Wells Fargo & Company, et al v. ABD Insurance & Financial Serv, et al

Filing

Filed ORDERS FOR PUBLICATION AND OPINION (MICHAEL DALY HAWKINS, RONALD M. GOULD and RICHARD A. PAEZ) ORDER 1 -The order for publication filed on March 3, 2014, is withdrawn, and replaced with the order for publication attached herein. ORDER 2- The mandate issued in this case is withdrawn. Stoel Rives request for publication is GRANTED, and the Memorandum Disposition issued on December 20, 2013 and amended by order on February 6, 2014, is withdrawn. The withdrawn memorandum disposition is replaced and superseded by the attached opinion. (Judge: RMG Authoring) REVERSED AND REMANDED. [9011645]

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 1 of 11

FILED
FOR PUBLICATION
UNITED STATES COURT OF APPEALS

MAR 11 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

WELLS FARGO & COMPANY; WELLS
FARGO INSURANCE SERVICES USA,
INC.,
Plaintiffs - Appellants,

No. 13-15625
D.C. No. 4:12-cv-03856-PJH
Northern District of California,
Oakland

v.
ORDER
ABD INSURANCE & FINANCIAL
SERVICES, INC., FKA Insurance
Leadership Network, Inc.; KURT DE
GROSZ; BRIAN HETHERINGTON,
Defendants - Appellees.

Before: HAWKINS, GOULD, and PAEZ, Circuit Judges.
The order for publication filed on March 3, 2014, is withdrawn, and replaced
with the order for publication attached herein.

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 2 of 11

FILED
MAR 11 2014

FOR PUBLICATION
UNITED STATES COURT OF APPEALS

MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

WELLS FARGO & COMPANY; WELLS
FARGO INSURANCE SERVICES USA,
INC.,
Plaintiffs - Appellants,

No. 13-15625
D.C. No. 4:12-cv-03856-PJH
Northern District of California,
Oakland

v.
ORDER
ABD INSURANCE & FINANCIAL
SERVICES, INC., FKA Insurance
Leadership Network, Inc.; KURT DE
GROSZ; BRIAN HETHERINGTON,
Defendants - Appellees.

Before: HAWKINS, GOULD, and PAEZ, Circuit Judges.
The mandate issued in this case is withdrawn. Stoel Rives’ request for
publication is GRANTED, and the Memorandum Disposition issued on December
20, 2013 and amended by order on February 6, 2014, is withdrawn. The
withdrawn memorandum disposition is replaced and superseded by the attached
opinion.

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 3 of 11

FILED
FOR PUBLICATION
UNITED STATES COURT OF APPEALS

MAR 11 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

WELLS FARGO & COMPANY; WELLS
FARGO INSURANCE SERVICES USA,
INC.,

No. 13-15625
D.C. No. 4:12-cv-03856-PJH

Plaintiffs - Appellants,
OPINION
v.
ABD INSURANCE & FINANCIAL
SERVICES, INC., FKA Insurance
Leadership Network, Inc.; KURT DE
GROSZ; BRIAN HETHERINGTON,
Defendants - Appellees.

Appeal from the United States District Court
for the Northern District of California
Phyllis J. Hamilton, District Judge, Presiding
Argued and Submitted December 2, 2013
San Francisco, California
Before: HAWKINS, GOULD, and PAEZ, Circuit Judges.
Opinion by Judge GOULD
GOULD, Circuit Judge:
Appellants Wells Fargo & Co. et al. (“Wells Fargo”) bring this case against
Appellees ABD Insurance and Financial Services et al. (“New ABD”) arguing that

