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

Filing 85

ORDER denying motion for preliminary injunction. Signed by Judge Hamilton on 03/08/2013. (pjhlc2, COURT STAFF) (Filed on 3/8/2013)

1
2
UNITED STATES DISTRICT COURT
3
NORTHERN DISTRICT OF CALIFORNIA
4
5
6
WELLS FARGO AND CO., et al.,
7
Plaintiffs,

No. C 12-3856 PJH

8
v.

ORDER DENYING MOTION FOR
PRELIMINARY INJUNCTION

9
ABD INSURANCE AND FINANCIAL
SERVICES, et al.,

11
For the Northern District of California

United States District Court

10

Defendants.
_______________________________/

12
13

Before the court is plaintiffs’ motion for preliminary injunction. Having read the

14

parties’ papers and carefully considered their arguments, and the relevant legal authority,

15

the court DENIES plaintiffs’ motion as follows.

16
17

BACKGROUND
Plaintiffs Wells Fargo & Co. and Wells Fargo Insurance Services (“Wells Fargo” or

18

“plaintiffs”) bring this lawsuit against defendants ABD Insurance & Financial Services (doing

19

business as “The ABD Team”), Kurt de Grosz, and Brian Hetherington (collectively, “ABD”

20

or “defendants”) arising out of the alleged misappropriation of the “ABD” name and

21

trademark. Wells Fargo asserts five causes of action against ABD: (1) violation of the

22

Lanham Act for infringing Wells Fargo’s “ABD” trademark rights and associated

23

marketplace confusion; (2) violation of the Lanham Act for false and misleading

24

descriptions of fact in connection with advertising of ABD; (3) common law trademark

25

infringement based on use of the “ABD” mark; (4) unfair competition under California

26

Business & Professions Code section 17200 for ABD’s use of the “ABD” mark and

27

misrepresentation of a common identity with Wells Fargo; and (5) false advertising under

28

California Business & Professions Code section 17500 for false and misleading

1

descriptions of fact in connection with ABD’s advertising or promotion.

Services, which was founded in 1990, and which changed its name to “ABD Insurance and

4

Financial Services” in 1997. In 2007, Wells Fargo acquired the company and all of its

5

assets, including the “ABD” mark. In 2008, Wells Fargo changed the name of the “ABD”

6

company to “Wells Fargo Insurance Services.” The parties dispute to what extent Wells

7

Fargo continued to use the “ABD” name after this name change; Wells Fargo claims that it

8

continued to use the name with customers and potential customers, while ABD claims that

9

Wells Fargo stopped using the “ABD” name for all relevant purposes. Regardless, it does

10

appear that Wells Fargo did not keep its trademark registrations current with regard to the

11
For the Northern District of California

The “ABD” mark was first used by the company Alburger Basso de Grosz Insurance

3

United States District Court

2

“ABD” mark.

12

Defendant de Grosz, the son of one of the original founders of ABD, worked at ABD

13

between 1994 and 1999 (before it was acquired by Wells Fargo). In 2011, he learned that

14

the “ABD” mark had been cancelled, and that Wells Fargo had not yet renewed the mark.

15

In October 2011, de Grosz filed an “intent to use” the “ABD” mark, and placed a call to

16

defendant Hetherington (who was then working for Wells Fargo Insurance Services)

17

regarding his intent to use the “ABD” mark. The parties do not agree as to Wells Fargo’s

18

response to this call, but in any case, in June or July 2012, de Grosz filed a notice of

19

intention to do business under the “ABD” name. Hetherington, having left Wells Fargo in

20

January 2012, joined the new ABD company. On July 17, 2012, Wells Fargo sent a

21

demand letter to de Grosz, asking that he abandon the pending trademark application, and

22

putting him on notice of the claims asserted in this suit. After sending the letter, Wells

23

Fargo also noticed that defendants were actively doing business under the “ABD” name,

24

and that they had been operating a website and a LinkedIn site using that name. In late

25

July 2012, approximately 75 former employees of Wells Fargo Insurance Services joined

26

ABD. Wells Fargo claims that ABD has been using these employees to solicit Wells Fargo

27

customers and to use Wells Fargo proprietary information.

28

Wells Fargo filed this suit on July 24, 2012. On July 31, 2012, Wells Fargo filed an
2

1

action in state court against six former employees of Wells Fargo Insurance Services who

2

joined ABD, alleging claims for breach of the duty of loyalty, intentional interference with

3

economic relationships, intentional interference with potential economic relationships, unfair

4

competition, conspiracy, and breach of contract. In this suit, Wells Fargo contends that

5

ABD is creating confusion in the marketplace by using the “ABD” mark and by recruiting

6

former Wells Fargo employees. On November 30, 2012, Wells Fargo filed this motion for

7

preliminary injunction.

8
9

DISCUSSION
A.

