Citizens Fin Grp Inc v. Citizens Natl Bank

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

9-9-2004

Citizens Fin Grp Inc v. Citizens Natl Bank Precedential or Non-Precedential: Precedential

Docket No. 03-2868 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004

Recommended Citation "Citizens Fin Grp Inc v. Citizens Natl Bank" (2004). 2004 Decisions. Paper 283. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/283

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PRECEDENTIAL District Judge: Honorable Donetta W. Ambrose IN THE UNITED STATES COURT OF ____________ APPEALS FOR THE THIRD CIRCUIT Argued: April 21, 2004 ____________ Before: SCIRICA, Chief Judge, Nos. 03-2868 and 03-3175 ROSENN and GREENBERG, Circuit ____________ Judges

CITIZENS FINANCIAL GROUP, INC. (Filed: September 9, 2004)

v. Frederick W. Thieman (Argued) Thieman & Farrell CITIZENS NATIONAL BANK OF 436 Seventh Avenue EVANS CITY; 2312 Koppers Building CITIZENS INC; CITIZENS Pittsburgh, PA 15219 NATIONAL BANK OF SOUTHERN PENNSYLVANIA David M. Kelly Andrea Anderson Citizens National Bank of Evans Finnegan, Henderson, Farabow, Garrett & City and Citizens, Inc., Dunner 1300 I Street, N.W . Appellants No. 03-2868 Washington, DC 20005 ____________ Ray F. Middleman CITIZENS FINANCIAL GROUP, INC. Malone, Larchuk & Middleman Northridge Office Plaza Appellant No. 03-3175 117 VIP Drive Northridge Office Plaza, Suite 310 v. Wexford, PA 15090

CITIZENS NATIONAL BANK OF Counsel for Appellants in No. 03- EVANS CITY; CITIZENS INC; 2868 CITIZENS NATIONAL BANK OF SOUTHERN PENNSYLVANIA Paul F. Ware, Jr. (Argued) ____________ R. David Hosp Goodwin Procter Appeal from the United States District 53 State Street Court Exchange Place For the Western District of Pennsylvania Boston, MA 02109 D.C. No.: 01-cv-01524

Counsel for Appellant in No. 03- CNBEC branches, and in addition some of 3175 the branches in Butler County were located ____________ on the same streets. Upon learning of CFG’s announcement of its plan to rename OPINION OF THE COURT the Mellon Bank branches in Pennsylvania ____________ as Citizens Bank, CNBEC sent a cease and desist letter to CFG requesting that CFG not use “Citizens” as a name with respect ROSENN, Circuit Judge. to its Western Pennsylvania branches. This appeal presents a number of CFG responded by filing this suit in the questions arising out of a trademark United States District Court for the infringement dispute between two banking Western District of Pennsylvania seeking institutions. The dispute is an outgrowth a declaratory judgment that CNBEC could of aggressive and expansionist banking not prevent it from using the name f l o wi n g f rom the C ongressional “Citizens.” CNBEC answered the liberalization in recent years of national complaint by asserting affirmative banking laws. Citizens National Bank of defenses and a counterclaim alleging Evans City (CNBEC) is a community bank trademark infringement and unfair founded in 1878 in Evans City, competition under § 43(a) of the Lanham Pennsylvania, north of Pittsburgh, under Act, 15 U.S.C. § 1125(a), and unjust the name of Citizens Bank of Evansburgh. enrichment. In 1907, the bank became federally CNBEC then filed a motion for a chartered and adopted its current name. preliminary injunction, which the District The bank also has refered to itself as Court denied following an evidentiary “Citizens’” in its advertisem ents, hearing. On appeal, this Court affirmed promotional materials, and customer the denial. Citizens Fin. Group, Inc. v. communications. CNBEC now has sixteen Citizens Nat’l Bank of Evans City, 30 Fed. branches in the Northwestern region of Appx. 24 (3d Cir. 2002). The parties then Pennsylvania. proceeded to a jury trial at which CNBEC The Citizens Financial Group, Inc. asserted three counter-claims. CNBEC (CFG) is a subsidiary holding company of raised t w o claim s of trademark the Royal Bank of Scotland. In July 2001, infringement, first that CFG’s “Citizens CFG purchased the retail banking Bank” mark infringed its mark of the word operations of Mellon Bank and announced “Citizens” standing alone, and second, that that it would, and in December 2001 did, CFG’s “Citizens Bank” mark infringed its conve rt all Mellon branches in full “Citizens National Bank” mark. Pennsylvania to “Citizens Bank” branches. CNBEC also claimed that CFG’s conduct CNBEC claimed that nine of these former constituted unfair competition due to the Mellon Bank branches were located near confusing similarity of the marks and that

CFG had been unjustly enriched by its CNBEC maintains 16 local infringement. branches in Northwestern Pennsylvania, twelve in Butler County, three in Northern With regard to CNBEC’s Allegheny County, and one in Armstrong infringement claims, the jury found that County. CNBEC acknowledges that the CNBEC had tradem ark rights in majority of its customers live in Butler “Citizens,” that CFG’s use of the “Citizens County, but asserts that its Allegheny Bank” mark in CNBEC’s market was County customers account for about 13% likely to cause confusion with CNBEC’s of its total accounts, 20% of its total mark “Citizens,” but that CFG’s “Citizens combined deposit/loan volume, and about Bank” mark would not likely be confused 30% of its profits. CNBEC claims that as with CNBEC’s “Citizens National Bank” of August 1, 2001, it had 64,132 accounts mark. The jury rejected CNBEC’s claim in Butler County, 9,886 accounts for damages regarding unfair competition representing about $50 million in deposits and unjust enrichment. in Northern Allegheny County, 2,806 The District Court thereupon accounts in Beaver County, and 1,170 considered CNBEC’s motion for a accounts in Armstrong County. Prior to permanent injunction. The Court refused CFG’s entry into CNBEC’s marketplace, to enjoin CFG’s use of its “Citizens Bank” CNBEC had been the only “Citizens” mark in CNBEC’s market. Instead, it retail bank in the area. molded the jury’s verdict of infringement A. CNBEC Advertising in favor of CFG on all of CNBEC’s claims and sua sponte issued an injunction Over the years, CNBEC has spent restraining CNBEC’s use of the “Citizens” millions of dollars in advertising its mark. The injunction requires CNBEC services and diverse products under the always to identify itself as “Citizens marks “Citizens National Bank” and National Bank” in the text of promotional “Citizens.” It has advertised in Allegheny material, advertisements and documents, County in the North Pittsburgh edition of despite the jury’s finding that CNBEC the Post Gazette, the Tribune Review, and maintained a protected interest in the the North Hills News Record, as well as “Citizens” mark standing alone. CNBEC the Butler Eagle and some of the smaller timely appealed, and CFG cross appealed. newspapers in Butler and Armstrong We hold that the District Court abused its Counties. The number of advertisements discretion by denying CNBEC’s motion has varied depending upon its campaigns for injunctive relief and issuing an and targets at the time. From time to time, injunction sua sponte against CNBEC. CNBEC has also sponsored local Therefore, we will affirm in part and community events in its marketplace such reverse in part. as football programs, ballets, and other sporting events and musical performances, I. Background which have been a form of advertising.

CNBEC has also advertised “Citizens National Bank.” The record campaigns on radio stations covering contains more than seventy-five CNBEC Allegheny and the surrounding counties advertisements and promotional materials and television station KDKA, which that refer to CNBEC as “Citizens” covers Western Pennsylvania and the predating CFG’s acquisition of the Mellon entire Greater Pittsburgh area. In addition, banks. In another fifty instances, it has placed flyers in customer statements, “Citizens” appears as the first reference to utilized billboards for outdoor advertising the Bank. During 2001, the year CFG in the Gibsonia, Slippery Rock and Butler opened its doors in the CNBEC areas, and for the past five years prior to marketplace as “Citizens Bank,” CNBEC the jury trial, it has maintained a wall spent $366,000 for print advertising. In painted on the Masonic Building in the the year 2002, it spent $247,000 on print City of Butler with its logo, the name advertising. “Citizens”and the tag line “The B. Consumer Confusion Uncommon Bank.” It also has placed listings in numerous telephone directories In the town of Wexford in circulated throughout the Pittsburgh area Allegheny County, and in Butler, and has issued numerous press releases Zelienople, and Saxonburg in Butler each year in its claimed market. CNBEC County, CFG’s branches are located on the has issued hundreds of thousands of its same street as CNBEC’s branches. Both checks and debit cards, carrying its mark, banks frequently refer to themselves to its customers and merchants. simply as “Citizens. CFG’s full-page newspaper announcement in the Pittsburgh CNBEC witnesses testified that at Post-Gazette of its acquisition of the least since the 1950s, employees and Mellon banks referred to itself as either customers have referred to it as “Citizens.” “Citizens” or “Citizens Bank” five times. Competing banks in that market as well as Another contained the headline “Welcome the media also refer to CNBEC as to Citizens,” and others referred to itself in “Citizens.” the text as simply “Citizens” with Since at least 1995, the bank policy “Citizens Bank” and its logo at the bottom with respect to the use of its name has of the page. been that the first time the bank’s name Similar to CNBEC, CFG also was used, the entire bank name, Citizens introduced many financial products with National Ba nk, s hould be used. “Citizens” and with “Citizens Bank” and Subsequent uses can be either “Citizens” logo at the bottom of the ad. Examples are or “Citizens National Bank.” For the introduction of banking products and example, an advertisement offered in services available for law firms, Citizens evidence for CNBEC’s 18-month CD SBA program, and Citizens business carries at its top only “Citizens” but at the owners, com merc ial banking and bottom in much smaller print appears

