San Diego Cnty. Credit Union v. Citizens Equity First Credit Union
| Decision Date | 25 May 2021 |
| Docket Number | Case No.: 18cv967-GPC(MSB) |
| Citation | 541 F.Supp.3d 1110 |
| Parties | SAN DIEGO COUNTY CREDIT UNION, Plaintiff, v. CITIZENS EQUITY FIRST CREDIT UNION, Defendant. |
| Court | U.S. District Court — Southern District of California |
James V. Fazio, III, Jesse A. Salen, Lisa M. Martens, Martin Bader, Stephen S. Korniczky, Patrick McGill, Sheppard Mullin Richter & Hampton LLP, San Diego, CA, for Plaintiff.
Emma Leigh Baratta, Pro Hac Vice, Michael M. Polka, Pro Hac Vice, James Wilson Dabney, Pro Hac Vice, Hughes Hubbard & Reed LLP, New York, NY, Geoffrey M. Thorne, Steven J. Cologne, Higgs, Fletcher & Mack, LLP, San Diego, CA, Stefanie Michelle Garibyan, Pro Hac Vice, Leason Ellis LLP, White Plains, NY, for Defendant.
Plaintiff San Diego County Credit Union ("SDCCU") brings this action for declaratory judgment of invalidity of Defendant Citizens Equity First Credit Union ("CEFCU")’s common law mark, IT'S NOT A BANK. BETTER.1 (Dkt. No. 139, SAC ¶¶ 88-96.) A bench trial was held via ZOOM on March 30, 2021 and April 1, 2021. (Dkt. Nos. 335, 338.) Martin Bader, Esq. and Jesse Salen, Esq. appeared on behalf of SDCCU and James Dabney, Esq. appeared on behalf of CEFCU. (Id. ) On April 7, 2021, CEFCU filed its closing argument, SDDCU filed its closing argument on April 13, 2021, and CEFCU filed a reply closing argument on April 15, 2021. (Dkt. Nos. 343, 347, 350.)
Having carefully reviewed the evidence and the arguments of the parties, as presented at trial, and in their written submissions, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule ("Rule") of Civil Procedure 52(a) and finds in favor of SDCCU seeking declaratory judgment that NOT A BANK. BETTER. is invalid.2
SDCCU is a credit union organized and existing under the laws of the State of California, having its principal place of business and headquarters in San Diego, California and CEFCU is a credit union organized and existing under the laws of the State of Illinois, having its principal place of business and headquarters in Peoria, Illinois.
On September 1, 2010, CEFCU filed an application to federally register CEFCU. NOT A BANK. BETTER. on the principal trademark register. (Trial Ex. B.) On May 3, 2011, the United States Patent and Trademark Office ("USPTO") recorded U.S. Registration No. 3,952,993 for CEFCU. NOT A BANK. BETTER. in standard characters (the "’993 Registration"). (Trial Ex. A.) The USPTO recorded the ’993 Registration without requiring any disclaimer4 of NOT A BANK. BETTER. (Trial Ex. B.)
At trial, Jennifer Flexer, CEFCU's Assistant Vice President of Market Strategy and Analytics, who has been employed with CEFCU since 1997, was the sole non-expert witness to testify. (Dkt. No. 348, Flexer Test. at 78:21-79:1.) From 2006 to 2011, CEFCU used "Your Credit Union" as its primary tagline on its advertising. (Dkt. No. 348, Flexer Test. at 150:11-19; see also Trial Exs. 21, J, 33,5 95.) In 2011, CEFCU made a corporate decision to rebrand and switched its tagline from "CEFCU, Your Credit Union" to (Dkt. No. 348, Flexer Test. at 151:8-16.) It is not disputed that since 2011, Defendant has consistently used NOT A BANK. BETTER. with its housemark, CEFCU, in the form of CEFCU. NOT A BANK. BETTER. in its extensive advertising and marketing. (Dkt. No. 349, Trial Trans. at 283:12-19: see also Trial Exs. C, D.)
Prior to its corporate decision to rebrand in 2011, CEFCU used the tagline or slogan, NOT A BANK. BETTER. as part of its advertising and marketing beginning in 2006. (Dkt. No. 348, Flexer Test. at 91:4-8.) On September 20, 2006, CEFCU, in an internal email, announced it would start the campaign to include TV, radio and billboard ads for its fall membership campaign that would run in Illinois for a period of four weeks. (Dkt. No. 348, Flexer Test. at 81:23-82:3; 83:3-18; Trial Exs. F, G.) This campaign included 15-second TV ads promoting CEFCU and in a closing graphic where floating type moves across the screen along with the CEFCU housemark are displayed. (Trial Exs. G-2, G-5.)
On October 16, 2006, CEFCU first used NOT A BANK. BETTER, by itself and separate from the housemark CEFCU in an ad that ran for one day in the Decatur Herald and Review. (Trial Ex. CC - 4645-47.) The rectangular advertisement presents in the upper left-hand corner and on the bottom right-hand corner is CEFCU's former tagline, "CEFCU Your Credit Union." (Id. )
CEFCU's first use of CEFCU. NOT A BANK. BETTER. was in a print advertisement in the Peoria Journal Star on February 5, 2007 promoting its home equity loans. (Dkt. No. 348, Flexer Test. at 168:15-169:19; Trial Exs. I, J.) The ad features in normal text after a description of its home equity loan and its former tagline highlighted in the bottom right-hand corner, "CEFCU Your Credit Union." (Trial Exs. I, J.)
