I like opinions in trademark infringement cases that don’t just gloss over LIKELIHOOD OF CONFUSION issues, but I have to admit I wasn’t ready for what awaited me when, after seeing the tweet reproduced below from Bill Donahue, I undertook to dig into yesterday’s ruling by the Southern District of New York in Citigroup, Inc. v. AT&T Services, et al.)
BREAKING: Judge rules against Citi in #trademark suit, refuses preliminary injunction blocking AT&T’s “Thanks” program. Full story soon.
— Bill Donahue (@BDonahueLaw360) August 11, 2016
So, what gave? Or didn’t?
First, the basics. From the opinion:
This is a trademark action concerning the phrases “thank you” and “thanks.” Citigroup, a leading financial services company, has offered a customer loyalty, reward, and redemption program using the term “THANKYOU” since 2004. AT&T, a telecommunications giant, began implementing a customer loyalty program using the term “AT&T THANKS” this summer, in 2016. Citigroup initiated this action seeking both damages and an injunction prohibiting AT&T’s continued use of this name, and has moved for a preliminary injunction that would prohibit that use during the pendency of this litigation.
Again: These corporate behemoths are litigating over the use of the words, respectively, “thank you” and “thanks” for — what now?
Competing customer loyalty programs.
Customer LOYALTY programs. One is called THANK YOU.
One is called THANKS.
What I am telling you is the following information, in case my powers of expression have, perhaps, failed me: Both parties here claim protectible trademark rights in the use of the words, respectively (maybe), “Thank you” and “Thanks” for customer loyalty programs.
Now, Bill’s take, as he said in the following tweet, is that the money quote from the opinion is this:
On this record, the Court cannot conclude that Citigroup has carried its burden. For the reasons discussed above, there has not been an adequate showing of irreparable harm from the continued existence of AT&T THANKS while this litigation continues. Against that lack of a showing, AT&T has advanced concrete evidence that requiring it to halt use of the “AT&T THANKS” name would be an expensive and significant disruption.
That is accurate. How the court gets there, however, is quite interesting.
Interesting point number two, and of central importance to understanding the outcome here, is that Citigroup and AT&T have been, as the opinion puts it, “partnering” on a co-branded Citigroup credit card, which included the THANK YOU customer loyalty feature, for a long, long time — since 1998!
Meanwhile, on what appears to have been a separate track, the AT&T folks decided just last year, in 2015, to spiff up their own customer-appreciating by developing their own program for appreciating their customers, which are not customers, by the way, of the same thing that Citigroup’s customers are. And amazingly enough, here is how the process of naming that program went, according to the opinion:
AT&T began efforts to name its upcoming program in September 2015. It first tested five names, none of which satisfied decision-makers within AT&T. AT&T tested ten more names in October 2015 and remained dissatisfied. AT&T then considered the name “AT&T Thanks” and tested it alongside two other possible names, “AT&T Rewards” and “The AT&T Advantage.” In the ensuing testing “AT&T Thanks” scored well, although generally not as well as “AT&T Rewards.” Nevertheless, some time before February 2016, AT&T decision-makers decided that “AT&T Thanks” was the best name for the program.
The opinion did not, as I may have done if I were an opinion-writer, stop at this juncture and made some sort of observation concerning the remarkable attraction of “decision-makers” and, well, just about everyone, probably, to the words “thanks” and “thank you” when casting about for names of customer-loyalty or customer appreciation programs and at least exploring whether there might be some legal significance to that phenomenon.
In any event, the Citi people knew this could be a problem, and the court determined that, notwithstanding a dispute as to the facts, no later than March 25, 2015, AT&T had disclosed to Citi that it planned to launch its AT&T Thanks program, following which a bunch of stuff happened, none of which was a settlement. On June 9, 2016, Citigroup filed its complaint; on June 24th, Citigroup filed its motion for a preliminary injunction.
The delay between March 25th and June 24th in Citigroup’s acting to seek an injunction, the court found, mattered — notwithstanding the ongoing negotiations. In the abstract, I will tell you in shorthand, as most people involved in the trademark litigation practice will, that this is a somewhat surprising holding. Now, we have all done this research, and in the Southern District alone there is a case standing for the proposition for and against every conceivable amount of time you like as being too much delay, not enough delay, and ju-u-u-u-u-ust right.
But details matter, and here the court notes some important ones that led it to conclude that Citigroup could not prove irreparable harm because, in part, “the elapsed period between March 25, 2016 and Citigroup’s June 24, 2016 motion cut against Citigroup’s request for the extraordinary remedy of a preliminary injunction”:
- Citigroup had effectively “lawyered up,” i.e., brought the briefcases into the discussions, by April 22, 2016 — thereby at once signalling its “seriousness” while also running the clock against itself. All the rules of brinksmanship, including every color, flavor and degree of The Bluff, were now in effect.
- Citigroup filed its lawsuit on June 2nd, the date it knew was in fact the launch date for AT&T’s program.
- Not only did Citigroup not immediately seek an injunction on the heels of that June 2nd initiation of the lawsuit, but dragged its feet for weeks before finally pulling the trigger.
- During those weeks, AT&T had already been “THANKS”ing its customers for their loyalty with its own program for, um, weeks.
Why? Why? Why? Why?
