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CITIGROUP INC. v. CITY HOLDING COMPANY

February 7, 2003

CITIGROUP INC. AND CITICORP., PLAINTIFFS,
v.
CITY HOLDING COMPANY AND CITY NATIONAL BANK OF WEST VIRGINIA, DEFENDANTS



The opinion of the court was delivered by: Robert W. Sweet, District Judge.

OPINION

Plaintiffs Citigroup Inc. and Citicorp (collectively "Citigroup") initiated this action against defendants City Holding Company and City National Bank of West Virginia (collectively "City Holding"), alleging that City Holding's "CITY" marks and blue trade dress infringe upon Citigroup's family of "CITI" marks and "Blue Wave" trade dress. Citigroup seeks cancellation of, and an injunction against the prosecution of, several CITY marks as well as money damages. After a trial before the Court and upon all the prior proceedings and the findings and conclusions set forth below, judgment will be granted in favor of Citigroup, in part, as set forth below.

The Issue

This action presents the contest between the aurally identical marks employed by one of the primary financial institutions in the nation and by a West Virginia bank that has had regional and national inspirations. Competing causes of action for trademark infringement, dilution and unfair competition have been whittled down into the remaining claims by Citigroup for infringement, unfair competition and cancellation.

Both parties prognosticate fearful results if the Court finds for the other side: City Holding augurs a world where no (small) business with CITY in its title will be safe from Citigroup's crack team of trademark lawyers, while Citigroup fears that in the absence of relief, the West Virginia-based defendant bank will create a "family" of CITY-marks that will track exactly all of its CITI-marks and create unimaginable mayhem in the minds of consumers. While both sides likely exaggerate, there is an important subtext to City Holding's argument. Businesses have been touting CITY in their titles and trademarks easily since the creation in the nineteenth century of the entity that has become Citigroup. Indeed, Citigroup, which began its existence as the City Bank of New York in 1812, quite intentionally differentiated itself from the pack with the distinctive second "I." As a result, Citigroup's primary claims of infringement must fail, as discussed below.

Prior Proceedings

This action was commenced on September 29, 1999, alleging claims including trademark infringement, dilution, unfair competition and false designation of origin under the Lanham Act, 15 U.S.C. § 1114(1), 1125(a) and (c), to which New York State and common law claims are appended.

On November 5, 1999, five weeks after this lawsuit was filed and before City Holding responded to it, City Holding filed a parallel lawsuit against Citigroup and Citicorp in the federal district court for the Southern District of West Virginia. Ten 3 days later, City Holding moved before this Court to dismiss Citigroup's complaint for lack of personal jurisdiction or, in the alternative, to transfer the case to the Southern District of West Virginia pursuant to 28 U.S.C. § 1404(a).

On January 25, 2000, Citigroup moved before this Court to enjoin prosecution of the later-filed, duplicative West Virginia action. City Holding cross-moved to stay proceedings in this Court pending decision on the motion to dismiss or transfer.

This case was originally assigned to the Honorable Charles S. Haight, but was reassigned to this Court on March 28, 2000, after Judge Haight recused himself.

On May 31, 2000, this Court denied City Holding's motion to dismiss for lack of jurisdiction and its motion to transfer the action to the West Virginia District Court and enjoined City Holding from prosecuting its action there. Citigroup, Inc. v. City Holding Co., 97 F. Supp.2d 549 (S.D.N.Y. 2000).

Upon the conclusion of discovery, on April 17, 2001, Citigroup moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure on their affirmative claims of trademark infringement, dilution and unfair competition and to dismiss City Holding's counterclaims. In an opinion dated October 30, 2001, the Citigroup motion for judgment on its claims was 4 denied, its federal and New York dilution claims were dismissed, and its motion to dismiss City Holding's counterclaims was granted. Citigroup, Inc. v. City Holding Co., 171 F. Supp.2d 333 (S.D.N.Y. 2001).

A non-jury trial was held on June 17 and 18, 2002, to address the several specific issues that remained following the October 30, 2001 summary judgment opinion. Citigroup called three witnesses (Anne MacDonald, the head of Citigroup's global consumer marketing group; Anne Moses, Citigroup's chief trademark counsel; and John Alderman, City Holding's general counsel) and City Holding called one witness (Craig Stilwell, City Holding's executive vice president and director of marketing and human resources). Oral argument was held on December 11, 2002, and post-trial submissions were finalized on February 5, 2003.

Findings of Fact

I. The Parties

A. Plaintiffs Citigroup and Citicorp

Citigroup Inc. is a Delaware corporation with its principal executive office located at 399 Park Avenue, New York, New York.

Citicorp, a Delaware corporation with its principal offices located at 399 Park Avenue, New York, New York, is a wholly-owned subsidiary of Citigroup Inc.

