Court should have listened to the people in CITIZENS Case

In Citizens Financial Group Inc v Citizens National Bank of Evans City, the US Court of Appeals for the Third Circuit has overturned a trial court's decision to issue, of its own accord, an injunction against the senior user of the mark CITIZENS notwithstanding a jury verdict that this mark was infringed as a result of the competing use of CITIZENS BANK by a junior user.

The case involved competing banks in the northwest region of Pennsylvania. The senior user, Citizens National Bank of Evans City (CNBEC), was operating under the marks CITZENS and CITIZENS NATIONAL BANK. The junior user, Citizens Financial Group Inc (CFG), operated under the trademark CITIZENS BANK. CNBEC sent CFG a cease and desist letter, requesting that it stop using Citizens as a name with respect to its Western Pennsylvania branches. CFG responded by filing suit in the US District Court for the Western District of Pennsylvania seeking a declaratory judgment that CNBEC could not prevent it from using that name. CNBEC counterclaimed and moved for a preliminary injunction.

At trial, a jury found that (i) CNBEC owned the CITIZENS mark, and (ii) CFG's use of CITIZENS BANK infringed that mark. However, the jury also found that CITIZENS BANK did not infringe CNBEC's CITIZENS NATIONAL BANK mark. The jury rejected CNBEC's claim for damages.

Several days after the verdict, the district court ruled on CNBEC's motion for a permanent injunction against CFG. Notwithstanding the jury verdict, the court, of its own accord, issued an injunction restraining CNBEC from using CITIZENS and requiring CNBEC to identify itself as CITIZENS NATIONAL BANK. CFG was free to use CITIZENS BANK despite the jury verdict that a likelihood of confusion existed between that term and CNBEC's CITZENS mark. CNBEC appealed.

The US Court of Appeals for the Third Circuit held that the district court abused its discretion when it denied CNBEC's motion for an injunction and, instead, enjoined CNBEC from using CITIZENS, a mark that the jury found was owned by CNBEC. In its opinion, the appellate court discussed the concept of "moulding the verdict", noting that Third Circuit precedent requires that such moulding must be undertaken only if a jury's findings are inconsistent. In that event, a court may mould its ruling in order to harmonize the jury's answers to special interrogatories. In this case, however, the Third Circuit perceived no conflict in the jury's verdict, stating:

"The 'moulding' in this case only became necessary when the district court decided that despite the jury's finding of infringement by CFG over CNBEC's senior rights, it would still grant declaratory judgment in favour of CFG, thereby allowing CFG to use its trademark in CNBEC's market area."

The lower court was instructed to vacate the decision and to enter judgment in accordance with the jury's finding of infringement.

Russell H Falconer, Baker Botts LLP, New York

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