international services “by one of the logos are remarka bly “similar in largest banks in the world,” the Citizens appearance.” Dr. Morrin opined that the Circle Money Market Account, Citizens word “national” in CNBEC’s name is not Phone Bank, Citizens Fixed-Rate very helpful in enabling consumers to Annuities, Citizens Circle Gold Checking differentiate between the two banks Account, and Citizens Business Premium because “national” is commonly used in Money Market Account. bank names, and it is an abstract word. It is hard to visualize a concrete image of an CNBEC produced testimony of abstract word, she testified, and “humans CFG customers mistakenly doing business have a hard time storing and retrieving with CNBEC branches, attempting to cash abstract words in their memory.” CFG checks, depositing money and making loan payments on CFG loans. Based on a survey of consumers in CFG customers also used CNBEC’s ATM the Pittsburgh area, Dr. Mital testified that machines believing they were CFG’s and an overwhelming majority shortened the called CNBEC branches with respect to bank’s name and referred to Citizens Bank CFG accounts and promotions. CNBEC as “Citizens.” He also conducted a survey employees alleged to have recorded more of adult banking consumers in the four than 2000 instances of confusion during county area of Allegheny, Butler, Beaver, the current litigation. and Armstrong. According to that survey of 300 people, respondents supplied 1057 CNBEC also produced at trial as bank names. Of the 1057 names, 71% of expert witnesses, Dr. Maureen Morrin of those names were shortened. With respect Rutgers University and Dr. Vihas Mital of to Citizens Bank, 76% “shortened the the University of Pittsburgh. Dr. Morrin name to just ‘Citizen’ or ‘Citizens.’” testified that CFG’s mark is likely to cause consumer confusion because Citizens CFG admitted that CNBEC National Bank and Citizens Bank are customers tried to make deposits into CFG essentially identical in consumers’ minds accounts, make payment on CNBEC loans, due to consumers’ tendency to shorten cash CNBEC checks, or use ATMs at CFG brand names in speech and memory. To branches, all under the belief that they consumers, CFG’s and CNBEC’s marks were banking with CNBEC. However, are both “Citizens.” Moreover, Dr. Morrin CFG claimed that the instances of pointed out that both banks in their confusion were minimal and decreased promotional materials, print ads and web after the conversion of Mellon branches to sites commonly refer to themselves as just Citizens Bank branches was completed. “Citizens.” CFG offered into evidence its Dr. Morrin also noted that another trademark registration of the name contributing factor to the likelihood of “Citizens Bank” and its service mark in the confusion is that the branch names and the United States Patent and Trademark Office

dated August 28, 2001, as well as federal C. Jury Instructions, the Verdict and the trademark registrations for various service Injunction marks such as Citizens Select Gold, After instructing the jury generally Citizens Circle and Citizens Nouvelle on the law with respect to the burden of Credit Program. All of these trademarks proof, the Court informed the jury that it and service marks were registered with the would be the Court’s responsibility to United States Patent Office between determine whether CFG would prevail on March 11, 1997 and March 18, 2003. its claim seeking the right to use its CFG leveled its attack on registered mark “Citizens Bank” in the CNBEC’s claim of seniority to the use of disputed areas of Pennsylvania. The Court “Citizens” by eliciting evidence through explained that the jury’s role would be to cross examination of inconsistencies in the determine whether CNBEC would obtain testimony of CNBEC’s witnesses, judgment on its claims of trademark exaggerations in its geographic claims as infringement, unfair competition, and to its market area, and the weakness of unjust enrichment. “Citizens” as a mark. CNBEC’s president, The Court provided the jury with a Margaret Wier, admitted that CNBEC had general background in trademark law, no trademark in the words “Citizens Bank” noting that the two major objectives in the and had not used those words to represent law regarding trademarks are to protect her institution. CFG also offered in customers from becoming confused or evidence a communication from an misled as to the source from which assist a n t in CN BE C’s m arketin g products or services originate, and to department, Sue Kushonardit, to CNBEC’s protect the owner’s value and business branch managers and commercial loan goodwill associated with his or her managers, advising them that “CFG’s trademark. The Court explained that even corporate colors are green and the logo is though CFG obtained federal registration uniquely different from our own.” for its marks, CNBEC can still prevent Counsel for CFG developed CFG from using its registered marks in its through cross examination of CNBEC’s market area by demonstrating that CNBEC president that its principal advertising has a protected interest in the mark and agency, Larson O’Brien Acumens, offered that a likelihood of confusion would result some suggestions to its vice-president, if CFG also used the mark in the same Betsy Rab, in February 2002, that would market area. On the other hand, the Court add to the confusion of the public with noted that if there is no likelihood of respect to the two banks, thereby confusion “between CFG’s Citizens Bank strengthening CNBEC’s legal case. mark and CNBEC’s marks, then both CNBEC’s president conceded that these parties can use their respective marks in all suggestions amounted to dirty tricks but areas.” CNBEC “did not implement any” of them.

The Court outlined for the jury the The Court concluded its jury factors to be considered in determining instruction with an explanation of the whether there was a likelihood of damages sought by CNBEC and the confusion and the weight to be given to elements that must be proven for such each. The Court explained that if CNBEC relief. The Court then submitted to the has established the right to the word jury a verdict slip which contained fifteen “Citizens” standing alone as a trademark, questions. The first six questions and the the jury must place the mark into one of responses of the jury are pertinent to our four groups in the spectrum of review. distinctiveness. These four groups listed QUESTION #1: Do you find that CNBEC in order from the strongest to weakest are, has proven by a preponderance of the (1) fanciful and arbitrary, (2) suggestive, evidence that CNBEC has used “Citizens” (3) descriptive, and (4) generic. The Court standing alone as a trademark? commented that “fanciful or arbitrary and suggestive marks are considered inherently JURY: Yes. distinctive and are entitled to immediate QUESTION #2: Do you find by a protection.” See also Checkpoint Sys., preponderance of the evidence that the I n c . v . C h e c k P o i n t S o f t w a re mark “Citizens” standing alone is ... (A) Technologies, Inc., 269 F.3d 270, 282 (3d generic, (B) merely descriptive, (C) Cir. 2001) (explaining the four levels of suggestive or arbitrary or fanciful? trademark distinctiveness). 1 JURY:(C) [The Jury was directed to skip to Question 1 The Court also instructed the jury on #4] the determination of whether CNBEC’s QUESTION #4: Do you find by a “Citizens” mark had acquired a preponderance of the evidence that a secondary meaning, whereby a likelihood of confusion exists between significant portion of the public CFG’s Marks and CNBEC’s “Citizens” associates banking services under the standing-alone mark? name “Citizens” as coming from a single source. However, because the jury found JURY: Yes. the mark “Citizens” to be either QUESTION #5: Do you find by a suggestive or arbitrary/fanciful on the preponderance of the evidence that a distinctive scale, it was not required to likelihood of confusion exists between address secondary meaning in order to find that CNBEC had a protected interest in the “Citizens” mark and that there was a likelihood of confusion with CFG’s descriptive mark may be entitled to marks. See Checkpoint Sys., 269 F.3d at strong protection if it has developed a 283 n.10 (describing how even a secondary meaning).

