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COMMERCE NAT'L INS. SERVS. v. COMMERCE INS. AGENCY

February 18, 1998

COMMERCE NATIONAL INSURANCE SERVICES, INC. and COMMERCE BANCORP, INC., Plaintiffs,
v.
COMMERCE INSURANCE AGENCY, INC. and COMMERCE INSURANCE AGENCY OF SOUTH JERSEY, INC., Defendants. COMMERCE INSURANCE AGENCY, INC., Plaintiff, v. COMMERCE NATIONAL INSURANCE SERVICES, INC., Defendant.



The opinion of the court was delivered by: IRENAS

 IRENAS, District Judge:

 For the reasons that follow, this Court will: (1) deny both parties' applications for preliminary injunctions prohibiting each other's use of the mark "Commerce;" (2) grant CNIS and CBI's application for a preliminary injunction prohibiting CIA from using a stylized, indented capital "C" in physical proximity to the mark "Commerce," or any similar logo; *fn2" (3) grant CNIS and CBI's application for a preliminary injunction prohibiting CIA from using the term "National" in identifying itself or its services; and (4) grant CIA's application for a preliminary injunction prohibiting CNIS from using the abbreviated name "Commerce Insurance."

 I. BACKGROUND

 CBI was founded in 1973 with a branch in Marlton, New Jersey. Today it is a large bank, with more than fifty branches and nearly $ 3 billion in deposits. Since approximately January, 1973, CBI has used as a logo ("the CBI logo") a curved, filled-in, block-lettered, slightly italicized large-type "C" appearing, indented, below "Commerce." (See infra at A-1). *fn3" CBI has promoted the "Commerce" mark and the CBI logo widely through customer services, promotional materials, advertisements and community service activities. Since December of 1974, CBI has offered credit life insurance and credit disability insurance in connection with its banking services. *fn4"

 CIA was founded in April, 1983, with a single office in Cedar Brook, New Jersey. After five years of growth and expansion, CIA moved to larger offices in Sicklersville. CIA serves insurance customers in New Jersey and "elsewhere." Since 1985, CIA has used as a logo ("the CIA logo") a block-lettered, slightly italicized large-type "C" appearing, indented, below "Commerce." (See infra at A-1). Recently, CIA has begun using "Commerce National Insurance Agency" as its business name and service mark. (Aff. of Norcross P 14 & Exh. A).

 In 1986, CIA began banking at CBI. CIA secured lines of credit from CBI and rented a safe deposit box. In October, 1988, CBI invited CIA to contribute to CBI's 5th Annual Commerce Golf Classic and CIA made a contribution. (Aff. of Loser PP 7-8 & Exh. 4 at 5). CBI listed CIA as a sponsor in the Golf Classic's printed program and placed CIA's name on a sign at the event. (Id. P 8 & Exh. 4 at p. 5). CIA and CBI have referred individuals and businesses to each other. (Id. P 9). From 1983 to 1996, CIA never was made aware of anyone who believed CIA was a part of CBI or vice versa, and CIA and CBI co-existed without any confusion between CIA's insurance services and CBI's banking operations. (Id. P 10).

 On July 25, 1996, CBI announced its intention to form Commerce National Insurance Services, Inc. ("CNIS"), now a subsidiary of CBI. The announcement came in the wake of Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 134 L. Ed. 2d 237, 116 S. Ct. 1103 (1996), in which the Supreme Court found that a federal statute permitting a national bank to sell insurance, 12 U.S.C. § 92, preempts any inconsistent state law. Having purchased several additional insurance agencies, CNIS now provides insurance services to more than 38,000 customers maintaining more than $ 150 million of insurance coverage. CNIS has been using versions of the CBI logo which feature "Commerce National Insurance Services," or "Commerce Insurance," in place of "Commerce Bank."

 In August, 1996, CIA began taking actions apparently designed to shore up its position for a potential trademark dispute with CNIS/CBI. On August 26, 1996, CIA filed a service mark registration application with the United States Patent and Trademark Office for federal registration of its interstate use of "Commerce" for insurance products. The application was granted. On August 28, 1996, CIA filed a service mark registration application with the New Jersey Secretary of State ("the Secretary") for state registration of the mark "Commerce Insurance Agency." This mark was registered by the Secretary on September 3, 1996. On September 3, 1996, CIA filed a service mark registration application with the Secretary for registration of the mark "Commerce National Insurance Agency." This mark was registered by the Secretary on September 11, 1996.

 The presence of two similarly-named insurance companies operating in southern New Jersey has caused some confusion. In early 1997, CIA contacted an insurance carrier to track down a missing policy and was asked by the carrier what CIA's agency code number had been prior to CBI's purchase of CIA. In May, 1997, the parties began to receive each other's mail. (Aff. of Loser P 8). CIA brought this situation to CNIS's attention in June, 1997, and again in August and September of 1997. (Id. P 19). In June, 1997, CNIS denied the existence of client confusion. (Id. P 19). CNIS currently is using "Commerce," "Commerce Insurance, "Commerce National," and "Commerce National Insurance" in connection with its operations. CIA continues to receive mail and telephone calls intended for CNIS. (Id. P 19).

 CNIS and CBI [hereinafter, when referred to in their capacity as litigants, "CNIS/CBI"] filed a complaint on September 12, 1997. CIA filed its own complaint on September 29, 1997. CNIS/CBI states that, since its complaint was filed, it has learned that -- as recently as October, 1997 -- CIA has been promoting CNIS's mark, including a stylized capital "C," in a manner virtually identical to CNIS's use of that mark. (Aff. of Norcross P 14). *fn5" The parties' actions have been consolidated. CNIS/CBI and CIA filed their motions for preliminary injunctive relief on October 29, 1997, and November 12, 1997, respectively.

