Financial Institutions Face Huge Legal Risks When Rebranding

Financial institutions pay big bucks for branding projects. But if you aren't aware of the trademark risks, you could wind up in court mired in an expensive lawsuit.

For every brilliant financial marketing idea, be it a new name or a “sonic trademark,” there’s just one problem: Someone else might have thought of it first.

And more than likely, especially if they have made their ownership official, they won’t want to share it.

“There’s a reason only one company makes women’s shoes with contrasting red soles.”

In fact, they’ll want you to stop using it, trash whatever assets you developed containing it and, quite possibly, recompense them for perceived damages to their brand.

Are you reaching for your bottle of calcium carbonate tablets yet? (We hesitate to use a brand name here.)

The annals of financial marketing are full of such cases, the parties involved ranging from industry giants to much smaller institutions.

And there’s also the other possibility — maybe it’s your own financial institution’s name, logo, color scheme, etc., that someone else has appropriated.

He Who Steals My Brand Steals My Business

Federal trademark cases filed of all kinds averaged around 4,500 annually from 2009-2018, according to figures from Lex Machina. Generally cases dealing with trademarks are filed under the federal Lanham Act, though other statutes may become involved. Lex Machina indicates that three out of five cases filed are settled.

Financial brands typically aren’t among the top ten types of plaintiffs. That’s in part because some other types of businesses spawn many filings. For example, some consumer brands may file large numbers of cases in a year to battle constant attempts to ride their coattails. There’s a reason only one company makes women’s shoes with contrasting red soles.

However, financial brands are constantly defending their trademarks, and more of this can be expected as new entrants come into banking, organizations merge and seek new names for their combined operations, and others seek trendier corporate names than “First National Bank of …”

All Kinds of Ways to Stir Up Trademark Trouble in Banking and Finance

When Mastercard eliminated the lettering from its logo, in favor of just its longstanding intersecting circles, and also adopted an audible trademark, this underscored the investment a brand can feel it has in simple but identifiable things. Marketing executives at Nabisco years ago gave entire speeches about the “three little notes” that meant “Na-bis-co,” and the extra brand value of the “ting!” added later.

Banking trademark issues have arisen from causes all over the lot. Here are some examples.

• True concerns— Shortly after BB&T and SunTrust announced that the name of their merged organizations would be “Truist,” their pick was challenged by Truliant Federal Credit Union. Chartered in 1952, Truliant has held its current name since 1999 and filed suit to kill the Truist name as too close to its own. The credit union seeks both compensatory and punitive damages.

Read More: Truist Bank: Colossal Rebranding Misstep? Or Long-Term Winner?

• Getting in Facebook’s face— When Facebook and others announced intentions to launch the Libra cryptocurrency and the Calibra digital wallet, it also unveiled a logo for the wallet. Its resemblance to the logo for Current, a savings app and debit card initially for teens but now billed as the “modern bank for all,” led the fintech to protest the resemblance.

Fintech Facebook logo lawsuit

“This is a funny way to try and create trust in a new global financial system – by ripping off another fintech firm,” Stuart Sopp, Current CEO, told CNBC when Facebook announced Calibra.

• Let’s be Prudential. Prudential Insurance Co. of America and Prudential Bank tussled over both the “Prudential” and similar blue and white color schemes. The bank started as Prudential Savings Association in 1886, became Prudential Savings Bank in 2003 after a charter change, and finally Prudential Bank in 2017 after another charter change. Further complicating things, the N.J.-based insurance company, founded over 140 years ago, owns Prudential Bank & Trust in Connecticut.

• Erica versus E.R.I.C.A. Bank of America’s virtual digital assistant, Erica — derived from “America” — launched in June 2018. Not long afterward the trademark was challenged by the creator of a virtual news anchor named E.R.I.C.A. that later evolved into additional roles. (The acronym stands for Electronic Repetitious Informational Clone Application.) BofA held a federal trademark, whereas E.R.I.C.A.’s creator only held a state-level registration in one state.

Bank of America ERIKA lawsuit

The trademark for Bank of America’s virtual assistant, Erica, has been challenged by the developer of the virtual news reader and avator E.R.I.C.A.

• A thankless case. In a matter since dropped, Citigroup sued AT&T Inc. over the telecom’s use of the words “thanks” and “AT&T thanks” in a customer loyalty program. The basis of the suit was the financial company’s trademark on the use of the combined word “thankyou”. Citi dated its use of the term to the late 1990s when it offered the AT&T Universal Card, and had since expanded it to other loyalty programs.

• Protecting your slogan. San Diego County Credit Union and Citizens Equity First Credit Union, of Peoria, Ill., have been scrapping in court over their mottoes. San Diego County’s is “It’s not big bank banking. It’s better.” Citizens Equity’s is “CEFCU. Not a bank. Better.” CEFCU petitioned the U.S. Patent and Trademark Office to cancel the California institution’s trademark. The latter sought a court ruling that it wasn’t infringing on CEFCU’s slogan, and CEFCU filed a counter suit.