CFG’s Marks and CNBEC’s “Citizens the Court concluded that an injunction National Bank” mark? would increase confusion rather than prevent it. The Court reasoned that if CFG JURY: No. were required to change its name in QUESTION #6: Do you find by a CNBEC’s market area as a result of an preponderance of the evidence that injunction, it would still be required to CNBEC has proven that is has been indicate to consumers that it was owned by injured as a proximate result of CFG’s or otherwise affiliated with Citizens Bank. infringement? Also contributing heavily to the Court’s decision was a determination that there JURY: No. was evidence of “unclean hands” on the After answering “No” to Question part of CNBEC in this litigation, and that #6, the verdict slip informed that jury that such evidence “is significant.” The Court it had found a verdict in favor of CFG and concluded that this factor weighed heavily that its task was complete. against the granting of a full injunction. It also believed that granting an injunction Several days later, the Court against CFG would be difficult, if not considered CNBEC’s application for a impossible, to enforce because it had its permanent injunction. Although labeled a own trademark rights in areas other than hearing, there was no jury, no evidence CNBEC’s market area. The Court asserted presented, or oral argument. The Court that the use of broad ranged media for the concluded on the briefs submitted by purposes of advertisements and the counsel for the parties that an injunction increasing use of internet banking added to against CFG should not issue. The Court the difficulty. Instead of granting an arrived at this result by balancing the injunction against CFG, the Court sua equities and considering the factors sponte concluded that the principles of enumerated in §35 of the Restatement equity and the record in this case (Third) of Unfair Competition (1995). The compelled it to impose an injunction Court determined that CNBEC had not requiring CNBEC to use the term proven bad faith or that CFG had “National” as part of its name when it first deliberately infringed on CNBEC’s marks. refers to itself in any document, It concluded that a full injunction directed advertising, or promotion, regardless of the to CFG would have devastating effects on type or medium used. The Court its business and its customers, not only in thereupon molded the verdict entered by CNBEC’s market area but throughout the jury and entered a verdict in favor of Pennsylvania, a consequence even beyond CFG on its declaratory judgment claim and the scope sought by CNBEC. However, it against CNBEC on all of its counterclaims. did not offer a descriptive explanation for this awesome prediction. II. Evidentiary Rulings With respect to the public interest, The four issues raised by CNBEC

on appeal are: (1) the refusal of the was conducted outside of CNBEC’s District Court to enjoin CFG’s use of its market. Reitter interviewed people at two “Citizens Bank” mark after a jury malls in Allegheny County, Ross Park determined that it infringed CNBEC’s Mall and Robinson Towne Center. The “Citizens” mark; (2) the District Court’s Court agreed with CFG and excluded the exclusion of CNBEC’s proffered expert testimony. CNBEC now appeals this testimony regarding a likelihood of evidentiary ruling. The District Court’s consumer confusion between the parties’ decision to exclude proposed expert marks; (3) the District Court’s exclusion of testimony under Daubert v. Merrell Dow e v i d e n c e of purported con s um er Pharms., Inc., 509 U.S. 579 (1993), is confusion; and (4) the Court’s admission reviewed for an abuse of discretion. of evidence of third-party use of the word Montgomery County v. Microvote Corp., “Citizens” in trademarks outside of the 320 F.3d 440, 445 (3d Cir. 2003). relevant marketplace and the Court’s The District Court was concerned subsequent jury instruction that these about the propriety and trustworthiness of third-party marks were relevant to a Reitter’s survey. A “universe” is “that determination of the commercial strength segment of the population whose of CNBEC’s “Citizens” mark. perceptions and state of mind are relevant In its conditional cross-appeal to be to the issues in the case.” McCarthy on considered only if this Court reverses any Trademarks and Unfair Competition § of the District Court’s rulings, CFG 32:159 (4th ed. 2003). “A survey of the contends that the District Court erred in wrong ‘universe’ will be of little probative admitting generalized hearsay testimony value in litigation.” Id. The Court noted concerning unspecified instances of that the proponent of the survey bears the alleged confusion and in formulating its burden of proving that the universe is jury instruction concerning the definition proper. Id.; see also 3A Callmann on of “use” of the term “Citizens” for Unfair Competition, Trademarks and purposes of acquiring trademark rights. Monopolies § 21:67) (4th ed. 2001). We turn first to CNBEC’s It is not disputed that the consumer arguments regarding the District Court’s confusion at issue here is known as evidentiary rulings. “reverse confusion.” “Reverse confusion occurs when a larger, more powerful A. Exclusion of CNBEC’s Proffered company [here, CFG] uses the trademark Expert Testimony of a smaller, less powerful senior owner CFG filed a pre-trial motion to [here, CNBEC] and thereby causes likely preclude proposed expert testimony of confusion as to the source of the senior Robert Reitter on behalf of CNBEC on the user’s goods or services.” Fisons ground that his survey relied on an Horticulture, Inc. v. Vigoro Industries, “improper universe” because the survey Inc., 30 F.3d 466, 474 (3d Cir. 1994). The

District Court observed that “in reverse allow Reitter to conduct the survey there. confusion cases . . . the appropriate Reitter also acknowledged that he could universe is the ‘senior user’s [i.e. have conducted the survey somewhere else CNBEC’s] customer base.” Citizens Fin. in Butler County, but it would have been Group, Inc. v. Citizens Nat’l Bank of more difficult. How ever, “[t]he Evans City, No. 01-1524, slip op. at 7 geographical area surveyed cannot be (W.D. Pa. Apr. 23, 2003) (citing McCarthy based on mere sampling convenience § 32:159). rather than upon scientific or sampling grounds.” McCarthy § 32:161. The Court then considered evidence showing that CNBEC operated The Court further disagreed with sixteen branches in Butler County, no CNBEC’s argument that its “universe” branches in Beaver County, one branch in should include all of Allegheny County Armstrong County, and three branches in because it had a marketing presence northern Allegheny County near the Butler beyond Butler County in the Greater County line. The District Court stated Pittsburgh area. Specifically, the Court “[f]or the past 108 years, CNBEC and its noted that “[t]he scope, media type, predecessors in interest have offered retail volume, and frequency of [CNBEC’s] banking services in this area and not advertising and promotional efforts beyond. Thus, in this case there can be no regularly focus[ed] on Butler county, not doubt that CNBEC’s customer ‘base’ is Allegheny county,” and that “the evidence within Butler county and extreme northern indicates that CNBEC’s advertising and Allegheny county rather than Allegheny marketing efforts outside of Butler County county as a whole.” Id. The Court noted are sporadic.” Citizens Fin. Group, No. that “[t]he closest CNBEC branches are 7 01-1524, slip op. at 9.The Court and 17 miles, respectively, away from the determined that any customers that malls,” and the remaining branches were CNBEC may obtain outside of their main “further away.” Id. at 8. customer base of Butler County and Northern Allegheny county would be “spill The Court disagreed with over” which would not be a part of CNBEC’s argument that the universe at CNBEC’s customer base. Id. The Court issue consisted of potential customers of also rejected some of the methodology both parties because the universe in a used by Reitter in his survey questions as reverse confusion case should be limited to being vague, imprecise, overly inclusive, the senior user’s customer base. See or overly exclusive. Id. at 9-10. McCarthy § 32:159; 3A Callmann § 21:67. The Court noted that Reitter testified, and Exercising its role as the CNBEC acknowledged at the hearing, that “gatekeeper” regarding the proffered he and CNBEC would have preferred to expert witness testimony, the Court conduct the survey at Clearview M all in concluded that Reitter’s report was too Butler County but that mall refused to fundamentally flawed to be admissible. Id.

