United States District Court, D. Colorado
ORDER GRANTING PRELIMINARY INJUNCTION IN
PART
WILLIAM J. MARTINEZ UNITED STATES DISTRICT JUDGE
Plaintiff
Central Bancorp, Inc., operates a full-service bank under the
name “Central Bank & Trust” in Colorado
Springs. A little more than five miles away, but still in
Colorado Springs, Defendants recently opened a bank branch
under the name “Central Bank.” Plaintiff now sues
Defendants for trademark infringement and unfair competition,
seeking to bar Defendants from operating branches anywhere in
Colorado under a name that includes the word
“Central.”
Currently
before the Court is Plaintiff's Motion for Preliminary
Injunction (ECF No. 16) and associated briefing (ECF Nos. 32,
43, 53, 54). The Court held an evidentiary hearing on May 1,
2019. For the reasons explained below, the Court finds that
Plaintiff is entitled to a preliminary injunction against
Defendants' use of “Central Bank” or
“Central Trust Bank” in El Paso County, but not
in the entire state of Colorado. Such an injunction is
conditioned on a $100, 000 bond from Plaintiff.
Because
Defendants cannot simply change the name of their Colorado
Springs branch overnight (due to the need for regulatory
approval, at a minimum), the Court will order Defendants to
begin the planning process for a name change and to submit a
status report with a realistic timeline for carrying out the
name change.
I.
BACKGROUND
From
the testimony and exhibits received at the hearing, the Court
finds as follows. Because the parties dispute which of them
is the senior user of the “Central Bank” mark in
Colorado, the Court will present the facts in strict
chronological order.
A.
Defendants' Missouri Origins
Defendant
Central Bancompany is a bank holding company that owns and
controls Defendant Central Trust Bank and Defendant Mortgage
Central, LLC. Central Trust Bank began as the Central
Missouri Trust Company in Jefferson City, Missouri, in 1902.
In the late 1960s, it changed its name to Central Trust Bank.
In 1987, it received permission from the appropriate
regulators to operate under the name “Central
Bank.” Throughout, it has remained headquartered in
Jefferson City and has a significant, visible presence in
Missouri. For example, it has had extensive business dealings
with the Missouri state government, and it is the official
banking sponsor of the St. Louis Cardinals and the University
of Missouri-meaning that a person wanting to have
Cardinals-themed or Mizzou-themed checks or debit cards must
go through Central Bank.
Central
Bancompany also owns and controls Jefferson Bank, which is
not a defendant here. Jefferson Bank operates exclusively in
Jefferson City under its own branding.
B.
Defendants' Operations in Colorado Before 2010
1.
FSA Servicing
Beginning
in 1998, Defendant Central Trust Bank became the Flexible
Spending Account (FSA) servicer for Colorado state employees,
other than University of Colorado employees; and in 2004,
became the FSA servicer for University of Colorado employees
as well. In practical application, this meant that an
employee with an FSA would submit a claim for reimbursement
through a company called ASI Flex, which is not owned or
controlled by Defendants. ASI Flex would determine
eligibility for reimbursement, and Central Trust Bank (using
the name "Central Bank") would fund any
reimbursement, usually through a mailed check. The following
check image, although dated in 2012, is a representative of
what such a check would have looked like during the relevant
time period (i.e., before Plaintiff began operations
in January 2010):
(Image
Omitted.)
(Defendants'
Exhibit ("DX") S.) As will become clear below, the
stylized flower logo at the top, just left of center, is
meant to represent a dogwood flower and is now
Defendants' federally registered trademark and a
ubiquitous part of their brand presence.
Central
Trust Bank remains the Colorado state government's and
University of Colorado's FSA servicer bank to this day.
Together, more than 8, 000 employees currently participate in
those two FSA programs. Defendants presented no evidence of
the enrollment numbers just before Plaintiff began operations
in January 2010.
2.
Hunting & Fishing License Payment Processing
In the
late 1990s, Central Trust Bank developed a system to speed up
approval and issuance of hunting and fishing licenses.