Legal Standard
A plaintiff seeking a preliminary injunction must establish that it is likely to succeed

11
For the Northern District of California

United States District Court

10

on the merits, that it is likely to suffer irreparable harm in the absence of preliminary relief,

12

that the balance of equities tips in its favor, and that an injunction is in the public interest.

13

Winter v. Natural Resources Defense Council, Inc., 55 U.S. 7, 20 (2008).

14

Alternatively, the plaintiff may demonstrate that serious questions going to the merits

15

were raised and that the balance of hardships tips sharply in the plaintiff's favor, “so long

16

as the plaintiff also shows that there is a likelihood of irreparable injury and that the

17

injunction is in the public interest.” Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127,

18

1135 (9th Cir. 2011). A “serious question” is one on which the plaintiff has “a fair chance of

19

success on the merits.” Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415,

20

1421 (9th Cir. 1984).

21

An injunction is a matter of equitable discretion and is “an extraordinary remedy that

22

may only be awarded upon a clear showing that the plaintiff is entitled to such relief.”

23

Winter, 55 U.S. at 22.

24

B.

25

Plaintiffs’ motion
Wells Fargo’s motion centers around two main themes: (1) its own use of the “ABD”

26

mark after acquiring ABD Insurance and Financial Services in 2007; and (2) the allegedly

27

bad behavior of defendants in plotting to “appropriate” the “ABD” name and in recruiting

28

Wells Fargo employees to join defendants’ company. For reasons that will be discussed
3

1

more fully below, for the purposes of this motion, the court will focus on the first category;

2

namely, Wells Fargo’s use of the “ABD” mark.

3

Wells Fargo starts by explaining that it purchased ABD in 2007, “lock, stock, and

4

barrel,” which included the ABD name, its intellectual property, and all goodwill in the ABD

5

brand. Wells Fargo claims that the latter was “conservatively” allocated at $270 million.

6

After the purchase, Wells Fargo “continued to operate the ABD business as ABD” until

7

2009, when it “chose to focus its use of the ABD brand as secondary to the famous Wells

8

Fargo brand.” Wells Fargo changed the corporate name of ABD to “Wells Fargo Insurance

9

Services,” and changed any business material (such as business cards, letterhead, etc.)
that used ABD “as the primary or sole entity name.” However, Wells Fargo claims that the

11
For the Northern District of California

United States District Court

10

“ABD brand did not disappear,” noting that its business cards, customer presentations,

12

voicemail systems, and business faxes still reflected a “tie” between Wells Fargo and ABD

13

(presumably, ABD was mentioned as a secondary name, as Wells Fargo has already

14

stated that “ABD” was not used as the primary or sole entity name on any materials). Wells

15

Fargo also maintains the ABD email domain, and redirects traffic from the ABD website to

16

the Wells Fargo website.

17

After setting forth the factual background, Wells Fargo argues that all four of the

18

Winter factors are met here, justifying a preliminary injunction against defendants,

19

preventing them from continuing to use the “ABD” mark. Wells Fargo focuses its attention

20

on the first Winter factor, the likelihood of success on the merits. While Wells Fargo argues

21

that it is likely to succeed on each of its Lanham Act claims (for trademark infringement and

22

false advertising), as well as its common law trademark and state law claims, the court will

23

first address the Lanham Act trademark infringement claim.

24

Section 43(a) of the Lanham Act prohibits any person from using “any word, term,

25

name, symbol, or device, or any combination thereof,” which is “likely to cause confusion,

26

or to cause mistake, or to deceive as to the affiliation, connection, or association of such

27

person with another person, or as to the origin, sponsorship, or approval of his or her

28

goods, services, or commercial activities by another person.” 15 U.S.C. § 1125(a)(1). In
4

1

order to prevail on its claim for trademark infringement under the Lanham Act, Wells Fargo

2

must show that (1) it owns a valid trademark and (2) defendants’ use of the mark is likely to

3

cause confusion, mistake, or deception. See, e.g., Applied Information Sciences Corp. v.

4

eBay, Inc., 511 F.3d 966, 969 (9th Cir. 2007).

5

As to the first prong, Wells Fargo points to its acquisition of ABD Insurance and

6

Financial Services in 2007, which included acquisition of the ABD name. Defendants do

7

not challenge the validity of Wells Fargo’s initial acquisition, they instead argue that Wells

8

Fargo abandoned the “ABD” name post-acquisition. Wells Fargo counters by arguing that,

9

in order to show abandonment, defendants must show that Wells Fargo stopped using the
trademark and intended not to resume such use in the future. See, e.g., Grocery Outlet,

11
For the Northern District of California

United States District Court

10

Inc. v. Albertson’s Inc., 497 F.3d 949, 951 (9th Cir. 2007). Wells Fargo argues that it has

12

“consistently used the ABD mark since acquiring it in 2007,” and dismisses its corporate

13

name change from “ABD Insurance and Financial Services” to “Wells Fargo Insurance

14

Services” as “of no import.” Rather than focus on the corporate name change, Wells Fargo

15

urges the court to focus on its use of the “ABD” mark on “business cards, customer

16

presentations, ‘broker of record’ letters, payment processing, voicemail messaging

17

systems, and even business faxes.”