at 10. The Court therefore excluded the of which relied on a single court decision, proffered testimony under Daubert and Sterling Drug, Inc. v. Bayer AG, 14 F.3d F e d e r a l R ule of Evidence 702. 733 (2d Cir. 1994), but that Sterling did Alternatively, the Court excluded the not support the Court’s exclusion. testimony under Federal Rule of Evidence CNBEC also takes issue with the 403, concluding that the danger of unfair Court’s factual findings, contending that prejudice far outweighed the minimum shoppers at both malls have access to its probative value of Reitter’s testimony. Id. banking services, and that Reitter’s at 11. See, e.g., Trouble v. The Wet Seal, methodology and use of a “screener” Inc., 179 F. Supp. 2d 291, 306-308 question was proper. Finally, CNBEC (S.D.N.Y. 2001). The Court explained argues that the Court’s “critique” of that “[i]f the universe is skewed, then the Reitter’s methodology should affect only conclusion will similarly be skewed. If an its weight but not its admissibility. See expert, a person with special knowledge Southland Sod Farms v. Stover Seed Co., and expertise, testifies as to the skewed 108 F.3d 1134, 1143 (9th Cir. 1997), results, a jury is likely to give special United States v. 88 Cases, etc., 187 F.2d weight to the skewed conclusion.” Id. 967, 974 (3d Cir. 1951); 5 McCarthy § CNBEC argues that Reitter’s 32:162 (selection of an inappropriate survey constitutes highly probative universe generally affects the weight of evidence of likelihood of confusion and survey and not its admissibility). that the Court erred in excluding the In Sterling, 14 F.3d 733, a United evidence from consideration by the jury. States drug company sued Bayer AG, a According to CNBEC, 152 of the 213 German drug company, for infringement respondents, or 71%, exhibited “reverse of the trademark “Bayer” in Sterling’s confusion” either by identifying a CFG market. Both companies held rights in the location in response to the CNBEC trademark for historical reasons. Id. at advertisement or stating that the bank in 737. It was undisputed that Sterling was a the CNBEC advertisement was affiliated senior user of the trademark in its market. with Mellon Bank. Id. at 738. The Sterling court rejected CNBEC argues also that the Court Bayer AG, the junior user’s, argument that misinterpreted case law regarding the a consumer survey regarding likelihood of composition of an appropriate survey confusion should include Bayer AG’s universe in a reverse confusion case. customer base in the United States. Id. at Specifically, it takes issue with the Court’s 741. The Court held that under the theory conclusion that in a reverse confusion of reverse confusion, as opposed to the case, the universe is limited to the senior traditional theory of confusion, the user’s “customer base.” CNBEC argues universe was limited to the senior user’s that the Court’s conclusion was based on customer base. Id. two treatises, McCarthy and Callman, both

Sterling’s holding was cited with for a jury. The courts have held generally approval by the two leading treatises and that mere technical unreliability goes to the was the position adopted by the District weight accorded a survey, not its Court here, that is, the proper universe admissibility. See, e.g., Southland Sod under CNBEC’s theory of reverse Farms, 108 F.3d at 1143. The Court in confusion was limited to CNBEC’s this case concluded that Reitter’s survey customer base, not to CFG’s customer did not suffer from mere technical flaws, base. CNBEC interprets Sterling to mean but from fatal flaws. Thus, the Court that the universe should include consumers appropriately fulfilled its duty as a whose perceptions are at issue and have gatekeeper in excluding this evidence. access to the marks of both parties. Finally, CNBEC has failed to show However, in our view, Sterling does not that the Court committed plain error in its stand for such a proposition. The Sterling findings of facts as to what constituted its court stated that “[w]here, as here, the customer base. The Court cited CNBEC’s relevant issue is whether consumers own documentary evidence to make the mistakenly believe that the senior user’s determination that it had business products actually originate with the junior primarily in Butler County and in the user, it is appropriate to survey the senior northern tip of Allegheny County. user’s customers.” Id. at 741. Although CNBEC has also failed to show that the Sterling dealt with a difference between Court committed plain error regarding the junior and senior users’ customers whether its shoppers at the two malls were based on products, as opposed to different within the universe of CNBEC’s customer geographic regions, the rule is the same. base and whether Reitter’s “screener” The court should limit survey evidence in question was proper. Accordingly, we reverse confusion cases to the customers hold that CNBEC has failed to show an of the senior user. We do not believe that abuse of discretion by the District Court the District Court abused its discretion in and affirm its ruling to exclude the determining that the consumers surveyed proffered expert testimony. in this case were located outside of CNBEC’s customer base. B. Exclusion of Certain Written Evidence Purporting to Show Instances of CNBEC’s argument that any “Actual Confusion” problems of Reitter’s survey should have affected only its evidentiary weight but not its admissibility is also unpersuasive. The CNBEC also attacks the District District Court excluded the survey because Court’s establishment of guidelines to Reitter’s methodology was fundamentally insure that CNBEC’s “confusion log” flawed and because the danger of undue entries prepared by CNBEC’s employees prejudice far outweighed the limited satisfied the Federal Rules of Evidence probative value of the survey, especially before being admitted. CFG filed a

pretrial motion to exclude CNBEC’s In general, “actual confusion” “confusion log” entries as inadmissible evidence collected by employees of a party hearsay. CNBEC conceded that log in a trademark action must be viewed with entries were hearsay, but argued that they skepticism because it tends to be biased or fell within the present sense impression self-serving. See Checkpoint Sys., 269 exception under Fed. R. Evid. 803(1). The F.3d at 298 (“the District Court properly Court granted in part and denied in part took into account the potential bias of the CFG’s motion and established guidelines Checkpoint System’s employees who for the admissibility of CNBEC’s log testified [regarding actual confusion].”); A entries under the “present sense” & H Sportswear, Inc. v. Victoria’s Secret exception. Stores, Inc., 237 F.3d 198, 227 (3d Cir. 2000) (“The District Court, while not CNBEC does not dispute the explicitly discrediting this evidence, Court’s disposition of its argument viewed it with great skepticism, given the regarding the exceptions to the hearsay interested sources and the inability to rule. Rather, CNBEC specifically cross-examine the supposedly confused challenges the Court’s two guideline individuals.”). It was, therefore, proper for requirements: requiring log entries to (1) the District Court here to establish “specifically mention Mellon or CFG” and guidelines to ensure that the evidence met (2) “describe the specific evidence of the the standards of the Federal Rules of direct link to Mellon or CFG in either the Evidence. form of (a) ‘documentary evidence,’ such as specifically referring to a deposit slip, Witnesses for both CFG and or (b) ‘a clear and specific statement by the CNBEC acknowledged that customer customer.’” Citizens Fin. Group, No. 01- confusion between banks frequently 1524, slip. op. at 14. The guidelines also occurred, regardless of bank names. required exclusion of log entries that “Ownership of a trademark does not reflected “the thought process, conclusion, guarantee total absence of confusion in the analysis or interpretation” of the CNBEC marketplace. Selection of a mark with a employees who recorded the entries. Id. at common surname naturally entails a risk of 15. CNBEC asserts that the Court “[cited] uncertainty and the law will not assure no legal support and [articulated] no absolute protection.” Scott Paper Co. v. rationale for its heightened evidentiary Scott’s Liquid Gold, Inc., 589 F.2d 1225, requirements” and that the Court’s 1231 (3d Cir. 1978). The Court was requirements were inconsistent with the familiar with the evidence gathered during standards of admissibility under Fed. R. discovery and was in the best position to Evid. 803(1). We review the District determine the safeguards for relevance and Court’s guidelines for abuse of discretion. reliability in this case. The Court did not United States v. Saada, 212 F.3d 210, 220 abuse its discretion in requiring CNBEC’s (3d Cir. 2000). written evidence to specifically refer to

CFG or Mellon to ensure that the jury received only relevant evidence. Saada, CFG introduced evidence showing 212 F.3d at 220. that “Citizens” was commonly used by Likewise, the Court did not abuse banks both in Pennsylvania and throughout its discretion in requiring CNBEC’s the United States: 8 banks, in addition to evidence to exclude entries that reflected CFG, use “Citizens” in Pennsylvania; the thought process, conclusion, or banks with “Citizens” in their name interpretation of the CNBEC employees coexist in six zip codes in Pennsylvania; who recorded the entries. It was proper for more than 350 FDIC-insured banks use the Court to make such requirement under “Citizens” in their trade names throughout Fed. R. Evid. 803(1). See United States v. the United States and they operate more Guevara, 277 F.3d 111, 127 (2d Cir. 2001) than 2,400 separate branches; “Citizens” is (upholding determination that hearsay the ninth most commonly used bank name; statements did not qualify as “present and approximately 4% of FDIC-insured sense impression” under Rule 803(1) banks have Citizens in their names. because they “were conclusions based CNBEC appeals from the District Court’s upon information [the recorder] had denial of its motion in limine to exclude processed rather than contemporaneous or evidence of widespread third-party use of spontaneous statements that were Citizens-formative trademarks outside its inherently trustworthy”) reh’g denied, 298 market area. F.3d 182 (2 nd Cir. 2002); Vitek Sys., Inc. v. In this case, the jury found that Abbott Labs., 675 F.2d 190, 194 (8th Cir. CNBEC had used the mark “Citizens,” that 1 9 8 2 ) ( c o n c lu d i n g t h a t h e a r s a y the mark was very distinctive (either memorandum did not qualify as present “suggestive,” “arbitrary,” or “fanciful), sense impression because company sought and that there was a likelihood of to elicit its employee’s evaluation of the confusion between CFG’s marks and customer’s thought process). Nonetheless, CNBEC’s “Citizens” mark. Thus, the the District Court’s guidelines permitted jury found infringement by CFG, and written hearsay evidence that reflected “an CNBEC prevailed on this claim. Yet, explanation or description of the event CNBEC argues that the Court erred in rather than a narration.” The guidelines allowing evidence of widespread third conformed to the requirements of Rule party use because it “is not relevant to 803(1). We, therefore, conclude that the determining the strength of CNBEC’s Court did not abuse its discretion and did mark within its marketplace.” We need not err in setting up the guideline not tarry on this issue. First, as a general requirements. rule, widespread use of even a distinctive C. The Discussion of Evidence of mark may weaken the mark. See, e.g., Widespread Third-Party Use of the Word Petro Stopping Ctrs, L.P. v. James River “Citizens” by Other Banking Institutions Petroleum, Inc., 130 F.3d 88, 93-94 (4th