Citigroup Inc. was formed on October 8, 1998, following the business combination of Travelers Group Inc. ("Travelers") and Citicorp. Citicorp is the parent of Citibank, N.A. ("Citibank").

For many decades or more, Citibank has been one of the most prominent banking institutions in the United States and the world. Through its subsidiaries, Citigroup provides a broad range of financial services to consumers and corporate customers, including banking services such as checking accounts, savings accounts, loans, credit and debit cards, insurance, travelers checks, mortgages, bill payment services, brokerage services and investment advisory services.

Many of the products and services offered by Citigroup's businesses are described on, or available through, its websites, located at <www.citigroup.com>, <www.citibank.com>, <www.citi.com> and others. Citigroup considers e-commerce to be an important aspect of Citigroup's continued growth and leadership in the financial services area.

B. Defendants City Holding and City National Bank

City Holding Company is a West Virginia corporation headquartered in Cross Lanes, West Virginia. City Holding Company is a bank holding company whose shares are traded on the NASDAQ Exchange.

City National Bank of West Virginia, a wholly-owned subsidiary of City Holding Company, is headquartered in Charleston, West Virginia. City National offers a broad range of banking and financial services. Its services are offered primarily to residents of West Virginia and two adjacent counties in Ohio.

II. The CITI Marks

A. The History of Citibank

Citibank was originally chartered on June 16, 1812 under the banking laws of New York State as the "City Bank of New York." Citibank is one of the few private banking institutions in this country that has been in continuous operation since 1812.

In July 1865, Citibank converted its state charter to a national charter and changed its name to The National City Bank of New York.

In the 1890's, Citibank became the largest government depository bank and held more deposits from other national banks than any other U.S. bank.

By 1912, Citibank was the largest commercial lender to New York City businesses, and more than 400 foreign banks maintained their accounts with Citibank. By 1913, Citibank had also secured a leading position in investment banking.

Following passage of the Federal Reserve Act in 1913, Citibank began developing a system of foreign branches to provide corporate customers with banking services around the world. By 1917, no American bank came close to matching Citibank's system of 35 foreign branches. By the end of 1967, Citibank had become the largest U.S. banking presence in the world, having 208 foreign branches in 61 countries.

During the 1920's, Citibank became a pioneer in providing banking services, including checking accounts, savings vehicles and personal loans, to the general public. Also during the 1920's, Citibank, through a corporate affiliate, conducted what would be the first of its many national advertising campaigns. This campaign included advertisements in such prominent national publications as Harpers and Atlantic Monthly.

During the post-World War II business expansion, Citibank took a leading position in responding to the rising demand for credit among small businesses and the general public, more than doubling its commercial and industrial loans and tripling its personal loans to consumers from June 1945-1948. During the 1950's, Citibank's industrial and commercial loans increased more than four times.

In the mid-1960's, Citibank's management adopted the strategic goal of diversifying Citibank's domestic business to offer a more comprehensive array of financial products and services. As a first step, Citibank's shareholders formed a one-bank holding company named First National City Corporation. The holding company was officially renamed Citicorp in March 1974.

The new holding company provided a vehicle through which to expand in the rapidly growing market for financial services by building upon Citibank's well-established business. For example, in 1969, plaintiffs opened the Citicorp Venture Capital business, and in the 1970's, they established the Citicorp Leasing business, a commercial leasing service. These businesses operated across the country.

In 1979, Citicorp founded Citicorp Mortgage, headquartered in St. Louis, Missouri. Throughout the 1980's, Citicorp Mortgage expanded its business in mortgage origination and 9 mortgage servicing. In the late 1980's, Citicorp Mortgage was the country's number one issuer of new first mortgages.

During the 1970's, Citicorp acquired Nationwide Financial Services, a consumer finance corporation based in St. Louis, Missouri with offices in approximately 14 states. This division was named Citicorp Person-to-Person Consumer Financial Services. By 1982, there were approximately 150 Person-to-Person Centers across the country.

In 1979, Citicorp Industrial Credit Corp. was formed with offices in 29 cities to provide asset-based financing worldwide.

By 1982, Citicorp Capital Investors, Ltd. provided long-term debt and equity financing worldwide, and Citicorp Investment Management Inc. provided portfolio investment advice. Citicorp Business Credit, Inc. had 11 domestic offices that offered financing and other services to middle market companies.

During the 1970's and 1980's, consumers throughout the country had exposure to Citicorp and Citibank through their travelers check and credit card businesses. For example, in the mid-1980's, more than 60 million travelers checks bearing the CITICORP mark were sold each year in all fifty states by more than 20,000 agents.

In the 1970's and 1980's, plaintiffs issued millions of MasterCard and Visa credit cards prominently bearing the CITIBANK or CITICORP marks. Millions more Americans received credit card solicitations in the mail each year as part of direct mail campaigns soliciting new credit card customers.