 II. PRELIMINARY INJUNCTION STANDARD

 In order to obtain a preliminary injunction, the moving party must show: (1) a reasonable probability of eventual success in the litigation; and (2) that it will be harmed irreparably pendente lite if relief is not granted. Acierno v. New Castle County, 40 F.3d 645, 653 (3d Cir. 1994). Where appropriate, the court also must: (3) balance the hardships to the respective parties; and (4) determine whether the issuance of a preliminary injunction will further the public interest. Opticians Ass'n of America v. Independent Opticians Ass'n of America, 920 F.2d 187, 197 (3d Cir. 1990); see Acierno, 40 F.3d at 653. All factors should favor preliminary relief before an injunction will issue. S & R Corp. v. Jiffy Lube Int'l Inc., 968 F.2d 371, 374 (3d Cir. 1992).

 III. DISCUSSION

 A. The Underlying Claims

 CNIS/CBI states claims against CIA for: (1) trademark infringement in violation of the Lanham Act, 15 U.S.C. § 1114; (2) false designation of origin in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1); (3) trademark dilution in violation of the Lanham Act, 15 U.S.C. § 1125(c); (4) common law unfair competition; and (5) appropriation of trademark in violation of N.J.S.A. § 56:4-1. CIA asserts claims against CNIS for: (1) service mark infringement in violation of the Lanham Act, 15 U.S.C. § 1114; (2) false designation of origin in violation of the Lanham Act, 15 U.S.C. § 1125(a); (3) service mark infringement in violation of N.J.S.A., Title 56; (4) common law unfair competition; and (5) tortious interference with prospective economic advantage. Both parties base their preliminary injunction applications solely on the federal trademark infringement issue. They characterize the alleged irreparable harm as consumer confusion leading to deprivation of good will and damage to reputation.

 B. The Parties' Applications for Preliminary Relief

 CNIS/CBI seeks to enjoin CIA:

 1. From using the name "Commerce National Insurance Agency;"

 2. From using: (a) the mark "Commerce;" (b) the CIA logo; and/or (c) "Commerce National Insurance Services," or a mark which uses "Commerce" as a component, or anything confusingly similar, in connection with the sale of insurance;

 3. From suggesting in any way that CIA's products and services are associated with, sponsored by, or connected/affiliated with CNIS/CBI.

 CIA seeks to enjoin CNIS:

 1. From using the name "Commerce National Insurance Services, Inc.;"

 2. From using: (a) the mark "Commerce;" and/or (b) the mark "Commerce National Insurance Services, or a mark which employs "Commerce" as a component or anything confusingly similar, in connection with the sale of insurance; and,

 3. From suggesting in any way that CNIS's products and services are associated with, sponsored by, or otherwise connected/affiliated with CIA.

 C. The Legal Standards

 1. Standard for Trademark Infringement Claim

 "The law of trademark protects trademark owners in the exclusive use of their marks when use by another would be likely to cause confusion." Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 462 (3d Cir. 1983). "Generally, to win a trademark claim, a plaintiff must establish that (1) the marks are valid and legally protectable; (2) the marks are owned by the plaintiff; and (3) the defendant's use of the marks to identify goods or services is likely to create confusion concerning the origin of the goods or services." Opticians Ass'n of America, 920 F.2d 187 at 192; see Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 472 (3d Cir. 1994); Ford Motor Co. v. Summit Motor Prods., Inc., 930 F.2d 277, 291 (3d Cir.), cert. denied sub. nom, Altran Corp. v. Ford Motor Co., 502 U.S. 939, 116 L. Ed. 2d 324, 112 S. Ct. 373 (1991).

 
The first two requirements, validity and legal protectability, are proven where . . . a mark was federally registered and has become "incontestible" under the Lanham Act, 15 U.S.C. §§ 1058 and 1065. Ford Motor Co., 930 F.2d at 291 (citing Opticians Ass'n, 920 F.2d at 194). If the mark has not been federally registered or, if registered, has not achieved incontestability, validity depends on proof of secondary meaning, unless the unregistered mark is inherently distinctive. Ford Motor Co., 930 F.2d at 291 (citing A.J. Canfield Co. v. Honickman, 808 F.2d 291, 296 (3d Cir. 1986)).

 Fisons Horticultural, Inc., 30 F.3d 466 at 472 (footnote omitted). *fn6"

 "The prime element of secondary meaning is a mental association in buyers' minds between the alleged mark and a single source of the product." 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 15:5 (4th ed. 1997). "Secondary meaning is demonstrated where, in the minds of the public, the primary significance of a product feature or term is to identify the source of the product itself." Ford Motor Co., 930 F.2d at 292 (internal quotes omitted). While there is no consensus on the elements of secondary meaning,

 
[a] non-exclusive list of factors which may be considered includes the extent of sales and advertising leading to buyer association, length of use, exclusivity of use, the fact of copying, customer surveys, customer testimony, the use of the mark in trade journals, the size of the company, the number of sales, the number of customers, and actual confusion.

 Id.

 Ownership of a mark is established by being the first to adopt and use the mark. Id.; see ACCU Personnel, Inc. v. AccuStaff, Inc., 846 F. Supp. 1191, 1213 (D. Del. 1994) ("The senior user usually is deemed the owner of the trademark."); 2 McCarthy § 19:3. "The first party to adopt a trademark can assert ownership ...


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