CITIBANK, NA v. Citytrust

Citations: 596 F. Supp. 369; 224 U.S.P.Q. (BNA) 1014; 1984 U.S. Dist. LEXIS 22432Docket: 84 Civ. 3786

Court: District Court, E.D. New York; October 26, 1984; Federal District Court

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Plaintiffs Citibank, N.A. and Citicorp filed a motion for a preliminary injunction against defendants Citytrust and Citytrust Bancorp, Inc. to prevent them from using the name "CITYTRUST" in connection with their newly established office in Melville, New York, and to restrict their advertising efforts in New York. A hearing was held on October 22, 1984, where testimony and arguments were presented alongside supporting affidavits. Citibank and Citicorp own registered federal service marks, including the name "Citi" and numerous extensions, though "Citytrust" is not among them. Citibank does have subsidiaries that have used the name outside the U.S. since the 1970s. The defendants have operated in Connecticut since 1854 and opened their first New York office in May 1984. Prior to this, there was no overlap in their business channels. The defendants' application to register the "Citytrust" mark was opposed by the plaintiffs in 1980 due to potential confusion with their own marks. The plaintiffs claim relief under the Lanham Act for trademark infringement, false designation of origin, and under New York state law for trademark infringement and dilution. The resolution of the registration issue is projected for 1985 or 1986.

To secure a preliminary injunction in this Circuit, plaintiffs must demonstrate (a) irreparable harm and (b) either (1) a likelihood of success on the merits or (2) sufficiently serious questions related to the merits that warrant litigation, along with a favorable balance of hardships for the requesting party. The burden of proof lies with the moving party. In trademark infringement cases, the key factor is the likelihood of confusion among consumers regarding the source of goods or services. This determination is guided by the Polaroid factors, which include the strength of the senior user's mark, similarity between the marks, proximity of the products, likelihood of bridging the gap, actual confusion, junior user's good faith, quality of the junior user's product, and buyer sophistication.

The strength of a trademark is crucial, categorized as generic, descriptive, suggestive, or arbitrary/fanciful, with strength also determined by secondary meaning. Although the specific category of the plaintiffs' marks is undetermined, they have clearly acquired secondary meaning and are thus entitled to protection. The degree of similarity between the marks is evaluated based on whether such similarity is likely to confuse consumers, focusing on the overall impression of the marks.

On October 13, 1978, Jonathan A. Topham, CEO of the defendants, expressed opposition to the plaintiffs' application to open a consumer loan office in Westport, Connecticut, citing potential confusion between "Citicorp" and "Citytrust." Topham clarified in an affidavit that neither he nor the Federal Reserve Bank viewed his protest as a trademark conflict, and he had not sought legal trademark counsel before expressing his opinion. However, his perspective is deemed more relevant as it reflects consumer perception. The defendants argue that the "I" in "Citi" differentiates it from the "Y" in "Citytrust," minimizing confusion. 

Deposition testimony from Edward C. Kozlowski, the designer of "Citytrust," indicated that "Cititrust" would sound similar to "Citytrust," highlighting the auditory aspect of trademark similarity. The likelihood of confusion is further supported by the proximity of the competing services in the same geographic area and the potential for consumers to assume relatedness due to corporate diversification. Evidence of actual confusion, supported by testimonies and affidavits from various individuals, strengthens the likelihood of confusion claim. 

The defendants’ awareness of the plaintiffs' opposition before establishing their New York office and their minimal advertising investment are factors in assessing the defendants’ good faith. The defendants’ financial challenges in the late 1970s and their name change were seen as efforts to improve their situation, which may influence the court's consideration of equity in this case.

Quality of the defendants' banking and financial services is deemed irrelevant as the plaintiffs do not contest it. The sophistication of purchasers is significant; testimony indicated that even sophisticated Citibank customers experienced confusion regarding the services, suggesting that unsophisticated consumers may also be confused. The plaintiffs are likely to succeed on the merits based on the Polaroid factors, which have been supplemented by considering the parties' conflicting interests, the senior user's priority, delay in asserting claims, and potential harm to the junior user. The defendants' minimal advertising efforts and lack of substantial capital investment imply they are only tentatively entering the market. Given the likelihood of confusion and the defendants' tentative market entry, the balance of hardships favors the plaintiffs.

The plaintiffs are also likely to suffer irreparable harm if the defendants' actions continue, as established case law suggests such harm follows from a likelihood of success. The defendants argue that the plaintiffs are guilty of laches, requiring proof that the plaintiffs knew of the defendants' mark use, delayed action, and that the defendants would be prejudiced by the plaintiffs asserting their rights now. The plaintiffs opposed the defendants' mark registration in 1980, and they acted promptly after learning about the defendants’ New York office opening, indicating that the defendants would not be unduly prejudiced. The excerpt briefly mentions the plaintiffs' claim under New York General Business Law § 368-d concerning injury to business reputation and dilution, referencing case law that establishes a cause of action based on a distinctive trademark and likelihood of dilution.

Competition between the parties and likelihood of confusion are not required elements for the cause of action; however, the defendants' good faith is relevant in claims for injunctive relief. The plaintiffs have demonstrated a likelihood of success on their claims under the anti-dilution statute and the Lanham Act, as well as established irreparable harm. In compliance with Rule 65(d) of the Federal Rules of Civil Procedure, the injunction order specifies the reasons for its issuance and details the acts to be restrained. Consequently, the defendants and associated parties are preliminarily enjoined from using the name "CITYTRUST" in connection with their office at 510 Broadhollow Road, Melville, New York, or any future offices in New York, as well as from increasing advertising efforts in the state beyond prior levels. Additionally, the plaintiffs must post a bond of $25,000 to cover potential costs and damages incurred by any party wrongfully restrained. The Federal Reserve Board found no significant similarity between the plaintiffs' proposed name in Westport and "Citytrust" that would lead to unfair competition.