Wells Fargo sued ABD for trademark infringement (undervarious names; the court concluded that the heart of its false advertisingclaim was that ABD’s name was a misrepresentation of affiliation, and thus wasthe same as the trademark claim). TheABD mark was first used by Alburger Basso de Grosz Insurance Services, foundedin 1990, which changed its name to ABD Insurance and Financial Services in1997. In 2007, Wells Fargo bought the company and all its assets, including itsmark. In 2008, Wells Fargo changed its name to Wells Fargo Insurance Services. Wells Fargo didn’t renew its ABDtrademark registrations.
Defendant de Grosz, the son of one of the original foundersof ABD, worked at ABD between 1994 and 1999. In 2011, he learned that the ABDmark had been cancelled and filed an ITU for the mark. He called another defendant, Hetherington,who was then working for Wells Fargo, about his intent to use the mark. “The parties do not agree as to Wells Fargo'sresponse to this call …. Hetherington, having left Wells Fargo in January 2012,joined the new ABD company.” Inmid-2012, between 60 and 75 former Wells Fargo Insurance Services employees joined ABD,allegedly soliciting Wells Fargo customers and using Wells Fargo proprietaryinformation. (There’s a related statesuit alleging claims for breach of the duty of loyalty, intentionalinterference with economic relationships, intentional interference withpotential economic relationships, unfair competition, conspiracy, and breach ofcontract.)
Wells Fargo moved for a preliminary injunction against theuse of the ABD mark. It argued that, in2009, it “chose to focus its use of the ABD brand as secondary to the famousWells Fargo brand” and changed any business material (such as business cards,letterhead, etc.) that used ABD “as the primary or sole entity name.” However,Wells Fargo alleged that the “ABD brand did not disappear,” noting that itsbusiness cards, customer presentations, voicemail systems, and business faxesstill reflected a (secondary) “tie” between Wells Fargo and ABD. It maintained the ABD email domain andredirected traffic from the ABD website to the Wells Fargo website.
Wells Fargo identified evidence of confusion: “four customeremails from July 2012, all containing questions regarding the link (if any)between Wells Fargo and the new ABD company”; an instance in August 2012 inwhich an insurer was confused about whether Wells Fargo or ABD was the brokerof record for one of its customers; and a January 2013 subpoena from a law firmserved on ABD in connection with a state lawsuit, in response to which ABDreturned a Certificate of No Records and explained that it “picked up the [ABD]name but that Wells Fargo had the records.”
Wells Fargo further argued that “even in an industry whereconsumers may be sophisticated and careful decision-makers,” no amount ofconsumer care can prevent confusion between two companies with identical names.
In opposing a preliminary injunction, defendants mostlyargued abandonment, which requires a discontinuation of use with intent not toresume. Even a single use can avoid abandoment, but that use has to be bonafide use of a mark in the ordinary course of trade, not merely token orsporadic usage. The evidence of abandoment:
(1) Wells Fargo formally merged ABDinto Wells Fargo Insurance Services as of January 1, 2009, thereby ending theseparate existence of ABD; (2) Wells Fargo emails and other internal documentsshow that it intended to “retire” the ABD name as of January 1, 2009, and WellsFargo instructed its employees that “the ABD name can no longer be used,” thatany “stationery, brochures, and other sales materials” bearing the ABD nameshould be recycled, and that the ABD name should be removed from voicemailmessages and email signatures; (3) Wells Fargo did not renew the federal trademarkregistration for the “ABD” mark; and (4) Wells Fargo did not maintain the “ABD”trade name with the California Department of Insurance, and was thereforeprevented from offering insurance services in California under the name “ABD.”
The court noted that the formalities of registration andmaintenance weren’t as important as actual use. And while the internaldocuments showed a clear intent to stop using ABD, abandonment requires actualcessation of use, not just an intent to cease use. Wells Fargo argued that, even after January2009, it continued to use the ABD name on “business cards, customerpresentations, ‘broker of record’ letters, payment processing, voicemailmessaging systems, and even business faxes.”
But a closer look at these materials wasn’t very helpful toWells Fargo. While “ABD Insurance andFinancial Services–A Wells Fargo Company” appeared as a footer on somepresentations, it was accompanied by ABD’s expired California licensenumber. This suggested that the footerwas a mere remnant from before 2009; at that point, Wells Fargo had no right tooffer insurance services using that license. Another presentation mentioned ABDonly as part of customer testimonials; the presentation was from March 2010,but there was no evidence about when the testimonials were given. ABD waslikewise mentioned “in an historical context” in other presentations, e.g., “WellsFargo Insurance Services USA, Inc. (formerly ABD Insurance & FinancialServices) is now ranked ...” Similarly,the business card Wells Fargo submitted contained an outdated license number,address, phone number, and email address, and the solicitation emails sent byits employees mentioned ABD in the context of the Wells Fargo acquisition.