Let’s consider why. I’m not going to drag you through the whole opinion here. You may already know what I think the reason is because, as a learned reader, you’ve gotten the hint from some of my hints.
Indeed, the answer lies buried in the inevitably formal likelihood-of-success analysis (the work of busy and industrious law clerks no doubt) that follows the “irreparable harm” section, which in and of itself was pretty much the death knell for Citigroup’s tardy and apparently half-hearted effort (as we shall examine) here. Yes, the court goes through all those undying Polaroid factors at length, making the following observation on page 17 under the “Similarities of the Parties[‘s] Marks” section, in words so droll that I actually envy the power of their understatement:
The marks bear certain obvious similarities, at least when considered in the abstract: “AT&T THANKS” and “THANK YOU” share five central letters, are partially pronounced similarly, and both convey a message of gratitude.
Now, before we bring it on home, I must say there is in fact a very neat section in the opinion in which the court goes back to some of the Citigroup registrations for THANKYOU — and to some extent is just an aspect of what, we will see, is really Citigroup’s fundamental dilemma here — and we’ll enjoy that discussion a bit, which is pure trademark nerd fun — before proceeding to our main point, which is more suitable for general audiences.
In the PTO, the Examining Attorney had issued an initial refusal to register the mark on the grounds that there was a LIKELIHOOD OF CONFUSION between Citi’s THANKYOU mark and prior registrations. Citi responded by arguing all sorts of ways its mark was narrow enough to avoid stepping on those registrations, and offered up disclaimers. In this lawsuit, as it happens, AT&T was taking the position that the two customer loyalty programs were not competitive: One was for credit card customers, and one was for whatever it is AT&T sells these days — oh, right — “finance and telecommunications”? As the court explained:
Notwithstanding the undeniable fact of corporate interrelationships (evidenced by, inter alia, the parties’ co-branded credit cards), products in these fields do not compete and do not serve the same purpose. They are arguably used together, but then again finance and telecommunication are arguably used alongside every other conceivable industry.
Moreover, AT&T points out that Citigroup, in its prosecution of the THANKYOU trademark, argued for a services-level analysis. In that prosecution, the United States Patent and Trademark Office had initially refused registration because other financial institutions had already registered loyalty program titles similar to THANKYOU. Citigroup drew a much finer line than the one separating banking and telecommunications when it argued that even though it and the earlier registrants “may share certain commercial and personal banking services,” there would be no likelihood of confusion because the THANKYOU program was associated with credit card services, which the other cited marks did not recite. Thus, before the USPTO, Citigroup adopted the position that differences in the core products promoted by similarly named loyalty programs justified a determination that those loyalty programs were unlikely to be confused for one another, even when all of the offering entities were banks.
The Court tends to be of the view that the proximity of rewards programs must be considered in the context of the core services the programs promote. The two are necessarily connected. This is even more evident where the core services for sale are purchased with care (see discussion of consumer sophistication below). . . . As a general matter Citigroup and AT&T simply are not competitors.
THANKYOU is one pretty sorry trademark for a customer loyalty program.
“Sorry trademark,” of course, means “sorry” from a legal point of view. For non-lawyers in the room, that means it is hard to protect. Oh, it’s a GREAT name for a customer loyalty program of course — the best!
That’s why everyone wants to use it! Because it describes exactly what the program does: It is expresses thanks, gratitude, thankingness to the cus-tah-mah!
In fact, Citigroup was, as AT&T was, represented by very able counsel here. But its lawyers could not do much about the hole in which reality placed their client: At the end of the day, all roads lead to a likelihood of success argument that hinged on Citibank claiming the exclusive right to using “thank you” to name a program for thanking your customers for being loyal. Hence the foot-dragging, i.e., the bluffing.
Citigroup really had nowhere to go in threatening its disloyal “partner.”
Everybody wants to thank their customers for their loyalty. And what better way to say thank you than by saying… THANKS? Thanks? Thank you? THANKYOU!
Oh I know, I know — acquired distinctiveness is a thing. Some of the Citigroup registrations are incontestible; so yes, we know you can have an uber-descriptive trademark such as “thank you” — I mean, THANKYOU — and it can function as a trademark and be protected as a trademark, yes. It can happen, it can.
Now, the court notes that the PTO did not so much as request evidence of acquired distinctiveness for some of the registrations (presumably during the Dark Days of examination). This entitled Citigroup to a “presumption” of inherent distinctiveness. As a matter of graciousness, however, the court did not mock this proposition, as applied to this trademark in this context, openly. It merely acknowledging the legal principle, noting its plasticity, and eliding, ultimately, into a determination that Citigroup had not presented compelling evidence of anything like secondary meaning at the preliminary injunction stage.
And how could it?
That’s why that PTO argument by Citibank turns out to be so yuge. Because chances are Citibank would ultimately be able to show that it does have secondary meaning here. It will do a survey, an expensive one, and it will demonstrate that consumers associate THANKYOU with a single source for services relating to …. customer reward programs …. for CREDIT CARD USE.
If Citibank has trademark rights, and probably does, in its thanking words, those rights fit neatly into your wallet.
And once June 2nd came, and June 10th, and June 20th, and the bluff was called, and AT&T had not backed off — why did Citibank keep upping the bluffing stakes at these points — knowing what we all know, which of course AT&T knew better than we do, and then some; and probably even more?
We will have to write another post about that some time.