18

As to the second prong, Wells Fargo explains that the “likelihood of confusion”

19

analysis is guided by the eight factors set forth in AMF v. Sleekcraft Boats. 599 F.3d 341

20

(9th Cir. 1979). The Sleekcraft factors are:

21

(1) strength of the mark;

22

(2) proximity of the goods;

23

(3) similarity of the marks;

24

(4) evidence of actual confusion;

25

(5) marketing channels used;

26

(6) type of goods and the degree of care likely to be exercised by the purchaser;

27

(7) defendant’s intent in selecting the mark;

28

(8) likelihood of expansion of the product lines.
5

1
2

Id. at 348-49.
As to factor (1), the strength of the mark, Wells Fargo argues that the “ABD” mark is

3

fanciful or arbitrary, and is therefore entitled to strong protection, especially in light of its

4

“extensive use and promotion for more than two decades.”

5

As to factor (2), the proximity of the goods, Wells Fargo argues that this factor

6

weighs heavily in its favor, as both Wells Fargo and defendants use the “ABD” mark to

7

promote “identical insurance brokerage services.”

8
9

identical and the manner in which they are being used is identical.
As to factor (4), Wells Fargo points to “numerous instances of actual confusion

11
For the Northern District of California

United States District Court

10

As to factor (3), the similarity of the marks, Wells Fargo contends that the marks are

arising from defendants’ use of ABD.” Specifically, Wells Fargo points to four customer

12

emails from July 2012, all containing questions regarding the link (if any) between Wells

13

Fargo and the new ABD company. See Boyd decl., Exs. EE, HH, II, JJ. Wells Fargo also

14

cites an instance, in August 2012, where an insurer was confused as to whether Wells

15

Fargo or ABD was the broker of record for one of its customers. This confusion led to

16

Wells Fargo losing the customer’s account. Finally, in its reply brief, Wells Fargo contends

17

that “actual confusion continues today,” and cites to a January 2013 email from a law firm

18

employee. Though Wells Fargo does not explain the contents or context of the email, it

19

appears to be an email regarding a document subpoena that was served on ABD

20

Insurance and Financial Services, Inc., in connection with a state court lawsuit. See

21

second Boyd decl., Dkt. 78-1, Ex. A. In response to the subpoena, ABD returned a

22

Certificate of No Records, and explained that it “picked up the [ABD] name but that Wells

23

Fargo had the records.” Id.

24

As to factor (5), Wells Fargo argues that it and defendants “use the exact same

25

marketing channels to advertise, market, promote, and sell their products and services.”

26

As to factor (6), the type of goods and the degree of care likely to be exercised by

27

the purchaser, Wells Fargo hedges by arguing that the “measure of consumer care in the

28

present case cannot be considered in a vacuum.” According to Wells Fargo, “even in an
6

1

industry where consumers may be sophisticated and careful decision-makers,” no amount

2

of consumer care can prevent confusion between two companies with identical names.

3

As to factor (7), Wells Fargo contends that defendants intended to “hijack” the “ABD”

4

mark as a way to “tap in to” the brand equity in the name. Wells Fargo hammers on this

5

theme throughout its brief, even outside the context of the Sleekcraft factors. It argues that

6

defendants “embarked on a brazen plan to steal that which Wells Fargo had bought” and

7

refers to defendants’ actions as “identity theft.” Wells Fargo urges the court to “presume

8

that defendants will achieve what they intended: public deception.”

9

11
For the Northern District of California

United States District Court

10

As to factor (8), likelihood of expansion of the product lines, Wells Fargo concedes
that “this factor does not play a significant role in the likelihood of confusion analysis.”
Apart from its trademark infringement claim under the Lanham Act, Wells Fargo also

12

asserts trademark claims under common law and California state law, as well as false

13

advertising claims under the Lanham Act and under state law. Wells Fargo concedes that

14

its common law and state law trademark claims are “subject to the same legal standards as

15

a Lanham Act trademark claim,” making any separate discussion of those two claims

16

unnecessary. Wells Fargo does briefly address its Lanham Act false advertising claim

17

separately, but the court finds that the heart of the false advertising claim is duplicative of

18

the Lanham Act trademark infringement claim. In other words, the key “misrepresentation”

19

identified by Wells Fargo is defendants’ representation of “their business as a continuation

20

of the business that Wells Fargo purchased.” Essentially, Wells Fargo is arguing that

21

defendants’ use of the “ABD” mark constitutes a false statement of fact that defendants are

22

somehow affiliated with Wells Fargo. While this theory may ultimately have merit, it is

23

derivative of Wells Fargo’s trademark infringement claim. For that reason, the court will

24

focus on Wells Fargo’s likelihood of success on the merits of its Lanham Act trademark

25

infringement claim.