Previously, standard practice in most states required filling
out a form and mailing it in. Central Trust Bank created a
process whereby a party seeking a fishing license at a local
bait shop, for example, could fill out an application, pay
the fee (which was wired to Central Trust Bank), and
immediately receive approval, giving the bait shop authority
to print a license on the spot. From 2002 through 2008,
Central Trust Bank was the contractor for the Colorado
Department of Natural Resources to process payments for
hunting and fishing licenses under this system. By the end of
that term, Central Trust Bank was administering the same
system in many other states, including Missouri and Kansas.
(DX C at 10.) It had also served Nebraska and Wyoming at some
point in the past. (Id.)
During
the six years Central Trust Bank administered this system in
Colorado, about 1, 700 vendor shops made it available to
license applicants. Employees of those vendor shops operating
the license approval system may have had exposure to the name
“Central Bank” or “Central Trust Bank,
” but there is no evidence in the record that license
applicants had any notion of Central Trust Bank's role in
the process.
3.
Servicing Account Holders Living in Colorado
Defendants
have records of 3, 886 account holders with mailing addresses
in Colorado who interacted or continue to interact with
Defendants as “Central Bank, ” counting from as
far back as Defendants' records go (at least the 1950s)
until the present, including closed accounts. (DX Z at
1.)[1]
These account holders variously held or hold all the sorts of
accounts one would expect from a consumer bank (checking,
savings, money market, investment, IRA, etc.). (Id.
at 2-151.) But Defendants' evidence makes it impossible
to discern how many individuals began banking with Central
Bank before 2010, as opposed to how many accounts were opened
before 2010. Also, it is impossible to tell how many
individuals interacted with Defendants from El Paso County.
In any event, Defendants have acquired most of these account
holders through their Missouri connections, e.g.,
they opened an account in Missouri and then moved to
Colorado, or they applied for an account with Defendants to
get Cardinals-branded checks.
Over
the years, Defendants also have loaned money to Colorado
residents, or persons buying real property in Colorado. (DX
A-1.) The vast majority of this lending has occurred since
2010. (See id.) Some of it has been to residents of,
or related to property in, El Paso County, but little or none
of that lending took place before 2010. (Id.)
C.
Plaintiff's Operations in El Paso County
1.
Inception
Plaintiff
is a bank holding company formed in 2006 with the intent to
start a new bank in Colorado Springs. The application to
start that bank, however, got bogged down in the FDIC
approval process, so Plaintiff pursued a different strategy.
It acquired an existing-and therefore already
FDIC-approved-bank in New Mexico known as Farmers &
Stockmens Bank. It then established "Central Bank &
Trust" in Colorado Springs as a branch of Farmers &
Stockmens Bank.
2.
Operations as "Central Bank & Trust" Since
January 2010
Central
Bank & Trust opened its doors at 1 South Nevada Avenue,
Colorado Springs, in January 2010, and has remained there
ever since. It has no other branches in Colorado. The hearing
evidence established that, as banks go, it is a fairly small
operation, with two tellers, about twenty walk-in customers
per day, about six package deliveries per week, and $100
million in deposits.[2] Through a mortgage division, it closes
between fifteen and thirty mortgage loans per month. Most of
Central Bank & Trust's primary commercial banking
business is in El Paso County, although it has some statewide
recognition as an SBA lender.
Since
the beginning, Central Bank & Trust has represented
itself to the public under the following mark, which it has
never federally registered:
(Image
Omitted.)
(ECF
No. 43-1 at 10.) On the exterior of its Colorado Springs
office, it uses a variant of the logo where the words and the
mountain logo are separated by some of the building's
windows and lighting fixtures:
(Image
Omitted.)
(Excerpt
from Plaintiffs Exhibit ("PX") 4 at 7.)
(Image
Omitted.)
(Excerpt
from id. at 2.)