In 2007, CEFCU's website landing page6 displayed at the bottom, (Dkt. No. 348, Flexer Test. at 119:2-121:1: Trial Exs. K, L.)
In October 2007, CEFCU mailed out a newsletter to members over sixteen years old. (Trial Ex. M.) NOT A BANK. BETTER. was used twice in the text of the Chairman's letter. (Trial Ex. M-2.) The Chairman wrote, "The phrase, ‘Not a Bank – Better’ certainly described those early days" and " ’ (Id. )
In November 2007, CEFCU produced a storyboard for a 15 second TV ad promoting its Visa credit card. (Dkt. No. 348, Flexer Test. at 125:1-12.) On the last shot, the CEFCU logo appeared and then rained down and was placed under the CEFCU logo. (Trial Ex. CC-4535.) This ad was aired from time to time between 2007 and 2010 when the Visa credit card offer was being promoted. (Dkt. No. 348, Flexer Test. at 126:2-5.)
CEFCU also played two audio radio advertisements at trial. The first radio ad began running in the fall of 2007 until 2010. (Dkt. No. 348, Flexer Test. at 105:8-13; 126:18-23; 127:6-9.) In the closing remarks promoting CEFCU's Platinum Rewards Visa card, the announcer states, There is a slight one second pause between "CEFCU" and (Trial Ex. CC-4497.)
The second radio ad began to run in the spring of 2008 until 2010. (Dkt. No. 348, Flexer Trans. at 128:2-8.) In the closing of the second radio ad promoting CEFCU's home equity line of credit, the announcer states, (Trial Ex. CC-4498.) In this ad, there is no pause between CEFCU and NOT A BANK. BETTER. (Id. )
In a storyboard for a 15 second TV ad, which aired in 2008 to 2010, promoting CEFCU's offer to pay closing costs for first-time home buyers, Flexer testified that there was a time delay between when the word CEFCU appeared and appeared on the last slate. (Dkt. No. 348, Flexer Test. at 129:12-23; 130:3-14; Trial Exs. 4557 and 4559.)
Starting February 1, 2008 for a period two months, CEFCU used the tagline, NOT A BANK. BETTER., by itself, along with its former tagline, in its pocket schedules. (Trial Ex. CC-4510.)
In 2009, CEFCU ran a home equity campaign. (Dkt. No. 348, Flexer Test. at 132:21-133:6, 136:10-18; Trial Ex. O; see also Trial Ex. P.) CEFCU published newspaper ads promoting its home equity loan with CEFCU NOT A BANK. BETTER. in regular text and font and used its former tagline "CEFCU Your Credit Union" which was highlighted in the bottom right corner. (Dkt. No. 348, Flexer Test. at 133:7-10; Trial Ex. O-2.) This promotion included radio ads using CEFCU ... NOT A BANK. BETTER. (Dkt. No. 348, Flexer Test. at 133:15-24; Trial Ex. O-3.) The promotion also included TV ads that included a slate at closing displaying CEFCU. NOT A BANK. BETTER. (Dkt. No. 348, Flexer Test. at 134:3-17; Trial Ex. O-4, O-5.) Flexer testified there was a time delay between display of the word CEFCU and NOT A BANK. BETTER. in the TV ad. (Dkt. No. 348, Flexer Test. at 134:18-20.)
In August 2009, CEFCU sent credit card statements to about 50,000 of its credit card holders. (Dkt. No. 348, Flexer Test. at 137:12-17; Trial Ex. Q.) The credit card statements included an ad for a car loan with CEFCU. NOT A BANK. BETTER along with "CEFCU Your Credit Union." (Trial Ex. Q.) These ads were inserted in the statements about five times between 2009 and 2011. (Dkt. No. 348, Flexer Test. at 137:12-15.)
On December 31, 2008, CEFCU purchased Valley Credit Union in northern California. (Id. at 161:13-19.) In the Spring 2010, CEFCU ran an ad in Scene, a magazine from the East Bay area for Valley Credit Union, a division of CEFCU. (Dkt. No. 348, Flexer Test. at 137:22-138:17; Trial Ex. R.) "Valley Credit Union, a division of CEFCU" is above the tagline (Trial Ex. R-4.) A fourth quarter 2010 Valley Credit Union newsletter was sent to CEFCU members who were members of the former Valley Credit Union in October 2010. (Dkt. No. 348, Flexer Test. at 138:18-139:1; Trial Ex. S.) The newsletter promoted the CEFCU Visa card and included, " (Trial Ex. S-1.)
Because CEFCU had no recognition or meaning outside of central Illinois, and the words "credit" and "union" have some negative connotations, CEFCU decided to rebrand itself around 2010-2011. (Dkt. No. 348, Flexer Test. at 151:17-152:12; 161:20-162:5.) CEFCU wanted to convey from a marketing standpoint that it was a full-service financial institution. (Id. at 162:6-10.) At this time, CEFCU also decided to register CEFCU. NOT A BANK. BETTER. as a trademark because that is...
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