Cir. 1997) (explaining how evidence of the case that makes the broad third party use of a suggestive mark jury’s answers to special may be relevant to show the weakness of interrogatories consistent, the mark). Thus, we believe this evidence they must be resolved that was likely relevant. Further, any way. For a search for one conceivable error was harmless because possible view of the case the jury found in favor of CNBEC on this which will make the jury’s issue of infringement and the strength of findings inconsistent results its mark. Accordingly, we will not reverse in a collision with the the admission of this testimony. Seventh Amendment. III. Molding the Verdict Announcing its decision to deny Our circuit has interpreted Atlantic injunctive relief to CNBEC, and instead to & Gulf Stevedores to mean that “a verdict enjoin CNBEC, the District Court must be molded consistently with a jury’s explained that it was “molding the verdict answers to special interrogatories when entered by the jury and entering a verdict there is any view of the case which in favor of CFG and against CNBEC on reconciles the various answers.” McAdam the declaratory judgement claim and on all v. Dean Witter Reynolds, Inc., 896 F.2d counterclaims filed by CNBEC against 750, 763 (3d Cir. 1990) (quoting Bradford- CFG.” This “molding” is troublesome, White Corp. v. Ernst & Whinney, 872 F.2d given that the jury found that CNBEC had 1153, 1159 (3d Cir. 1989), cert. denied, a protected interest in the mark “Citizens,” 493 U.S. 993 (1989) (emphasis added). and that there was a likelihood of Thus, trial courts must proceed “under a confusion between the marks, constituting constitutional mandate to search for a view CFG’s infringement on CNBEC’s mark. of the case that makes the jury’s answers The District Court had informed the jury consistent.” McAdam, 896 F.2d at 764 during its instructions that “if you find that (quoting United States v. 0.78 Acres of there is a likelihood of confusion caused Land, More or Less, 81 F.R.D. 618, 621 by CFG’s use of the mark Citizens Bank, (E.D.Pa. 1979) aff’d without opinion, 609 then CNBEC will be able to prevent CFG F.2d 504 (3d Cir. 1979). from using the mark Citizens Bank in In our view, the District Court’s those areas where CNBEC has established “molding” in this case has produced a a significant market presence.” collision with the Seventh Amendment. The Supreme Court observed in T h e D is t r ic t C o u r t su b m i t t e d Atlantic & Gulf Stevedores, Inc. v. interrogatories to the jury under Fed. R. Ellerman Lines, Ltd., 369 U.S. 355, 364 Civ. P. 49(b) to decide those issues of fact (1962): necessary for a verdict. In response to the Court’s first interrogatory, the jury found Where there is a view of

in the affirmative that CNBEC had proven The problem which triggered the that it had used “Citizens” standing alone molding of the verdict originated with the as a trademark. In response to the second Court’s framing of the sixth interrogatory. interrogatory, it found that the mark The Court presided over the lengthy and “Citizens” standing alone was suggestive, complex trial before the jury patiently and arbitrary or fanciful. Skipping to the competently. In framing the sixth fourth interrogatory, the jury also found in interrogatory, however, the District Court the affirmative that a likelihood of erroneously formulated the question in confusion existed between CFG’s mark terms of “injury,” rather than in terms of and CNBEC’s “Citizens” standing-alone monetary damages or unjust enrichment. mark. Taken together, these responses “Injury” is a much broader concept than constituted a finding that CFG had the issues of money damages or unjust infringed on CNBEC’s trademark. enrichment which were properly before the However, in the sixth interrogatory, the jury in this case. An injury is “any wrong jury found that CNBEC had not been or damage done to another, either to his “injured” by the infringement, meaning person, rights, reputation, or property.” that no money damages would be awarded. Black’s Law Dictionary (5th ed. 1979). Restatement (Second) of Torts § 7 (1965) defines injury as “the invasion of any The critical question in “molding” legally protected interest of another.” The cases such as this is “whether the jury’s jury, however, was not asked to decide the answers in the verdict are necessarily legal rights of the parties; its function was inconsistent with each other.” Loughman to find facts regarding infringement and v. Consol-Penn. Coal Co., 6 F.3d 88, 104 arrive at a verdict regarding CNBEC’s (3d Cir. 1993). Upon review, we hold that claims for monetary relief. The District the jury’s findings in this case were not Court instructed the jury that if it found for inconsistent, and no molding was CNBEC on unfair competition and its necessary to harmonize them. It is trademark infringement claims, it must completely feasible under trademark law determine whether “CFG be required to that a trademark owner may infringe on pay CNBEC the monetary damages that another’s mark, and yet the senior user CNBEC sustained as a consequence of may not suffer any economic damages. CFG’s wrongful acts.” The Court defined The “molding” in this case only became actual damages as meaning “the amount of necessary when the District Court decided money that will reasonably and fairly that despite the jury’s finding of compensate CNBEC for an injury you find infringement by CFG over CNBEC’s was caused by CFG’s use of the mark senior rights, it would still grant ‘Citizen’s Bank.’” Pursuant to its jury declaratory judgment in favor of CFG, instructions, the Court should have molded thereby allowing CFG to use its registered the jury verdict, as it may now be required, trademark in CNBEC’s market area. to reflect the sixth interrogatory to the jury

as though it were framed in terms of turn to the District Court’s ruling on money damages and unjust enrichment CNBEC’s motion for a permanent rather than “injury.” injunction. We have clearly held that Several days after the jury returned “trademark infringement amounts to its verdict, the District Court turned to irreparable injury as a matter of law.” CNBEC 's motion for a permanent Gucci Am., Inc. v. Daffy’s, Inc., 354 F.3d injunction to enjoin CFG from offering or 228, 237 (3d Cir. 2003) (quoting S & R advertising retail banking services under Corp. v. Jiffy Lube Int’l, Inc., 968 F.2d the mark "Citizens Bank" in CNBEC's 371, 378 (3d Cir. 1992)). Therefore, the claimed market area. The judge apparently jury’s finding of “no injury” must be had received memoranda on the issue, but limited to the context of economic took no new testimony, evidence or oral damages. The jury verdict may not be argument. Without citing any authority used to supplant the principle that CFG’s except the factors set forth in Restatement infringement constitutes a legal injury to (Third) of Unfair Competition § 35, the CNBEC as a matter of law. The District judge delivered an oral opinion denying Court’s molding of the jury’s verdict to CNBEC’s motion. Based on the jury encompass a lack of injury beyond the verdict finding no likelihood of confusion money damages was in error. It was this between CFG’s marks and CNBEC’s full error that led the Court to enter judgment mark of “Citizens National Bank,” the for CFG on its complaint for declaratory Court, sua sponte imposed an injunction judgment. Accordingly, the District on CNBEC requiring it to use the term Court’s molding of the verdict and the “National” as part of its name “when it entry of declaratory judgment for CFG will first refers to itself in any document, be reversed. Upon remand, the District advertising or promotion regardless of type Court is instructed to vacate the judgment or medium used.” and to enter judgment in accordance with On appeal, CNBEC argues that the the jury’s finding of infringement by CFG, District Court erred by enjoining it from consistent with this opinion. using its shortened “Citizens” mark, and IV. The Injunction failing to grant its application for a permanent injunction against CFG. Although we have stated that Further, CNBEC argues that this Court had trademark infringement is an “irreparable never endorsed the “Restatement Factors” injury as a matter of law,” id., we have that the District Court relied on to reach its also held that “the irreparable injury we decision. referred to was not intended to swallow the remaining prongs of the permanent The Restatement (Third) of Unfair injunction inquiry.” Gucci, 354 F.3d at Competition § 35(2), upon which the 237. With that admonition in mind, we District Court relied, states:

The appropriateness and scope of evaluate the “balance of harm” before the injunctive relief depend upon a ultimate determination of infringement. comparative appraisal of all the factors of AM Gen. Corp. v. Daimler Chrysler Corp., the case, including the following primary 311 F.3d 796, 804 (7th Cir. 2002); Lermer factors: & Germany GmbH v. Lermer Corp., 94 F.3d 1575, 1577 (Fed. Cir. 1996). (a) the nature of the interest to be protected; We review a District Court’s decision to grant or deny a permanent (b) the nature and extent of the injunction under an abuse of discretion wrongful conduct; standard. A.C.L.U. of N.J. v. Black Horse (c) the relative adequacy to the Pike Reg’l Bd. of Educ., 84 F.3d 1471, plaintiff of an injunction and of other 1476 (3d Cir. 1996). “An abuse of remedies; discretion exists where the District Court’s decision rests upon a clearly erroneous (d) the relative harm likely to result finding of fact, an errant conclusion of to the legitimate interests of the defendant law, or an improper application of law to if an injunction is granted and to the fact.” Id. (quoting Int’l Union U.A.W. v. legitimate interests of the plaintiff if the Mack Trucks, Inc. 820 F.2d 91, 94 (3d Cir. injunction is denied; 1987)). “[W]e will not interfere with the (e) the interests of third persons district court's exercise of discretion and the public; ‘unless there is a definite and firm conviction that the court . . . committed a (f) any unreasonable delay by the clear error of judgment in the conclusion it plaintiff in bringing suit or otherwise reached upon a weighing of the relevant asserting his rights; factors.’” Morgan v. Perry, 142 F.3d 670, (g) any related misconduct on the 683 (3d Cir. 1998) (citation omitted). part of the plaintiff; and We are hesitant to endorse any (h) the practicality of framing and finite set of factors for consideration in enforcing an injunction. determining the equities of injunctive relief. In fact, the District Court prefaced its consideration of these factors with the CNBEC a r g ues that th e statement that “equity is the key Restatement Factors have not been consideration in determining a proper adopted by the courts because they are ill- remedy once a likelihood of confusion suited for the task of crafting permanent exists.” Even the Restatement (Third) of injunctive relief. The factors, it asserts, Unfair Competition § 35(2) explains that are better suited in considering preliminary weighing injunctive relief requires “a injunctions, which are extraordinary comparative appraisal of all the factors of remedies requiring courts to carefully the case.” In order to determine whether

the District Court abused its discretion in jury, not the nature of the mark owner’s this matter, however, we must review the interest to be protected. The District Court Restatement Factors that were considered. should have focused instead on the actual interests to be protected, i.e. the public The first factor, the nature of the interest in avoiding confusion and interest to be protected, weighed in favor CNBEC’s interest in maintaining control of denying the injunction according to the over its mark and avoiding injury to District Court. The Court explained that reputation and goodwill. We see nothing even though the jury found “Citizens” in this factor which favors the infringer. standing alone to be CNBEC’s lawful trademark, 12 U.S.C. § 22 requires that As to the second factor, the nature CNBEC “include in its name the word and extent of the wrongful conduct, the ‘national’ when identifying itself.” Court was not persuaded that CFG acted in However, this federal statute relating to the bad faith or that it deliberately infringed on organization’s Certificate of National CNBEC’s mark. CFG may not have acted Banking Association only requires that in bad faith, but it deliberately advertised persons uniting to form such associations in the marketplace where CNBEC had “shall . . . make an organization certificate engaged in banking for over one hundred which shall specifically state: first, the years without any trademark infringement. name assumed by such association; which CFG did not enter CNBEC’s marketplace shall include the word ‘National.’” 12 inadvertently; its conduct was deliberately U.S.C. § 22. Nothing in this statutory conceived, planned and implemented by a language inhibits a national bank from large and aggressiv e fina ncial using a diminutive of its name for organization. Thus, although we accept advertising purposes, especially when it is the District Court’s determination that so known by its customers or the CFG did not act in bad faith, we see community it serves. Moreover, the nothing in this factor that weighs against statute expressly requires that the name an injunction. “National” be used in the organization Regarding the third factor, the certificate; it does not address other relative adequacy to CNBEC of an situations in which the name may be used, injunction, the Court again relied on its and certainly not in advertising media. We overly broad interpretation of the federal see no basis in the statute to support the statute requiring the inclusion of the word District Court’s assertion. “National” in CNBEC’s name. The Court The Court also explained under the concluded that CNBEC “can protect the first factor that hundreds of banks values of its trademark” without a throughout the United States use permanent injunction prohibiting CFG “Citizens” in their name. Yet, this inquiry from using its mark. For the reasons we is appropriate for determining the strength set forth in our discussion of the first of the mark, which was determined by the factor, this conclusion of law, although the

District Court stated it as a finding, is Such a limited injunction could in no way without any legal or factual basis. Even “potentially prevent” CFG from using its though CNBEC may be able to avoid some name throughout Pennsylvania. With a confusion by using the word “National” in giant institution operating hundreds of its name, the equities do not necessarily branches throughout the east coast of the support forcing CNBEC to take such United States, it is an enormous stretch of measures given that it is the senior user of imagination to conclude that an injunction the “Citizens” mark and the victim of l i m i t e d t o s e v e r a l c o u n t i e s in trademark infringement. Pennsylvania would have “devastating effects on CFG’s business and customers.” In the fourth factor, a balancing of The record does not support this broad the relative harm to the legitimate interests statement. of the parties if the injunction is denied, the Court concluded that “[a] full Furthermore, in considering this injunction would have devastating effects factor, the District Court ignored the jury’s on CFG’s business and its customers” and finding that CFG’s use of the “Citizens that “it would potentially prevent CFG Bank” mark in the CNBEC market area from using its name not just in CNBEC’s created a likelihood of public confusion market area, but throughout Pennsylvania that could harm CNBEC’s interest in its . . . .” There is nothing in the record to mark. The Court simply stated in support these conclusions. First, CNBEC conclusory fashion that CNBEC “has seeks to enjoin CFG, at most, from failed to demonstrate damage to its offering or advertising retail banking reputation and goodwill” as a result of services under the mark “Citizens Bank” CFG’s infringement. This statement only in Allegheny, Armstrong, Beaver and disregards the record that undisputably Butler counties, and not the rest of shows CNBEC has operated as a bank, at Pennsylvania. The District Court also least in Butler County, for over one noted that CNBEC did not prove it had hundred years and has built substantial penetrated the market in Armstrong and community goodwill that it seeks to Beaver counties and in the Greater protect in the future. As we noted in Pittsburgh area. Commerce Nat’l Ins. Servs., Inc. v. Commerce Ins. Agency, Inc., a similar Thus, an injunction could be easily case involving reverse confusion, “[w]e tailored to CNBEC’s proven market area, think it a reasonable inference that during a modest part of Western Pennsylvania.2

persons eighteen years and older; Beaver 2 According to the United States County, 140,350; Butler County, Federal Census of 2000, of which we 131,235; and all of Allegheny County, take judicial notice, all of Armstrong including the Greater Pittsburgh Area, County had only a population of 55,818 1,000,490.

those thirteen years, [the senior user] was Jaycees v. Phila. Jaycees, “avoidance of able to build up substantial goodwill for its confusion should always be a major general insurance services under [its] concern of a court in a trademark case,” mark.” 214 F.3d 432, 443 (3d Cir. 2000) and “actual confusion need not be shown. (footnote omitted). In this case, too, we Rather, only the likelihood of confusion is believe that after the use of CNBEC’s required.” 639 F.2d 134, 142 (3d Cir. trademark name in a limited rural area of 1981). We further stated in that case, Western Pennsylvania over many years, its “[p]rotection of infringers is not a purpose expansion in that area during this period, of the Lanham Act. On the contrary, the and the record of its consistent and broad Act’s objective is the protection of the advertisement of its business and name trademark and the public.” Id. We over those many years, one can reasonably recognize the District Court’s legitimate infer that infringement against CNBEC’s concern that a strict injunction against trademark will adversely affect its CFG could cause further public confusion reputation and goodwill. Balancing the for CFG’s customers, particularly relative harm to the legitimate interests of considering CFG’s national scope and the the parties clearly favors CNBEC and not proliferation of internet banking. the infringer. However, potential public confusion should not be considered to the exclusion As to the fifth factor, the interest of of trademark protection. Rather, we third parties and the public, the District believe that in this case this factor should Court was of the opinion that a permanent be read as a mandate to craft injunctive injunction, as requested, would increase relief that will minimize confusion, rather confusion rather than prevent it. It reached than abandoning injunctive relief all this conclusion on the supposition that an together. injunction would require CFG to change its name, but CFG still would be required As to the sixth factor, delay in suing to indicate to consumers “that it was the infringer, the Court found no delay on owned by or otherwise affiliated with the part of CNBEC in bringing its claims. Citizens Bank.” A tailored permanent Thus, the Court did not consider this factor injunction, however, need not affect the important. Because CNBEC did act name for CFG’s hundreds of branches promptly to protect its rights, we believe outside of the limited area constituting that if this factor is to be given any weight, CNBEC’s market area. A permanent it would favor CNBEC’s application for injunction need not require that CFG injunction. operate any branches in CNBEC’s The Court considered that the marketplace, nor would it bar CFG from seventh factor, misconduct on the part of operating an independent affiliate under a CNBEC, weighed heavily against the grant different name in the enjoined areas. of an injunction. CFG alleges that As we stated in United States CNBEC dropped the word “National” in