San Diego County Credit Union DCFCU lawsuit

• Staking a claim to a conceptual name. Second-cousin to slogans are marketing descriptions. One example is the term “Green Branch,” which PNC Financial registered in 2008. The institution got about the green offices trend early, and wanted to make a point about it.

• Claims of a different color. While PNC secured “Green Branch,” as recounted in The Financial Brand article cited above, the institution had trouble around the same time with a different color: orange. Back in 2008 PNC launched its Virtual Wallet, using the color orange and orange ball designs. ING Direct sued to protect its own orange-ball themed motifs. About three years later, the matter was moot, with Capital One acquiring ING Direct. Today, the direct bank’s home page doesn’t have a trace of orange.

• Hard lessons learned about trademark law. As recounted in a story on this website, Ohio Valley National Bank was known for years as “OV.” For over 100 years, no one challenged its name. But in the mid-1990s a state-chartered area competitor adopted the name “Ohio Valley Bank.” What this bank did, though, was file for trademark protection. The “original” didn’t contest the application and after five years the other bank received approval — and thereby the rights to the name.

As The Financial Brand wrote at the time, “This is a cautionary tale to all those financial institutions who erroneously presumed they safely owned their trademarks — forever. Wrong. Just because you’ve had your name for 100+ years doesn’t mean anything — even from the U.S. Patent and Trademark Office’s perspective.”

Do Your Due Diligence or Don’t Try a New Name

It’s actually surprising that in an industry with so many rules and a record of sameness that there aren’t more cases of institutions butting heads over names, looks, and more.

“It’s next to impossible to find a name that ‘sounds financial’ that won’t expose you to a potential lawsuit.”

The files of The Financial Brand have strong examples of cases where due diligence just didn’t seem to go far enough.

As one story advised, “It’s next to impossible to find a name that ‘sounds financial’ that won’t expose you to a potential lawsuit. Most of the names people naturally think of are already being use somewhere by someone.”

In one notable case, a federal judge’s punishment included an order that the infringing company buy “negative keywords” on Google and other services. This would prevent the offending company from having its brand come up in certain searches. The firm also had to pay to promote the winner’s links.

Unusual, but as the article stated, “Can you imagine having to pay to show your competitor’s ad every time someone did a Google search for your name?” It’s best to hope for an unimaginative judge.

Multiple types of damages can be assessed in court, depending on what the plaintiff is seeking and what the defendant has done. The idea, of course, is to avoid getting there in the first place.

Searches, typically by an attorney specializing in trademarks, are a key element of the due diligence, before something is submitted for registration to the U.S. Patent and Trademark Office. There are multiple ways to search federal registrations and there are also state-level databases that need to be checked. The process isn’t completely scientific, because there are gray areas. As explained in “Protecting Your Trademark: Enhancing Your Rights Through Federal Registration,” a government handbook:

“The most common reason to refuse registration is a ‘likelihood of confusion’ between the mark of the applicant and a mark already registered or in a prior filed pending application owned by another party. The USPTO determines that a likelihood of confusion exists when both (1) the marks are similar, and (2) the goods and/or services of the parties are related such that consumers would mistakenly believe they come from the same source. Similar marks or related goods/services by themselves are not enough to support a finding of a likelihood of confusion, unless a court has held that the mark is actually a famous mark. That is, generally two identical marks can co-exist, so long as the goods and services are not related.”

Some years back, a financial institution promoted a credit product called The Equalizer, and was allowed to do so even though there were numerous other brands that used the term. The key was that it didn’t compete with any of them, including a TV detective show.

Read More: How To: Brand Books For Retail Financial Institutions

Being Plain and Unimaginative Won’t Save You

The USPTO guide also cautions brands against what might colloquially be called “obviosities.” Sometimes plain labels, in a business that often tends towards commodity services, can make for inferior branding.

“Applicants often choose (frequently at the suggestion of marketing professionals) descriptive [trade]marks for their goods and/or services, believing that such marks reduce the need for expensive consumer education and advertising because consumers can immediately identify the product or services being offered directly from the mark,” the guidebook states. “This approach, while perhaps logical marketing advice, often leads to marks that cannot be easily protected.”

The more generic a trademark is, in other words, the weaker it will prove. While it is not required to register a name or other asset to use it, registration brings multiple advantages when it comes to defending the right to use a given name. Of course, once approved, that includes being in the federal database when a potential competitor does their own search. “Common law” trademarks, which aren’t registered, can be established by use, but recall the experience of the Ohio bank recounted earlier.

Note that USPTO is not an enforcement agency. Should you have to defend your brand, you’ll be headed towards court or engaging in an out-of-court settlement.

Which brings up a point made in Credit Union Times by Marc Whitfield, partner at Taylor Porter, who has been involved in credit union trademark cases: “Trademark law’s a bit unusual. It puts a burden upon the trademark owner that kind of essentially says that if you do not go out and police your trademark — and that means stopping everybody that you see coming along, or at least acting in a reasonable manner to stop everyone who’s coming along who starts to use very similar trademarks — if you don’t police it, then you will lose it and will find that it’s kind of fallen into the public domain.”

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