Plaintiff
has advertised and sponsored events in the Colorado Springs
community. Some of this advertising is under the
"Central Bank & Trust" name and other
advertising is under the "Central Bancorp" name
(the same logo as above, but with "Central Bancorp"
beneath the mountain graphic).
In the
Colorado Springs area, the public often refers to
"Central Bank & Trust" simply as "Central
Bank."
D.
Federal Registration of Defendants' Mark and Rebranding
of Defendants' Various Charters
By
2014, Defendants were operating banks under various names in
Missouri, Illinois, Oklahoma, and Kansas. Defendants then
chose to rebrand all of them, save for Jefferson Bank, as
"Central Bank" branches. Part of that process
involved obtaining federal registration of the following
mark, which was applied for in September 2014 and officially
registered in January 2016:
(Image
Omitted.)
(Excerpt
from DX A-3 at 1.) The dogwood flower is an integral part of
the mark. (Id.)
While
the federal application was pending, Defendants went ahead
with the changes necessary to convert branches into
"Central Bank" branches, including regulatory
approval, signage changes, customer notification, and so
forth.
E.
Defendants' Expansion into Colorado
In
2017, Defendant Mortgage Central opened a loan production
office at 5278 North Nevada Avenue, Colorado Springs, about
five-and-a-half miles north of Plaintiffs Central Bank &
Trust. A loan production office, or "LPO," finds
potential borrowers, helps them to apply for loans, and then
forwards the applications to a bank for approval-in this
case, to Defendant Central Trust Bank. The LPO on North
Nevada went by the name "Mortgage Central" with an
accompanying dogwood flower logo. Beyond the flower logo,
Defendant specifically chose not to display any public
association with Central Trust Bank or "Central
Bank" because it would minimize impact to
Defendants' broader reputation if the LPO failed.
Apparently
the LPO did not fail, because Defendants decided in 2018 to
convert it into a full-service banking branch under the
“Central Bank” brand. Under a Colorado statute,
[any] bank or bank holding company that intends to acquire
control of any Colorado financial institution or to conduct
interstate branching in Colorado shall provide the [state
banking division] with the name or names under which it
proposes to conduct the business of such bank, bank holding
company, or branch. The bank or bank holding company shall
not be eligible to conduct interstate branching or make any
such acquisition if the proposed name is either:
(a) Identical to or deceptively similar to the name of any
existing Colorado financial institution; except that this
paragraph (a) shall not apply if the bank or bank holding
company obtains express written consent of the affected
existing Colorado financial institution; or
(b) Likely to cause the public to be confused, deceived, or
mistaken.
Colo.
Rev. Stat. § 11-104-202(8). Without investigating or
otherwise conducting any due diligence into whether any other
“Central” banks existed in the area, Defendants
submitted the required application under this section,
although the application states that the branch would be
known as “The Central Trust Bank.” (DX E at 12.)
Defendants also applied for approval from their federal
regulator (the Federal Reserve Bank of St. Louis) and the
Missouri state banking division. As part of the approval
process, Defendants published a small notice in the
Colorado Springs Gazette on June 20, 2018,
announcing the intent to establish “The Central Trust
Bank” at the North Nevada location. (DX F.) The
Colorado state banking division also likely sent a broadcast
e-mail announcing the application to whomever is on an opt-in
e-mail distribution list. In response to a question from the
Court, Plaintiff's COO, Mr. Coutts, stated under oath
that he did not know if anyone employed by Plaintiff was on
that distribution list but that he would have been made aware
of it if an employee had received an e-mail announcing
another "Central" bank coming to town.
Sometime
in June 2018, or perhaps a little later, the Mortgage Central
location on North Nevada changed its signage and began
representing itself as "Central Bank." It now
appears from the outside as follows:
(Image
Omitted.)
(DX
A-13 at 2.) It also advertises on a sign near the street
showing the various businesses in the shopping center:
(Image
Omitted.)
(Id. at 7.)
Around
the same time the North Nevada location converted to
“Central Bank, ” Defendant established
“Central Bank” branches in the Denver Tech
Center, Pagosa Springs, and Durango.
F.
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