228 F.3d 729, 739 (6th Cir. 2000) ().
A court must consider four factors when deciding whether to issue a preliminary injunction: (1) whether the plaintiff has a strong likelihood of succeeding on the merits; (2) whether the plaintiff will suffer irreparable injury absent the injunction; (3) whether issuing the injunction will cause substantial harm to others; and (4) whether the public interest will be furthered by the issuance of the injunction. Gonzales v. National Bd. Of Med. Examiners, 225 F.3d 620, 625 (6th Cir.2000). These considerations are merely factors to be balanced, "not prerequisites that must be met." Teamsters Local Union 299 v. U.S. Truck Co. Holdings, 87 F.Supp.2d 726, 733 n. 2 (E.D.Mich.2000) (quoting Mascio v. Public Employees Retirement Sys. of Ohio, 160 F.3d 310 (6th Cir.1998)). However, a finding that there is no likelihood of success on the merits is usually fatal. Gonzales, 225 F.3d at 625.
As a threshold matter, Guaranty contends that it has priority in the "Guaranty Bank" service mark because it has been using the "Guaranty" name since 1923, well before Midwest Guaranty began using the "Midwest Guaranty" mark in 1989, citing the Tea Rose-Rectanus doctrine established by two U.S. Supreme Court cases—Hanover Star Milling Co. v. Metcalf 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713 (1916) and United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141 (1918). The Court disagrees.
Neither party to this case has filed a state or federal trademark registration. At common law, ownership of service marks is obtained by actual use. Allard Enterprises v. Advanced Programming Resources, Inc., 249 F.3d 564, 571 (6th Cir.2001) (citation omitted). "The first to use a mark in the sale of goods or services is the `senior user' of the mark and gains common law rights to the mark in the geographic area in which the mark is used." Id. at 572 (emphasis added). This principle was recognized long ago by the U.S. Supreme Court in Hanover Star Milling and Rectanus. As noted by a District Court in the Western District of Pennsylvania:
[W]here two users operate in geographically remote markets, prior appropriation is legally insignificant. [ACCU Personnel, 846 F.Supp.] at 1205. This is because each user attains rights in the mark in the remote market according to actual use. Thus, a senior user enters a remote market subject to the trademark rights already acquired, in good faith, by another user. See United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141 (1918); Hanover Star, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713 (the Tea-Rose case); see also Restatement (Third) of the Law of Unfair Competition § 19 (1995). This principle, known as the Tea-Rose/'Rectanus doctrine, governs territorial rights in unregistered trademarks and permits a junior user to enjoin a senior user's infringing use "in an area where the senior user has no established trade, and hence no reputation and no good will." Natural Footwear, 760 F.2d at 1394; see generally 4 McCarthy on Trademarks Ch. 26, passim ("The Territorial Extent of Trademark Rights"). The Tea-Rose/Rectanus doctrine applies to infringement actions premised on § 43(a) of the Lanham Act. 4 McCarthy on Trademarks § 26.4, at 26-9-10.
Laurel Capital Group v. BT Financial Corp., 45 F.Supp.2d 469, 481-82 (W.D.Pa. 1999).
Guaranty Bank did not "actually use", in the trademark sense, its mark in the relevant geographic market (southeast Michigan), before Midwest Guaranty adopted its mark in 1989. Guaranty claims that since the early 1980's, it was originating and servicing mortgage loans under the "Guaranty Bank" mark in approximately 40 states, not including Michigan, and that its name appears in closing documents as a servicer of such loans. (Gerald J. Levy Declaration 115-6.) Mr. Levy's declaration is deceptively insufficient—no mention is made of significant loan originations in Michigan before 1989 (only loans in 40 states since the early 1980's). In fact, Midwest Guaranty filed the declaration of Gary Mielock, former Commissioner of the Michigan Financial Institutions Board,2 who states that until at least June, 2002, Guaranty Bank would have been required to obtain a Certificate of Authority from the Commissioner in order to conduct business in Michigan—no such Certificate was...
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