During the 1970's, Citicorp became the largest United States banking corporation in terms of loans and the largest non-governmental bank worldwide with 850 offices in close to 900 countries. By 1972, Citicorp's assets exceeded $30 billion.

By 1983, Citibank's consumer loan portfolio was valued at $29 billion and 90 percent of its consumer earnings were generated outside New York.

In 1984, Citibank and Citicorp had customers in every one of the fifty states, and relationships with approximately one out of every seven households in the country. As of 1990, Citicorp had business relationships with more than 17 million domestic households. That number grew to 22 million by 1997, the year before the Travelers/Citicorp merger.

B. The CITI Marks

On January 19, 1960, Citibank registered the mark CITIBANK with the United States Patent and Trademark Office 11 ("PTO"). Prior to that time, by the 1950's, Citibank had identified itself, and had been referred to in the banking/financial industry, as well as by the public, as "City Bank" or "Citibank." Indeed, as early as 1897, "CITIBANK" was used as the bank's cable address.

Citicorp began no later than the mid-1970's to build and expand upon a CITI-based family of marks. CITI was chosen as the foundation of the family because the general public and financial community already referred to Citibank by the coined term "Citi" and the name had naturally evolved into the company's trademark.

In February 1978, an enormously successful advertising campaign was launched for the new Citicard Banking Centers. Its slogan was "THE CITI NEVER SLEEPS." These centers spurred a technological revolution in consumer banking, and Citibank's role in introducing this technology reaffirmed its leadership in innovation in the financial services area. Citicorp federally registered THE CITI NEVER SLEEPS shortly after the 1978 campaign was launched. Since then, Citigroup has used a number of other slogans featuring the CITI mark, including "The CITI of Tomorrow" (1981), "The CITI at Your Front Door (1981), "It's your CITI" (1984), and "The CITI of Your Dreams" (1995).

For at least two or three decades plaintiffs have been referred to and known as "CITI" or "The CITI." On March 19, 1979, Citicorp filed a federal trademark application for CITI. The mark CITI was federally registered by Citicorp in 1981.

As of December 30, 1980, Citicorp owned 27 federally registered marks, including: (1) CITIBANK; (2) CITICARD; (3) CITICORP; (4) CITIDATA; (5) CITIPHONE; (6) CITIPLAN; (7) CITIQUOTE; (8) CITISHARE; and (9) THE CITI NEVER SLEEPS. Five years later, that number had grown to approximately 60 federally-registered CITI-prefixed marks, including (1) CITI; (2) CITI TREASURY MANAGER; (3) CITI$HOPPER; (4) CITIDOLLARS; (5) CITIFILE; (6) CITIFLEX; (7) CITILEASE; (8) CITISAVINGS; and (9) CITITREND. By December 31, 1990, CITI's family of approximately 60 federally registered marks also included: (1) CITIBANK PREFERRED; (2) CITICORP TRAVELLERS CHECKS; (3) CITIEXPRESS; (4) CITISPAN; and (5) CITISTAR.

By year-end 2001, there were approximately 140 marks, either registered or covered in pending federal trademark application, in the CITI family of marks.

Plaintiff's in-house Chief Trademark Counsel, Anne Moses ("Moses"), was responsible for clearance for each of the various CITI-names that were adopted by the plaintiffs over the years in which Moses was Chief Trademark Counsel. Moses is unaware of any United States CITI-prefixed marks that have not been cleared by plaintiffs' trademark attorneys.

The CITI mark is also used in vanity phone numbers, including 1-800-321-CITI, 1-800-441-CITI, 1-800-336-CITI and 1-800-CITIGOLD. The number 1-800-CITI-ATM was used in the 1980's.

The CITI mark is also incorporated into plaintiffs' domain names. The website <www.citibank.com> was established in 1995.

Despite the abundance of CITI marks, it was not until the merger with Travelers in 1998 that Citigroup developed a "master brand strategy," whereby the CITI mark, or "primary brand" is "use[d] to name all of [the] divisions and flagship products". (MacDonald Dep. at 65.) Prior to the merger, "Citibank, rather than Citi [was] the first level of . . . branding emphasis." (Id. at 68.) The post-merger branding strategy was based upon consumer research and the fact that the company was larger.

C. Certain CITI Policing Efforts

During the 1970's and 1980's, plaintiffs enforced their trademark rights with a series of lawsuits and opposition proceedings before the PTO. These policing efforts included such third party marks as CITIBANK, CITY BANK, CITYCARD, ITS YOUR CITY, and CITYLINK. According to the deposition testimony of Christopher York, Citibank's attorney who was charged with protecting the bank's trademarks, as a matter of practice Citigroup did not take 14 action against entities titled "City National Bank," and he could not recall such a name ever causing consumer confusion.