its advertisements following CFG’s p l a i n ti f f a g a i n s t t h e entrance in the market in order to increase transgression which, it is confusion and advance its litigation c o n t e n d e d , s e rves to strategy. The Court concluded that there foreclose that right. was evidence in e-mails and memos from CNBEC’s marketing team and other employees “that indicated that CNBEC Id. took affirmative actions aimed at In a trademark infringement action, increasing confusion to further their own “the court must show solicitude for the efforts in this case.” These efforts, the public in evaluating an unclean hands Court found, all occurred after CFG defense.” Donoghue v. IBC/USA announced its intention to enter the (Publications), Inc., 886 F. Supp. 947, 954 market. The Court believed this “clear (D. Mass. 1995). Because a central evidence of unclean hands is significant.” concern in an unfair competition case is Although there is some evidence of protection of the public from confusion, at least consideration of a plan by CNBEC courts require clear, convincing evidence to enhance their litigation position, the of “egregious” misconduct before District Court took a severe view of the invoking the doctrine of unclean hands. evidence and allowed this evidence to Ciba-Geigy Corp. v. Bolar Pharm. Co., overshadow the merits of the plaintiff’s Inc., 747 F.2d 844, 855 (3d Cir. 1984). claim and the public’s interests. See Furthermore, “the extent of actual harm Republic Molding Corp. v. B.W. Photo caused by the conduct in question, either to Utilities, 319 F.2d 347, 350 (9th Cir. 1963) the defendant or to the public interest, is a (“Unclean hands, then, does not stand as a highly relevant consideration.” Republic defense that may be properly considered Molding Corp., 319 F.2d at 349-350. independent of the merits of the plaintiff's There is very little evidence in this claim . . . .”). case that the thoughts or suggestions of In the interests of right and CNBEC’s advertising agencies or its justice the courts should marketing team were ever implemented or not automatically condone carried into effect. Whether CNBEC the defendant’s infractions executives disapproved or rejected those because the plaintiff is also ideas or suggestions is not clear in this b lam ew or th y, ther e by record, but it is clear that any actual having two wrongs implementation of this strategy was minor. unremedied and increasing The District Court, in its oral opinion, the injury to the public. referred to evidence of e-mails from Rather the court must CNBEC’s marketing teams and its ad weigh the substance of the agencies “regarding a change in the ads to right asserted by the make its ads seem more like those of

CFG.” The Court, however, did not point evidence that CNBEC employees to any advertisements that CNBEC used to discussed amendments to a limited number implement these changes. of advertisements in order to enhance its litigation position, the evidence does not CFG argues that CNBEC amended support “egregious” conduct on the part of its policy of referring to itself in the first CNBEC to create consumer confusion. instance as “Citizens National Bank,” and This evidence may also be explained as began using “Citizens” alone more CNBEC’s attempt to hold its ground by frequently to highlight the similarity with utilizing its “Citizens” mark, rather than CFG’s marks. CFG points to one ad that conceding the name to CFG. Any effort was run originally in 2000, and again in by CNBEC to assert the name “Citizens,” 2002, where the 2002 version shortened its which CNB EC spent many years name in the text of the add from “Citizens cultivating as a recognizable trademark, National Bank” to “Citizens.” CNBEC does not automatically require a finding of counters this claim, explaining that its unclean hands. Furthermore, the internal communication guidelines from speculative evidence presented by CFG 1995, prior to CFG’s entrance, state clearly does not include any actual instances of that the bank will refer to itself as either consumer confusion based on CNBEC’s “Citizens National Bank” or “Citizens” in actions. We do not believe that the all c o m mu nications. Theref ore , isolated documents produced by CFG and particu larly w h e n C N B E C ’s ads relied on by the District Court constitute prominently display the CNBEC logo with clear, convincing and u nequ ivocal “Citizens National Bank” in large print in evidence that would reasonably support a the layout as a first reference, the bank finding of unclean hands. Kearney & may refer to itself with either its full or Trecker Corp. v. Cincinnati Milacron, Inc., shortened name in the text of an ad and 562 F.2d 365, 371 (6th Cir. 1977). We still be within its guidelines. hold that the District Court’s heavy CFG also argues that CNBEC reliance on the doctrine of unclean hands created a welcome letter for new to justify its denial of injunctive relief customers stating “[y]ou may have already improperly weighted that evidence to the noticed that Citizens is not your ordinary exclusion of the merits of CNBEC’s claim bank,” in an attempt to create confusion and the public interest, and constituted an with CFG’s tagline of “not your typical abuse of discretion. bank.” However, CNBEC explained that The District Court also concluded this sentence referred to a marketing that the last factor, the practicality of phrase “Beyond the Ordinary,” which framing and enforcing an injunction, CNBEC had used well before CFG entered weighs in favor of denying a permanent the market. injunction. It observed that CFG “is a We believe that although there is large bank with many branches and

consumers spanning a large geographical mark in “Citizens” standing alone and the area over many states” and that injunctive likelihood of confusion between that mark relief “would be difficult, if not impossible and CFG’s. Thus, these factors, even to enforce.” At the utmost, CNBEC seeks when combined with the Court’s reliance injunctive relief in only four counties. An on the other factors to which it deferred, is injunction limited to the area of CNBEC’s not a sufficient ground to support the market penetration would not require Court’s denial of injunctive relief. enforcement in the rest of Pennsylvania or Accordingly, we conclude that the United States. The numerous branches CNBEC is entitled to enjoin CFG from the and geographical dispersion of the use of the mark “Citizens” in CNBEC’s infringer’s network does not provide it marketplace. “The law of trademark with a blanket insulating it from action protects trademark owners in the exclusive against its infringement. No infringer is use of their marks when use by another immune from challenge because of its size. would be likely to cause confusion.” Neither the principles of equity nor the Interpace Corp. v. Lapp, Inc., 721 F.2d federal Constitution favor the rights of the 460, 462 (3d Cir. 1983). Although powerful over the rights of the weak CNBEC’s mark is unregistered, the jury merely because of size. found that CFG had a protected interest in Referring to consumer protection the mark, and that CFG infringed on as the “foremost purpose of trademark CNBEC’s use creating a likelihood of law,” the Court again referred to CNBEC’s consumer confusion. The concurrent use alleged unclean hands as the cause of the of a trademark where a likelihood of consumer confusion. As we stated confusion exists damages the public previously, we see no evidence to support interest. Jiffy Lube, 968 F.2d at 379. A this assertion. The Court was further finding of infringement or the likelihood influenced by its interpretation of 12 of confusion with the concurrent use of the U.S.C. § 22 requiring CNBEC to use infringed trademark implicitly signifies a “National” in its name, plus the jury’s loss of expectation and goodwill as well. finding of no likelihood of confusion The infringement amounts to borrowing between defendant’s marks and the the senior user’s reputation and goodwill, “Citizens National Bank” mark. We have which is an injury in and of itself, even already addressed our disagreement with without evidence of actual loss of the District Court’s interpretation of 12 goodwill. See Opticians Ass’n of Am. v. U.S.C. § 22, and there is no need to repeat Indep. Opticians of Am., 920 F.2d 187, it here. Reliance on the jury’s finding of 195 (3d Cir. 1990) (citing Ambassador E., an absence of confusion between CFG’s Inc. v. Orsatti, Inc., 257 F.2d 79, 82 (3d marks and the “Citizens National Bank” Cir. 1958)). does not respond to the jury’s finding of When we consider CNBEC’s infringement with respect to CNBEC’s reverse confusion harm in light of the

