The state vs. federal trademark issue is one that commonly confuses most financial marketers, leaving many of them improperly protected.

In essentially every aspect of the judicial system, federal law will trump state law. If you have a federally-registered trademark through the USPTO, you are pretty much entitled to exclusive use that trademark in the US (there are some limitations and restrictions that apply).

Hypothetical: A tiny credit union in California chooses “Awesome Financial” as its name and quickly gets a USPTO trademark. Then a few years later, some big bank in New York with billions of dollars in assets also changes names to “Awesome Financial.” Now, whenever someone searches Google for “Awesome Financial,” the credit union gets pushed wayyy back in the results. That isn’t fair, is it? The NY bank is depriving the CA credit union of business it could be getting via Google searches. At the very least, the NY bank is undermining the CA credit union’s search engine marketing efforts.

In this internet-based society where everything is available to everyone through Google, a state-level trademark doesn’t really cut it anymore. The USPTO is almost always a good idea.

I have always trademarked bank names, taglines, and some product names at the state level. In fact, I had “Customer First Service” trademarked for a bank in one state (but only in that state) many years ago (about 18). And, it has been renewed since then. So no one can use it in that state, but wouldn’t see why it couldn’t be used in other states.

What am I missing?

This naming strategy usually stems from one or more of the following reasons:
The acquired brand has significant equity.
The two organizations are concerned what might happen if one of the brands disappears (consumer confidence vs. confusion).
Fewer customers will defect if their brand is retained instead of immediately phased away.
The two organizations are similarly sized and want to blend brands.
The acquiring organization needed to promise the CEO/Board of the acquired company that it would retain the brand as a condition of the deal.

In the New Century/Customers1st situation, I don’t think any of those reasons apply. They are probably assuming this is the least-disruptive option to move forward with. But I think the word “USA” just happened to come along at a time when people inside New Century/Customers 1st had names on their brains. Had New Century acquired another bank, who knows what their name could be today.

What happened to New Century is the same thing that happened to no fewer than four separate Heritage Community Banks in New Jersey, South Carolina, Tennessee and Missouri after 60 Minutes did a blow-by-blow story on the FDIC’s seizure of a Heritage Community Bank in Chicago.

Any financial institution using words from either of the following two articles in its name could be at risk of facing (1) brand confusion by consumers and the media, (2) trademark legal issues, and (3) a less distinct brand.
http://thefinancialbrand.com/605/1000-free-financial-names/
http://thefinancialbrand.com/293/most-common-words-in-credit-union-names/

I also imagine that the Board isn’t too thrilled with management right now, and it probably isn’t the $1 million that they are upset about. Same thing goes for shareholders. It would be very interesting to sit in on the next shareholders meeting. I expect it won’t be pretty.

Regarding your comment on customer communications about the name change, the 60-page PDF summarizes what New Century did, and none of it sounds very strategic. The willy-nilly approach included a terse email, “We are now Customers1st,” some vinyl wraps around their exterior signs and changes to the website.

Initially, New Century had planned for an August rollout, timed to take place after shareholders approved “Customers1st.” But the recent failure of yet another “New Century” sent the bank into a tizzy; they made rash decisions. As the judge suggests, New Century’s actions were hasty, precipitous and impetuous. One could probably go further and call it a reckless, self-defeating disregard for trademark law.

There’s really no other way to describe this than a colossal f-up. It was entirely avoidable. A little patience and a dash of due-diligence would have seen this situation resolve itself with a much different conclusion.

In trying to protect its brand from negative perceptions, it sounds like New Century got exactly what it was trying to avoid. Now, does the management team adopt an entirely new name, or just revert back to the New Century name?