26

Turning to the second Winter factor, the likelihood of irreparable harm in the

27

absence of preliminary relief, Wells Fargo argues that it has “lost scores of customers

28

representing millions of dollars in lost revenue,” and “stands to lose even more customers
7

1

who are confused or are under the wrong impression that defendants are legitimately

2

continuing the original ABD business.” Wells Fargo further argues that defendants’ actions

3

have caused damage to “Wells Fargo’s goodwill and reputation in the ABD brand,” and that

4

the loss of ability to control its reputation constitutes irreparable harm.

5

Wells Fargo then briefly addresses the remaining two Winter factors. As to the

6

balance of hardships, Wells Fargo argues that the irreparable harm that it will suffer from

7

defendants’ continued use of the “ABD” name outweighs any impact on defendants. And

8

as to the public interest, Wells Fargo argues that the public is best served by preventing the

9

confusion caused by defendants’ use of the “ABD” mark.
In opposing the motion for preliminary injunction, defendants challenge a number of

11
For the Northern District of California

United States District Court

10

Wells Fargo’s arguments, but they focus largely on the argument that Wells Fargo

12

abandoned the “ABD” mark. Defendants argue that Wells Fargo’s abandonment undercuts

13

its claim that it has a valid, protectable trademark, and therefore weakens Wells Fargo’s

14

argument that it is likely to succeed on the merits of its Lanham Act claim. Again, to

15

establish an abandonment defense, defendants must show that Wells Fargo (1)

16

discontinued use of the mark, and (2) intended not to resume such use. Grocery Outlet,

17

497 F.3d at 951. Defendants concede that even a single use of the mark can be sufficient

18

to defeat a claim of abandonment, but clarify that such use must be a “bona fide use of a

19

mark in the ordinary course of trade,” and not merely token or sporadic usage. 15 U.S.C. §

20

1127; see also Electro Source, LLC v. Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931, 940

21

(9th Cir. 2006) (“Because the abandonment inquiry is tied to the unique circumstances of

22

each case, it is appropriate to look at the totality of the circumstances to determine if

23

genuine, albeit limited, usage of the mark qualifies as a trademark use ‘in the ordinary

24

course of trade’ under § 1127.”).

25

In support of its abandonment argument, defendants rely on the following facts: (1)

26

Wells Fargo formally merged ABD into Wells Fargo Insurance Services as of January 1,

27

2009, thereby ending the separate existence of ABD; (2) Wells Fargo emails and other

28

internal documents show that it intended to “retire” the ABD name as of January 1, 2009,
8

1

and Wells Fargo instructed its employees that “the ABD name can no longer be used,” that

2

any “stationery, brochures, and other sales materials” bearing the ABD name should be

3

recycled, and that the ABD name should be removed from voicemail messages and email

4

signatures; (3) Wells Fargo did not renew the federal trademark registration for the “ABD”

5

mark; and (4) Wells Fargo did not maintain the “ABD” trade name with the California

6

Department of Insurance, and was therefore prevented from offering insurance services in

7

California under the name “ABD.” As explained above, Wells Fargo dismisses the

8

corporate name change as “of no import,” and similarly argues that its decision not to

9

renew its federal trademark registration is irrelevant to the issue of whether it has
protectable trademark rights. Wells Fargo does not specifically address the decision not to

11
For the Northern District of California

United States District Court

10

maintain the “ABD” name with the California Department of Insurance, but implies that the

12

decision was merely part of the overall corporate name change, and thus more of a

13

formality than an actual decision to abandon the “ABD” name. The court agrees that, in the

14

context of an abandonment defense, the formalities of trademark registration and

15

maintenance are not as important as the extent of the trademark owner’s actual use of the

16

mark. And while defendants are correct that Wells Fargo’s internal documents show a

17

clear intent to stop using the “ABD” mark after January 1, 2009, Wells Fargo correctly

18

points out that abandonment requires actual cessation of use. The mere intent to cease

19

use is not enough. Electro Source, 458 F.3d at 937. Thus, the court will focus on Wells

20

Fargo’s actual use of the “ABD” mark after January 1, 2009.

21

Wells Fargo maintains that, even after January 2009, “the ABD brand did not

22

disappear.” Rather, Wells Fargo continued to use the ABD name on “business cards,

23

customer presentations, ‘broker of record’ letters, payment processing, voicemail

24

messaging systems, and even business faxes.” A closer look at the materials cited by

25

Wells Fargo shows the exact extent of this use.