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 4 of 11

the district court abused its discretion when it denied Wells Fargo’s motion for
preliminary injunction. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we
reverse the district court’s order and remand the case for reconsideration of the
motion for preliminary injunction consistent with this opinion.
Wells Fargo acquired the original ABD Insurance and Financial Services
(“Former ABD”) in 2007, at which point hundreds of Former ABD employees
joined Wells Fargo offices. In 2008, Wells Fargo changed the name of ABD to
“Wells Fargo Insurance Services,” but continued to display the Former ABD mark
on customer presentations and solicitations, to maintain the abdi.com website and
metatags, and to accept customer payments made to ABD. However, members of
the Former ABD left Wells Fargo in 2009 and created a new insurance and
financial services company called Insurance Leadership Network, Inc. (“ILN”).
Those members then used ILN to launch New ABD in June or July 2012, using the
exact same name as Former ABD, when they learned that Wells Fargo had not
renewed the registration of the Former ABD mark. Wells Fargo filed suit against
New ABD on July 24, 2012 asserting trademark, false affiliation and
advertisement, and unfair competition claims. Wells Fargo filed a motion for a
preliminary injunction on January 16, 2013. The district court denied that motion
by order of March 8, 2013.
2

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 5 of 11

The district court’s denial of preliminary injunctive relief is reviewed for an
abuse of discretion. Brookfield Comms., Inc. v. West Coast Entm’t Corp., 174 F.3d
1036, 1045–46 (9th Cir. 1999). “‘A district court would necessarily abuse its
discretion if it based its ruling on an erroneous view of the law,’ Cooter & Gell v.
Hartmarx Corp., 496 U.S. 384, 405 (1990), so we review the underlying legal
issues de novo.” Brookfield Comms., 174 F.3d at 1046 (citations omitted).
A plaintiff seeking a preliminary injunction must establish: (1) a likelihood
of success on the merits, (2) that the plaintiff will likely suffer irreparable harm in
the absence of preliminary relief, (3) that the balance of equities tip in its favor,
and (4) that the public interest favors an injunction. Winter v. N.R.D.C., Inc., 555
U.S. 7, 20 (2008). We agree with Wells Fargo that the district court erred in its
view of the applicable law and therefore abused its discretion in its analysis of the
first element, the likelihood of success on the merits.
First, the district court abused its discretion when it did not separately
consider the false advertisement claim. The district court included that claim in its
trademark infringement analysis because it found false advertisement to be
“derivative of Wells Fargo’s trademark infringement claim.” However, the two
claims are distinct and require the application of separate tests. To succeed on a
false advertisement claim under Lanham Act § 43(a), a plaintiff must prove:
3

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 6 of 11

(1) a false statement of fact by the defendant in a commercial
advertisement about its own or another’s product; (2) the statement
actually deceived or has the tendency to deceive a substantial segment
of its audience; (3) the deception is material, in that it is likely to
influence the purchasing decision; (4) the defendant caused its false
statement to enter interstate commerce; and (5) the plaintiff has been
or is likely to be injured as a result of the false statement, either by
direct diversion of sales from itself to defendant or by lessening of the
goodwill associated with its products.

Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997)
(citations omitted). The false advertisement test requires a plaintiff to show all five
elements. Id. By contrast, a claim for trademark infringement requires only two
elements: (1) ownership of a trademark, and (2) that the plaintiff show a likelihood
of confusion through the balancing of eight factors. Rearden LLC v. Rearden
Commerce, Inc., 683 F.3d 1190, 1202 (9th Cir. 2012). These tests are distinct, and
the district court abused its discretion when it did not separately consider the false
advertisement claim.
The district court also abused its discretion by misapplying the law in its
abandonment analysis when it considered evidence of prospective intent to
abandon the mark to determine whether Wells Fargo’s uses were bona fide and in
the ordinary course of business. To prove abandonment of a mark as a defense to a
claim of trademark infringement, a defendant must show that there was: “(1)