Between 1972 and 1980, Citigroup's predecessors initiated twenty-four instances of policing that did not lead to litigation and eleven lawsuits. Each of these examples involved either the CITIBANK mark or a phonetic twin, such as CITY BANK. There was also a 1980 matter involving Citi Savings and Loan Association of North Carolina.

One policing effort that was resolved by settlement involved First City Bancorporation of Texas ("First City"). Plaintiffs and First City entered into an agreement that required, among other things, that First City "refrain from any and all use of `City Bank' (or the phonetically similar word `Citi Bank') solely by themselves. . . ." The agreement further provided that First City was entitled to use the word "Bank" in combination with the prefix "First City," and that "City National Bank" and "First City National Bank" were acceptable, non-infringing uses "throughout the world . . . in connection with all business, goods and services." In the agreement, First City represented that it intended and desired that the public view its name and mark as "First City."

In another agreement, entered in 1977 between plaintiffs and City Federal Savings ("City Federal"), City Federal agreed to 15 cease all use of its marks "Citycard" or "CITYcard". In the 1980's, Citibank entered into another agreement requiring a business publication MCP Inc. ("MCP") to change its name from CITIBUSINESS to City*Business. Paragraph 9 of that agreement states that the "agreement shall continue in effect only so long as MCP is neither a financial institution nor affiliated with a financial institution and for so long as City*Business is used solely in connection with a general business publication. . . ."

In 1987, Citibank sent a cease and desist letter to a Citi Mortgage Co. in Georgia. The company wrote back in response that it had changed its name to City Mortgage Co.

In 1990, Citibank negotiated with Citi Mortgage Associates of Pennsylvania to change its name to CITY MORTGAGE ASSOCIATES. The Pennsylvania company complied, and simultaneously adopted a logo reflecting that fact, which it mailed to Citibank to verify its compliance with the settlement.

In the mid-1990's, Citibank negotiated with Citimortgage Co. of Washington State, which agreed to change its name to City Mortgage Corp.

In early 1998, Citibank's in-house Trademark Counsel, Eileen Kennedy, sent a cease-and-desist letter to the owner of an 16 intent-to-use trademark application for CITISAFE, covering safes, stating:

Safes . . . are intimately involved in the banking, finance and financial security industries. This fact, coupled with the fact that you have chosen a mark comprised of CITI, a famous designation in the banking and financial industries indicating products and services originating solely with Citicorp and its affiliates, concerns us. One could conclude that "CITI" was chosen as a result of the reputation and good will associated with that mark as a result of our long and extensive use of it. . . . Regardless of your intention, however, it is clear that consumers will mistakenly believe that your product originates with, is sponsored by, or is in some other way associated with, Citicorp or its affiliates, giving rise to a likelihood of confusion. We therefore must request that you either withdraw your present application or amend it to a mark that does not include our famous CITI prefix.
Plaintiffs' policing efforts have also included petitions and proceedings before the PTO. For instance, plaintiffs engaged in an opposition proceeding against federal trademark registration application for the service mark IT'S YOUR CITY. That opposition was resolved by the applicant withdrawing its application. In 1985, Citicorp filed with the PTO a Petition for the Cancellation of the mark CITYLINK for point-to-point telecommunications services. The parties entered into an agreement that provided that the registrant would, inter alia, (1) "always split or leave a space between the words CITY and LINK, equal to the type size of the letters used for those words, whenever and in whatever manner said mark is used, displayed or presented (e.g. CITY LINK) and further agrees to amend its United States Service Mark registration 17 accordingly"; (2) "limit all use of the mark CITY LINK solely to point-to-point telecommunications services in conformity with its current usage of that mark"; (3) limit the geographic scope of its use of the mark; and (4) "use its CITY LINK mark only in close conjunction with the words REPUBLIC, REPUBLIC TELECOM, MID AMERICAN and/or MID AMERICAN LONG DISTANCE whenever and in whatever manner the mark is used, displayed or presented."

Citicorp was successful in opposition proceedings in 1996 against registration of the marks CITYBROKER and CITYDEALER.

In 1997, Citicorp brought a PTO opposition proceeding involving the mark CITI HABITATS, INC.

In 1998, Citicorp commenced successful PTO opposition proceedings against the marks CITYHOME and Design and CITY CARD.

On May 25, 2000, Roseville PCS, Inc. abandoned its federal trademark application to register the mark CITYPHONE for wireless telecommunications and personal communications services, after counsel for Citicorp sent a letter to Roseville in February 2000 objecting to its registration of the CITYPHONE mark.

D. References to City Holding's Marks in Plaintiffs' Files

In September 1997, Citicorp obtained a search report for clearance purposes for the mark CITIFUND, to be used on mutual funds. The report revealed a number of marks, including City Holding's CITY ...


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