26

First, Wells Fargo cites to a number of customer presentations attached to the

27

declaration of Richard Lane. See Lane decl., Exs. C-F. While “ABD Insurance and

28

Financial Services - A Wells Fargo Company” is indeed included as a footer on some these
9

1

presentations, this footer is also accompanied by ABD’s California license number, which -

2

as defendants point out - expired when Wells Fargo chose not to maintain registration of

3

the ABD name with the California Department of Insurance. See id., Ex. C. While not

4

necessarily conclusive, the presence of the ABD license number suggests that the

5

presentation footer was a remnant from before 2009, because as defendants pointed out at

6

the hearing, as of January 2009, Wells Fargo no longer had the right to offer insurance

7

services using the expired ABD license number. In another presentation, ABD is

8

mentioned only as part of customer testimonials. See id., Ex. D. Even though the

9

presentation itself is from March 2010, there is no indication as to when the testimonials
were given. ABD is also mentioned in an historical context in a number of other

11
For the Northern District of California

United States District Court

10

presentations. See id. (“Wells Fargo Insurance Services USA, Inc. (formerly ABD

12

Insurance & Financial Services) is now ranked . . .”); see also id., Ex. E (“ABD/Wells Fargo

13

appointed broker October 2002”), (“Wells Fargo Insurance Services . . . [acquired] ABD

14

Insurance and Financial Services in 2007”); Ex. F (“Over 50 years ago, Wells Fargo

15

Insurance (formerly ABD Insurance and Financial Services) . . .”).

16

Second, Wells Fargo submits a business card from one of its managing directors,

17

which includes “Wells Fargo” as the main logo, but also contains a reference to “ABD

18

Insurance and Financial Services” in smaller type, in the lower left-hand corner. See Lane

19

decl., Ex. G. However, the business card also contains ABD’s California Department of

20

Insurance license number, which, as mentioned above, expired as of January 2009. The

21

declaration accompanying the business card states only that “Wells Fargo employees have

22

used the ABD trademark on business cards even after the name change” and that “[s]ome

23

of these cards are still in use today.” Id., ¶ 14. In response to defendants’ argument that

24

the card contains “an outdated address, phone number and email address,” Wells Fargo

25

maintains that “business cards were used after the corporate name change throughout

26

2009 and 2010,” and “are still in use today.” See Reply at 3, fn. 1 (emphasis in original).

27
28

Third, Wells Fargo submits correspondence from one of its customers in support of
its argument that “certain insurance carrier partners have continued to send business
10

1

communications directed to ABD, instead of Wells Fargo.” See Lane decl., ¶ 16, Ex. H.

2

Fourth, Wells Fargo submits a number of solicitation emails, sent from its employees

3

to potential customers, mentioning the name “ABD.” See Volkel decl., Ex. A. These emails

4

mention ABD in the context of its acquisition by Wells Fargo. See id. (“Our firm, ABD

5

Insurance, was acquired by Wells Fargo 4 years ago.”).

6

Fifth, Wells Fargo submits evidence that it maintains website registrations containing

7

the ABD name, and uses the term “ABD” (and related terms) as keywords in the metatags

8

for the Wells Fargo Insurance Services “Cybersure” website. See McCall decl., Exs. A-B.

“ABD Insurance” and other variations of the ABD name. See Lane decl., Ex. B. According

11
For the Northern District of California

Sixth, Wells Fargo submits a number of checks from its customers, made payable to

10

United States District Court

9

to the supporting declaration, Wells Fargo has continued accepting these checks into 2012.

12

See id.

13

Finally, Wells Fargo relies on declarations from several of its employees, attesting to

14

Wells Fargo’s use of the ABD name even after 2009. While many of the statements in

15

these declarations are duplicative of the evidence described above, the employees also

16

(identically) state that “[m]any clients and the marketplace continue to associate Wells

17

Fargo’s Bay Area insurance brokerage business with the ABD name and the ABD

18

business.” See Stahl decl., ¶ 3; Bolger decl., ¶ 2; McDonnell decl., ¶ 2.

19

To evaluate defendants’ abandonment argument, the key question before the court

20

is whether these post-2009 uses of the “ABD” name are enough to constitute “bona fide”

21

use in trade. Here, the court finds the cases cited by the parties to be instructive. Wells

22

Fargo first cites to Electro Source for the proposition that “rid[ding] oneself of inventory”

23

may still constitute bona fide use in the ordinary course of trade. 458 F.3d at 937.

24

However, the court notes that Electro Source did not involve a motion for preliminary

25

injunction, but instead involved review of summary judgment granted in favor of defendant

26

on its abandonment defense. Thus, when the Ninth Circuit was analyzing the issue of

27

abandonment, it was viewing the facts in a light most favorable to plaintiff, who needed only

28

to show a triable issue of fact with respect to abandonment. For that reason, Electro
11

1

Source is of limited value to this case, where Wells Fargo is asking for the extraordinary

2

relief of a preliminary injunction, and bears the burden of showing that it is likely to succeed

3

on the merits of its trademark infringement claim (which necessarily includes a showing that

4

defendants are not likely to succeed on their abandonment defense).