4

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 7 of 11

discontinuance of trademark use and (2) intent not to resume such use.” Electro
Source, LLC v. Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 935 (9th Cir. 2006).
The phrase “trademark use” means “the bona fide use of a mark in the ordinary
course of trade, and not merely to reserve a right in a mark.” Id. at 936 (quoting 15
U.S.C. §1127). Even a “single instance of use is sufficient against a claim of
abandonment of a mark if such use is made in good faith.” Carter-Wallace, Inc. v.
Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir. 1970). All bona fide uses in
the ordinary course of business must cease before a mark is deemed abandoned.
We have said that “unless the trademark use is actually terminated, the intent
not to resume use prong of abandonment does not come into play.” Electro
Source, 458 F.3d at 937–38. “[A] prospective intent to abandon says nothing
about whether use of the mark has been discontinued.” Id. at 937.
The district court held that Wells Fargo abandoned the ABD mark,
reasoning that Wells Fargo’s continued uses of the ABD mark were not bona fide
and in the ordinary course of trade because such uses were “residual . . . or in the
context of a historical background” given Wells Fargo’s rebranding efforts. The
district court’s abandonment findings were flawed for two significant reasons.
First, prospective intent to abandon is not properly considered when examining
whether bona fide uses of the mark in the ordinary course of business have ceased,
5

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 8 of 11

and the district court erred when it considered Wells Fargo’s intent to rebrand
ABD in that context. Second, the district court misconstrued the breadth of uses
included within the scope of a “bona fide use in the ordinary course of trade.”
Courts must consider the totality of the circumstances surrounding the use, and
“even a declining business retains, may benefit from, or may continue to build its
goodwill until it shuts its doors or ceases use of its marks.” Id. at 938. In this case,
Wells Fargo continued to use the mark in several ways, most notably in customer
presentations and solicitations. Such uses demonstrate Wells Fargo’s business
calculation that it could continue to benefit from the goodwill and mark
recognition associated with ABD, and we conclude that Wells Fargo continued its
bona fide use of the mark in the ordinary course of business through these uses.
Thus, the district court erred by concluding that Wells Fargo abandoned the ABD
mark, contrary to the principles of Electro Source.
Finally, at the preliminary injunction stage, evidence of actual confusion is
of diminished importance when a court examines the likelihood of confusion for a
trademark infringement claim. Network Automation, Inc. v. Advanced Sys.
Concepts, 638 F.3d 1137, 1151 (9th Cir. 2011) (“[W]hile [actual confusion] is a
relevant factor for determining the likelihood of confusion . . . its importance is
diminished at the preliminary injunction stage of the proceedings.”). Because a
6

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 9 of 11

motion for preliminary injunction normally occurs early in litigation, at that point
parties rarely have amassed significant evidence of actual confusion. Id. For that
reason, while actual confusion is a critical factor in a full likelihood of confusion
analysis, it is less important at the preliminary injunction stage, and we caution
against resting a finding of the likelihood of success of a trademark infringement
claim on that factor.
We also note that although the district court did not abuse its discretion by
omitting consideration of the false affiliation claim because it was not properly
raised below, we see no reason why that claim cannot be raised on remand and
therefore hold that Wells Fargo can address any false affiliation claims it has in
further proceedings consistent with this opinion. We further note that the district
court determined that Wells Fargo failed to establish that it would likely suffer
irreparable harm if a preliminary injunction did not issue. In light of our recent
decision in Herb Reed Enterprises, LLC v. Florida Entertainment Management,
Inc., 736 F.3d 1239 (9th Cir. 2013), we decline to address this issue. Because
neither the district court nor the parties had the benefit of Reed, the district court
should revisit the issue of irreparable harm on remand. See id. at 1250 ("Evidence
of loss of control over business reputation and damage to goodwill could constitute
irreparable harm.").
7

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 10 of 11

For the reasons stated above, we conclude that the district court abused its
discretion in its analysis of Wells Fargo’s likelihood of success on the merits of its
claims, and we reverse the district court’s order and remand for reconsideration
and further proceedings.
REVERSED and REMANDED.

8

Case: 13-15625

03/11/2014

ID: 9011645

DktEntry: 41-1

Page: 11 of 11

COUNSEL
Kevin D. Rising (argued) and Stephen R. Mick, Barnes & Thornburg LLP,
Los Angeles, California, Felicia J. Boyd, Barnes & Thornburg LLP, Minneapolis,
Minnesota, for appellants Wells Fargo & Co. et al.
Benjamin K. Riley (argued), Kerry L. Duff, and Jayne Laiprasert, Bartko,
Zankel, Bunzel & Miller, San Francisco, California, for appellees ABD Insurance
& Financial Services, Inc. et al.

9