Wells Fargo also maintained domain name registrationscontaining ABD, and used ABD and related terms as keywords in its metatags. Italso submitted correspondence and checks from customers using the ABD name;Wells Fargo continued accepting such checks into 2012. (I’d be surprised if Wells Fargo turned manychecks away.) Declarations fromemployees also (identically) stated that “[m]any clients and the marketplacecontinue to associate Wells Fargo's Bay Area insurance brokerage business withthe ABD name and the ABD business.”
The key issue was whether these post-2009 uses were “bonafide” use in trade. The court concludedthat, at least for purposes of meeting the heavy burden required for apreliminary injunction, Wells Fargo hadn’t shown it was likely to succeed onthis argument. The court was persuaded by Cascade Financial Corp. v. IssaquahCommunity Bank, 2007 WL 2871981 (W.D.Wash. Sept. 27, 2007), involving a bankthat rebranded from Issaquah to Cascade but continued to process Issaquahwithdrawal slips and checks, maintained Issaquah domain names, and advertisedusing Issaquah. In Cascade, the court found that defendants were likely to succeed ontheir abandonment defense, particularly given that Cascade had “takenaffirmative steps to encourage its customers to stop using the Issaquah Bankname.”
There were striking similarities to this case, in whichWells Fargo tried to rebrand ABD. “LikeWells Fargo, Cascade did not maintain the corporate status of the company thatit acquired, instead choosing to operate its business under one name. Like WellsFargo, Cascade maintained the domain names of its acquired company, butredirected website traffic to its own website. And like Wells Fargo, Cascadecontinued to accept documents bearing the acquired company's name from itscustomers.” Wells Fargo’s post-2009users were either residual or in the context of historical background, not usesin the ordinary course of trade.
The court also analyzed the evidence of actual confusion.The customer emails were immediately after the launch of the new ABD website,not evidence of continuing confusion. As for the subpoena, that doesn’t showordinary consumer confusion, but rather a mistake about the possession ofcertain corporate records. “While thismay be some evidence of confusion, it is certainly not evidence of consumerconfusion.”
This also bore on the degree of care exercised bypurchasers. Defendants argued that theirbusiness was relationship-driven and offered declarations from two customersstating that they chose ABD based on their relationships with brokers who leftWells Fargo for ABD and weren’t confused. “Insurance brokerage is not an industry where customers make purchaseson a whim, and can be easily fooled by the name of a company.” One unsolicited email, for example, came froma customer to one of the Wells Fargo-to-ABD employees. The customer learned that the broker had leftWells Fargo and sent an email to his personal email address, expressing adesire to “explore what to do and determine what's in the best interest of ourplans.” The customer noted that “Wells Fargo is anxious to keep our business,”but made clear that he “value[d]” the ABD people “much more as individuals thanas Wells Fargo employees.” It might wellbe true that Wells Fargo lost many customers to ABD. But that wasn’t evidence of losses due to confusion.
As for intent, which Wells Fargo contended was strongly inits favor, the court noted that “it does seem clear that defendants chose themark to signal some sort of link with the original ABD company, and not merelyas a way to ‘honor their fathers and their legacies.’” But Wells Fargo put toomuch weight on this factor and on its employees’ alleged betrayal. Itsallegations were far more relevant to its state court lawsuit. Because Wells Fargo didn’t show any examplesof consumer confusion after mid-2012 (I believe the court made a typo here andhave corrected it to be consistent with the rest of the opinion), and becausecustomers were likely to exercise a high degree of care, the Sleekcraft factors weren’t decisively inits favor despite ABD’s bad intent. (Anoutlier, per Barton Beebe, whose empirical research found a bad intent findinghighly correlated with a plaintiff victory.)
Confusion and degree of care was also directly relevant tothe (un)likelihood of irreparable harm. “The fact that all cited examples ofconsumer confusion occurred in the weeks immediately following ABD's launchfurther supports a finding of no irreparable harm. To the extent that WellsFargo was harmed by any confusion that occurred in those weeks, such harm canbe remedied by monetary damages.” Injunction denied.
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