5

Wells Fargo also cites to the district court’s opinion in Grocery Outlet to show that a

6

“sell off of residual inventory” can constitute bona fide commercial use. 2008 WL 5245962,

7

at *8 (N.D. Cal. Dec. 17, 2008). In Grocery Outlet, the district court granted summary

8

judgment in favor of the trademark holder, finding that it had not abandoned its mark.

9

However, the Grocery Outlet trademark holder had not only renewed the trademark that the
alleged infringer argued was abandoned, but had also made plans to start using the mark

11
For the Northern District of California

United States District Court

10

again. 2008 WL 5245962, at *9 (finding “sufficient, undisputed, and contemporaneous

12

evidence indicating that Albertsons intended to resume use of the name prior to the last

13

bona fide commercial uses in 2005”).

14

Finally, Wells Fargo cites to a case from the Eastern District of Ohio, where the

15

parties cross-moved for summary judgment, and where the court granted summary

16

judgment in favor of plaintiff on the issue of abandonment. KeyCorp v. Key Bank & Trust,

17

99 F.Supp.2d 814, 826-27 (E.D. Ohio 2000). However, in KeyCorp, the defendant

18

conceded that the use of the mark had not yet been discontinued, and instead based its

19

entire abandonment argument on plaintiff’s prospective intent to stop using the mark. Id. at

20

827. Here, defendants argue that Wells Fargo’s post-2009 uses of the “ABD” mark were

21

not bona fide uses, thus distinguishing this case from KeyCorp.

22

Defendants cite to a number of cases in support of their abandonment argument,

23

some involving fairly extensive use of a mark after the purported abandonment, some

24

involving fairly limited examples of such use. For example, in Metropolitan Life Ins. Co. v.

25

O’M & Assoc. LLC, the plaintiff pointed to a single internal fax with the trademarked name

26

in the header as evidence that it had not abandoned its mark. 2009 WL 3015210, at *4

27

(N.D. Ill. Sept. 16, 2009). The court rejected that argument, found that the use was “at best

28

token or residual use of the mark” and “not sufficient to constitute bona fide use of the
12

1

mark.” Id. (granting summary judgment in favor of defendants). In another case cited by

2

defendants, the trademark holder argued that it had not abandoned its mark by pointing to

3

four of its company vans that still bore the old mark and a phone book listing that did the

4

same. Newsouth Comm. Corp. v. Universal Telephone Co., 2002 WL 31246558, at *14

5

(E.D. La. Oct. 4, 2002). However, after determining that the phone book listing was the

6

result of a “screw up,” and that the vans’ logo was the result of a similar mistake, the court

7

found that the plaintiff had indeed abandoned its mark, and denied injunctive relief. Id. at

8

14-15. Neither of these cases are applicable to the present case, as Wells Fargo’s use of

9

the “ABD” mark goes beyond the uses in Metropolitan Life and Newsouth.
Of the cases cited by defendants, the closest to the present case is Cascade

11
For the Northern District of California

United States District Court

10

Financial Corp. v. Issaquah Community Bank. 2007 WL 2871981 (W.D. Wash. Sept. 27,

12

2007). In that case, plaintiff Cascade Bank acquired “Issaquah Bank” in 2005, and made

13

efforts to rebrand the former “Issaquah” services as “Cascade.” Id. at *4. It changed all

14

Issaquah signage, stationery, advertising materials, and deposit slips to “Cascade.” Id.

15

When defendant Issaquah Community Bank opened for business in 2007, plaintiff Cascade

16

Bank filed suit and moved for a preliminary injunction. Defendant argued that Cascade had

17

abandoned the “Issaquah” mark, pointing to the rebranding efforts described above. In an

18

attempt to show that it had not abandoned the “Issaquah” mark, plaintiff argued that it

19

“continued to process Issaquah Bank deposit and withdrawal slips and checks,” that it

20

continued to use the Issaquah Bank domain names, and that it still advertised its services

21

using the “Issaquah” name. Id. at *5-6. After discussing the relevant legal standard set

22

forth by Electro Source and other cases, the Cascade court ultimately found that

23

“[d]efendants have demonstrated a likelihood of success on their affirmative defense of

24

abandonment, thus precluding a finding for plaintiffs at this time of a likelihood of success

25

on the merits” of their Lanham Act claim. Id. at *10 (denying motion for preliminary

26

injunction). Importantly, while the court recognized that Cascade “continue[d] to process

27

old deposit and withdrawal slips featuring the Issaquah Bank name,” it also found that

28

Cascade had “taken affirmative steps to encourage its customers to stop using the
13

1

Issaquah Bank name.” Id. (emphasis in original).

