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Precedential or Non-Precedential: Precedential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

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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

2

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.

3

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

4

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

5

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.

6

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).

7

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

8

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

9

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.

10

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

11

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

12

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

13

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

14

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

15

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

16

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:

17

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

18

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

19

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.

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28