foregoing, the engagement of the parties in of advertising. Under these factors, the same line of business, CFG’s CNBEC maintains an injunction should awareness of the senior’s use of the mark, encompass the entire four-county area, and the jury’s verdict, there can be no including the Pittsburgh metropolitan doubt of a strong likelihood of reverse region. CNBEC asserts that this relief is confusion in this case despite CNBEC’s necessary to protect the public interest and use of the term “National.” CFG’s ability its rights. to promote its mark, in light of its CFG, on the contrary, points out enormous resources and many branches, is that CNBEC’s branches are located in and significantly greater than CNBEC’s. immediately adjacent to Butler County. “Without the recognition of reverse Almost all of its customer accounts are in confusion, smaller senior users would have Butler and Northern Allegheny counties. little protection against larger, more Dr. Crane, a Harvard business professor powerful companies who want to use testifying on behalf of CFG as an expert i d e n t ic a l o r confusingly simila r witness, explained that CNBEC’s market trademarks.” Fisons Horticulture, 30 F.3d should be limited to its core locations in at 475. Section 43(a) of the Lanham Act Butler and Northern Allegheny Counties has been interpreted by this and other because “75% of customers open a circuits to protect against s uch checking account within four miles of infringements by large entities, and we where they live or work.” will uphold that principle here. Id. Accordingly, the District Court’s refusal to Looking at CNBEC’s share of enjoin CFG’s infringement constituted an market deposits, Dr. Crane found that abuse of discretion, and we will reverse. CNBEC accounts for about 13% of deposits in Butler County, 2% in The more difficult problem arises Armstrong county, less than 1% in in the framing of the injunction. CNBEC Allegheny County, and less than 1% in asserts that an injunction should embrace Beaver County. On cross-examination, all of Allegheny, Armstrong, Beaver and Dr. Crane also acknowledged that if an Butler counties. It claims that the District injunction issued against CFG because of Court’s advisory ruling that CNBEC’s the likelihood of confusion caused by the trademark rights extend only as far as the use of its name, federal regulations would location of its physical branches is legally not bar CFG from using a different name erroneous. It argues that in determining on its branches in the enjoined territory. injunctive relief under Natural Footwear, Ltd. v. Hart, Schaffner & Marx 760 F.2d CNBEC had approximately 9,886 1383, 1398-99 (3d Cir. 1985), the extent accounts in northern Allegheny County as should be governed by (1) the senior user’s of August 1, 2001. Those accounts value of the sales, (2) growth trends, (3) represented approximately $50 million in market shares, and (4) amount and scope deposits and approximately $90 million in

loans. Don Shoney, CEO and Chief we are hesitant to enunciate the ultimate Operating Officer of CNBEC, testified that contours of the injunction. As we noted the branch in Northtowne Square in above, the District Court identified valid Northern Allegheny County was CNBEC’s concerns regarding potential confusion southernmost facility. He also testified among CFG’s customers in the region, as that the banks consumer market centered well as confusion that may arise from around its branches but that a much required disclosure of the name “Citizens broader market existed for its business Bank” for customers using ATMs outside accounts and for its non-traditional of the region or internet banking. Upon products such as life insurance, trust remand, we will instruct the District Court services and brokerages, where there is no to explore these issues and develop the need to be linked to a physical location. specific limitations in the injunction that will mitigate these potential sources of Although CNBEC lays claim to a confusion. four-county market largely because its advertising in print and broadcast media V. Cross-Appeal reaches this area, we do not agree that its CFG filed a conditional cross- market extends this far. This Court stated appeal in the event that this Court should in Natural Footwear that “the senior user reverse the District Court’s injunction. We of a common law mark may not be able to now address that appeal. obtain relief against the junior user in an area where it has no established trade, and A. hence no reputation and good will.” 760 CFG challenges the District Court’s F.2d at 1394. On the other hand, as we evidentiary ruling allowing testimony from pointed out in Scott Paper Co., 589 F.3d at CNBEC tellers regarding their experiences 1231, the grant of a monopoly to CFG by with customers confused between the two virtue of the federal registration under the banks. CFG claims this testimony was Lanham Act should not be liberally inadmissible hearsay. “To the extent the construed. The rights granted to the district court's admission of evidence was registered user should not be extended. based on an interpretation of the Federal We believe the District Court correctly Rules of Evidence, our standard of review found CNBEC’s market penetration is plenary. But we review the Court's included Butler County and the Northern decision to admit the evidence if premised part of Allegheny County. We do not at on a permissible view of the law for an this time express any opinion as to the abuse of discretion.” United States v. market penetration in Armstrong and Pelullo, 964 F.2d 193, 199 (3d Cir. 1992). Beaver counties, and we leave that determination for the District Court upon CFG points to no specific instances remand. As an appellate court one of a teller testifying to out-of-court step removed from the facts of this case, statements asserted for their truth. Even

by CFG’s description, the tellers described that had the instruction required a temporal their personal experiences with customers finding, the jury would not have found that at the bank, which is not inconsistent with CNBEC obtained trademark rights in Fed. R. Evid. 801(c). Furthermore, “the “Citizens.” plaintiffs' own testimony about the actual CFG’s argument relies upon a behavior of their customers is not single passage from the instructions that hearsay.” Calahan v. A.E.V., Inc., 182 does not include a temporal instruction F.3d 237, 253 (3d Cir. 1999). In this case, regarding CNBEC’s use of “Citizens.” the tellers described what they saw and the However, the scope of review for a jury action they took with respect to customers instruction is whether, when taken as a who appeared to be confused with respect whole, they properly apprise the jury of the to CFG and CNBEC. This is not hearsay. issues and the applicable law. Khorozian, Further, Fed. R. Evid. 803(3) allows 333 F.3d at 508 (explaining that courts statements, otherwise excluded as hearsay, review “the totality of the instructions and to be received to show the declarant’s not a particular sentence or paragraph in then-existing state of mind. Id. at 251. To isolation.”); Everett v. Beard, 290 F.3d the extent that any of the customers’ 500, 512 (3d Cir. 2002); Tigg Corp. v. statements may be deemed hearsay, we Dow Corning Corp., 962 F.2d 1123 (3d believe Rule 803(3) would apply. Thus, Cir. 1992). the District Court did not abuse its discretion by admitting this testimony. Upon review of the instructions, it is clear that the District Court instructed B. the jury specifically that in order to be a CFG also complains that the senior user of a mark, CNBEC’s rights District Court erred in its jury instruction should be evaluated prior to CFG’s entry concerning the determination of CNBEC’s into the disputed market area in July, 2001. rights in the mark “Citizens” standing In describing secondary meaning, the alone. CFG asserts that the District Court explained that the jury must consider Court’s instruction did not require a consumer perception of the mark “prior to finding that CNBEC had consistently used CFG’s entry.” This Court presumes that “Citizens” as a trademark over time prior the jury followed the Court’s instructions. to CFG’s entry in the market. The legal United States v. Givan, 320 F.3d 452, 462 accuracy of jury instructions are reviewed (3d Cir. 2003), United States v. Syme, 276 de novo. See United States v. Khorozian, F.2d 131, 155 (3d Cir. 2002). Thus, we 333 F.3d 498, 507-08 (3d Cir. 2003). presume that the jury considered CNBEC’s use of “Citizens” prior to CFG’s CFG argues that the undisputed entrance to the market in determining that evidence shows that CNBEC started using CNBEC had a protected interest in the the mark standing alone consistently only trademark. after CFG entered the market. CFG argues

The District Court’s evidentiary specific contours of CNBEC’s market area ruling and the challenged jury instruction in the other three disputed counties. raised in CFG’s cross-appeal will be The District Court is directed to affirmed. strike from its opinion its statement that VI. Conclusion “future actions by CNBEC based upon additional evidence of consumer confusion In accordance with the foregoing, occurring after November 1, 2002, would the evidentiary rulings and jury be frivolous and unwarranted.” instructions of the District Court during the jury trial and the order denying the Sixty percent of the costs will be motion for a new trial are affirmed. taxed against CFG. However, the judgment of the District Court entered in favor of Citizens Financial Group’s (CFG’s) complaint for a declaratory judgment will be vacated. The case will be remanded to the District Court to mold the verdict to reflect that Citizens National Bank of Evans City (CNBEC) has not proven that it has suffered money damages as a proximate result of CFG’s infringement, but also with directions to enter judgment in favor of CNBEC on the declaratory judgment claim, stating that CFG is not entitled to a declaratory judgment allowing its use of “Citizens” in CNBEC’s market area. The District Court’s denial of CNBEC’s motion for injunctive relief, and the subsequent injunction issued against CNBEC requiring its use of the term “National” as part of its name when it first refers to itself in any document or advertising, will be vacated. On remand to the District Court, it is directed to enter an order permanently enjoining CFG from offering or advertising retail banking services under the mark “Citizens Bank” in Butler County and to conduct an evidentiary hearing to determine the