2

On the issue of abandonment, the court finds that this case is closer to Cascade

3

than it is to any of the cases cited by Wells Fargo. As an initial matter, unlike the cases

4

cited by Wells Fargo, Cascade analyzed the abandonment defense as part of a motion for

5

preliminary injunction. But more importantly, the court finds striking similarities between

6

Cascade’s efforts to rebrand its newly-acquired Issaquah Bank services and Wells Fargo’s

7

efforts to rebrand its newly-acquired ABD services. Like Wells Fargo, Cascade did not

8

maintain the corporate status of the company that it acquired, instead choosing to operate

9

its business under one name. See Cascade at *6. Like Wells Fargo, Cascade maintained
the domain names of its acquired company, but redirected website traffic to its own

11
For the Northern District of California

United States District Court

10

website. Id. at *5. And like Wells Fargo, Cascade continued to accept documents bearing

12

the acquired company’s name from its customers. Id. at *10. In short, to the extent that

13

Wells Fargo continued to use the ABD name after 2009, such uses were either residual

14

(such as the business cards and presentations, both of which also listed ABD’s expired

15

license number) or in the context of a historical background (such as the presentations

16

mentioning that ABD was one of Wells Fargo’s acquisitions over the years). Such uses are

17

not in the “ordinary course of trade” as required by section 1127 and by Electro Source.

18

Thus, while the court does not rule on the ultimate issue of whether Wells Fargo actually

19

abandoned the “ABD” mark, it does find that defendants have made a sufficient showing of

20

a likelihood of success on the merits of their abandonment defense to preclude a finding

21

that Wells Fargo is likely to succeed on its Lanham Act claim.

22

Even leaving aside the abandonment issue, there are other obstacles to Wells

23

Fargo’s showing of likelihood of success on the merits of its Lanham Act claim. As set forth

24

above, Wells Fargo must show that (1) it owns a valid trademark and (2) defendants’ use of

25

the mark is likely to cause consumer confusion. Applied Information, 511 F.3d at 969. In

26

evaluating the likelihood of consumer confusion, courts look to the eight Sleekcraft factors.

27

The parties’ briefs show that their disputes are largely limited to three of the Sleekcraft

28

factors; namely, the evidence of actual confusion (factor 4), the type of goods and the
14

1

degree of care likely to be exercised by the purchaser (factor 6), and defendants’ intent in

2

selecting the mark (factor 7).

3

As to the evidence of actual confusion, Wells Fargo first cites to customer emails

4

asking about the link between Wells Fargo and the new ABD company. See Boyd decl.,

5

Exs. EE, HH, II, JJ. However, all of these emails are from July 2012, immediately after the

6

launch of the ABD website on July 19-20, 2012. Wells Fargo also cites to confusion

7

regarding a broker of record letter, but this confusion also occurred in the weeks

8

immediately after ABD’s launch. See Volkel decl., Ex. B. In its reply brief, Wells Fargo

9

maintains that “actual confusion continues today.” In support of this argument, it cites to an
email regarding a document subpoena that was served on ABD Insurance and Financial

11
For the Northern District of California

United States District Court

10

Services, Inc. See second Boyd decl., Dkt. 78-1, Ex. A. In response to the subpoena,

12

ABD returned a Certificate of No Records, and explained that it “picked up the [ABD] name

13

but that Wells Fargo had the records.” Id. In spite of Wells Fargo’s arguments to the

14

contrary, this email does not show the type of consumer confusion typically considered

15

under the Sleekcraft factors. Instead, it appears to be a mistake about the possession of

16

certain corporate records. The subpoena sought documents relating to a coverage dispute

17

from sometime in 2008 or 2009. Id. The subpoena was sent to the new ABD company,

18

but because ABD was not yet in business at the time of the coverage dispute, it pointed the

19

subpoena-issuer to Wells Fargo, who would have had records from that time period. Id.

20

While this may be some evidence of confusion, it is certainly not evidence of consumer

21

confusion. Thus, outside of the period immediately following ABD’s launch, Wells Fargo

22

has failed to show any examples of confusion among the consumers of the insurance

23

products both companies provide.

24

The lack of evidence of actual confusion is relevant to the court’s consideration of

25

the sixth Sleekcraft factor, the type of goods and the degree of care likely to be exercised

26

by the purchaser. Defendants argues that their (and Wells Fargo’s) business is “a

27

relationship driven business in which clients make decisions based upon existing long-

28

standing relationships.” Defendants also cite to declarations from two of their customers,
15

1

each stating that they chose to do business with ABD based on their relationships with

2

certain brokers who left Wells Fargo to join ABD, and that they were “at no point” confused

3

by the ABD name. See Sawyers decl., ¶¶ 4-5; Morris decl., ¶¶ 3-4. The Morris declaration

4

further states that Wells Fargo contacted him in an effort to retain his company’s business,

5

but that he “informed [Wells Fargo] that due to [his] long-standing and close relationship”

6

with an ABD broker, he had chosen to move his account to ABD. Morris decl., ¶ 5. Wells

7

Fargo argues only that the degree of consumer care “cannot be measured in a vacuum,”

8

and that the evidence of actual confusion shows that the customers are not actually as

9

sophisticated as defendants contend. Mot. at 18; Reply at 11.
The court finds defendants’ arguments far more convincing here. Insurance

11
For the Northern District of California

United States District Court

10

brokerage is not an industry where customers make purchases on a whim, and can be

12

easily fooled by the name of a company. Instead, as defendants point out, several clients

13

requested pitches from both Wells Fargo and ABD before deciding which company would

14

receive their business. See Hetherington decl., ¶ 31. Perhaps the most striking example of

15

customer sophistication comes from an unsolicited email sent from a customer to one of

16

the employees who left Wells Fargo to join ABD. See McCall decl., Ex. A. This customer

17

learned that Mr. McCall had left Wells Fargo, and sent an email to his personal email

18

address, expressing a desire to “explore what to do and determine what’s in the best

19

interest of our plans.” Id. The customer noted that “Wells Fargo is anxious to keep our

20

business,” but made clear that he “value[d]” Mr. McCall and another ABD employee “much

21

more as individuals than as Wells Fargo employees.” Id. Wells Fargo may be correct that

22

it has “lost scores of customers representing millions of dollars in lost revenue” as a result

23

of defendants’ actions. However, Wells Fargo has not shown that it has lost business as

24

the result of defendants’ alleged trademark infringement. Instead, it seems equally (if not

25

more) likely that Wells Fargo’s lost business was the result of each customer’s informed

26

choice about whether to do business with Wells Fargo or ABD.

27
28

Turning to defendants’ intent in choosing the “ABD” mark, it does seem clear that
defendants chose the mark to signal some sort of link with the original ABD company, and
16

factor weighs decisively in favor of Wells Fargo. However, Wells Fargo attempts to place

3

far too much emphasis on this factor. Its motion is riddled with references to defendants’

4

allegedly bad conduct in leaving Wells Fargo and starting their own business. Specifically,

5

Wells Fargo blames defendants for “orchestrat[ing] a mass walk-out of over 60 Wells Fargo

6

employees,” and “direct[ing] Wells Fargo staff to burn CDs with confidential client

7

information.” Mot. at 1, 7. Wells Fargo continues this theme in its reply brief, emphasizing

8

that ABD “rushed to burn the CDs immediately before departing Wells Fargo for a

9

competing business when they knew full well that Wells Fargo’s remaining employees

10

could have provided clients this same information.” Reply at 11 (emphasis in original).

11
For the Northern District of California

not merely as a way to “honor their fathers and their legacies.” The seventh Sleekcraft

2

United States District Court

1

While this alleged behavior certainly would explain the discord between the parties, these

12

allegations are far more relevant to Wells Fargo’s concurrent state court suit for breach of

13

the duty of loyalty, intentional interference with economic relationships, intentional

14

interference with potential economic relationships, unfair competition, conspiracy, and

15

breach of contract. In this case, these facts are relevant only to the extent that they provide

16

insight as to defendants’ intent in selecting the “ABD” mark. The court agrees that Wells

17

Fargo has the better of that argument. However, because Wells Fargo has not shown any

18

examples of consumer confusion after August 2009, and because its customers are likely

19

to exercise a high degree of care, the Sleekcraft factors do not decisively weigh in Wells

20

Fargo’s favor.

21

The dispute over consumer confusion and degree of care is also directly relevant to

22

the second prong of the Winter test, the likelihood of irreparable harm. As explained

23

above, Wells Fargo has not provided a single instance of a customer who chose to do

24

business with ABD (rather than Wells Fargo) because of ABD’s alleged trademark

25

infringement. Instead, Wells Fargo has shown only that some customers moved their

26

business from Wells Fargo to ABD. In other words, Wells Fargo has not established a

27

nexus between defendants’ alleged infringement and any harm suffered by Wells Fargo.

28

Thus, in the absence of any harm already suffered, Wells Fargo cannot show that it is likely
17

1

to suffer continued irreparable harm without a preliminary injunction. The fact that all cited

2

examples of consumer confusion occurred in the weeks immediately following ABD’s

3

launch further supports a finding of no irreparable harm. To the extent that Wells Fargo

4

was harmed by any confusion that occurred in those weeks, such harm can be remedied

5

by monetary damages.

6

The remaining two Winter factors do not significantly affect the court’s analysis. On

7

the balance of hardships prong, it is true that Wells Fargo is somewhat burdened by

8

defendants’ use of the “ABD” name, but it is also true that defendants would suffer hardship

9

if it were forced to rename and rebrand its entire company. As to the public interest prong,
the public’s main interest here is ensuring that preliminary injunctions are issued only in

11
For the Northern District of California

United States District Court

10

appropriate cases, and based on the court’s analysis of the first two Winter prongs, this

12

does not appear to be such a case.

13

Accordingly, plaintiff’s motion for preliminary injunction is DENIED.

14

IT IS SO ORDERED.

15

Dated: March 8, 2013
______________________________
PHYLLIS J. HAMILTON
United States District Judge

16
17
18
19
20
21
22
23
24
25
26
27
28
18