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LAUREL CAPITAL GROUP, INC. v. BT FINANCIAL CORP.
April 15, 1999
LAUREL CAPITAL GROUP, INC., LAUREL SAVINGS BANK, PLAINTIFFS,
BT FINANCIAL CORPORATION, LAUREL BANK, DEFENDANT.
The opinion of the court was delivered by: D. Brooks Smith, District Judge.
MEMORANDUM OPINION AND ORDER
Before the court are cross-motions for summary judgment.
Plaintiffs Laurel Capital Savings Group, Inc. and Laurel Savings
Bank ("Plaintiffs") have requested partial summary judgment on
their trademark infringement action under the Lanham Act,
15 U.S.C. § 1125(a). Defendants BT Financial Corporation and Laurel
Bank ("Defendants") have filed a competing motion for summary
judgment. For the following reasons, I will grant the Plaintiffs'
motion for partial summary judgment and deny the Defendants'
motion. As explained infra, the precise geographic scope of the
parties' respective rights in the mark at issue will be addressed
subsequently at the remedial stage of this action. Hence, the
geographic scope used to resolve the present motions will not be
law of the case for purposes of crafting an appropriate remedy.
The predecessor to Laurel Savings Bank, known as Laurel Savings
Association, was formed in 1981 when Peoples Savings Association
merged with Allison Park Savings and Loan Association. Id. at
2. In May 1981, a committee consisting of two directors from each
of the merged institutions was appointed to choose a name,
preferably one associated with Pennsylvania. The committee
initially chose "Mountain Laurel" after the state flower, but
shortened it simply to "Laurel" and named the new entity "Laurel
Savings Association." Dkt. no. 43, Exh. 2, at 4-5. At the time,
the committee was unaware of any other banking institutions using
the name "Laurel" in any fashion. Id. at 7-8. The name was
approved by the combined entity's board in mid-December 1981 and
used beginning in early January 1982.*fn2 Id. at 6.
Between 1982 and 1995, Laurel Savings Association operated as a
state-chartered savings association at the same six branches now
operated by the Plaintiffs. Dkt. no. 40, Exh.1, at 3. It offered
a variety of banking services to Pittsburgh-area individuals and
commercial customers including mortgage loans, installment loans,
checking accounts, certificates of deposit, passbook, club and
money market accounts, night depository services, U.S. Savings
Bond sales and redemptions, travelers' checks, money orders and
retirement accounts (IRA, KEOGH, SEP). Dkt. no. 57, Exh. 1, at 4.
ATM services were made available to individuals and commercial
customers in 1983, credit card merchant charge services to
commercial customers in 1984, and credit card and safety deposit
boxes to individuals and commercial customers in 1987. Id. In
addition, as of 1982, Laurel Savings Association branches were
authorized to offer commercial real estate lending and, to a
limited extent, non-interest bearing demand deposit accounts and
interest bearing negotiable order of withdrawal ("NOW") accounts.
Dkt. no. 60, Exh. 4, at 1-2.
As a savings association, Laurel Savings was subject to
regulation by the Office of Thrift Supervision ("OTS") and
required to pay annual OTS assessment charges. Dkt. no. 57, Exh.
1, at 3. In January 1995, in an effort to avoid further OTS
charges, Laurel Savings Association converted to a
state-chartered stock savings bank, thereby becoming subject
instead to regulation by the Federal Deposit Insurance
Corporation ("FDIC"). Accordingly, Laurel Savings Association
changed its name to Laurel Savings Bank to reflect the change in
its charter. Id. at 5. The conversion, however, did not alter
the institution's range or type of services, or its customer
base. Id. at 4-5; Dkt. no. 40, Exh. 1, at 2.
Laurel Savings Bank, currently holding over 35,000 customer
accounts, primarily serves individuals and businesses proximately
located near its six branch offices. Dkt. 40, Exh. 1, at 4,
12-13. Its customers hale mostly from Allegheny and southern
Butler Counties. These branch offices, however, do serve
individuals who, while residing in the nearby contiguous counties
of Armstrong, Beaver, Washington and Westmoreland, find it
convenient to bank in the Allegheny southern Butler area.
Id. at 12-13. Laurel Savings Bank uses the color green and a
stylized "L" logo in its marketing materials. See e.g., Dkt.
no. 42, Exhs. K, M, O.
Over the years, while continuing to operate at the same six
branch offices, Laurel Saving Bank's business has grown at a
moderate pace. See Dkt. no. 40, Exh. 1, at 4. Its current
assets exceed $212,000,000, up from $177,729,000 in 1994. Id.
Laurel Savings Bank has considered acquiring or opening new
branch offices in Allegheny and Westmoreland Counties, but has
yet to do so. Id.
Defendant BT Financial Corporation is a bank holding company
headquartered in Johnstown, Pennsylvania. Dkt. no. 50, Exh. C, at
2. Defendant Laurel Bank, a wholly owned subsidiary of BT
Financial, traces its roots back to the First National Bank of
Ebensburg, a commercial bank which opened its first branch office
in Cambria County in 1897. Id. By 1974, the First National Bank
of Ebensburg had grown considerably through new branch offices
and acquisitions. Id.; Dkt. no. 50, Exh. D, at 9-11. As the
Bank grew, however, there was increasing concern that the
regionality of the "Ebensburg" name no longer reflected its
geographic service area. Dkt. no. 50, Exh. C, at 3. Thus, in
1974, the First National Bank of Ebensburg changed its name to
"The Laurel National Bank" and adopted Pennsylvania's state
flower, the Mountain Laurel, for use in its marketing endeavors.
Id. at 3. The name change was extensively advertised in various
media, through open house events, and a campaign to give away
10,000 laurel bush seedlings. Id.
The Laurel National Bank was acquired by defendant BT Financial
Corporation on January 1, 1985. Dkt. no. 50, Exh. C, at 3. It
immediately converted to a state charter so as to be subject to
the same federal regulator as BT Financial's other commercial
subsidiary, the Johnstown Bank and Trust Company. Id. The
conversion had no impact on Laurel National Bank's range of
powers and services, but it did require the Bank to drop
"National" from its corporate name. Id. Thereafter, it carried
on its commercial banking business as "Laurel Bank," a BT
Meanwhile, from its headquarters in Johnstown, BT Financial
continued to expand westward. In 1991, BT Financial acquired
Peoples Federal Savings Bank of New Kensington. Dkt. 43, Exh. 6,
at 25. It began to operate Peoples' branches in Tarentum and
Natrona Heights in Allegheny County, New Kensington and Lower
Burrell in Westmoreland County and Sarver in Butler County as
branches of the Johnstown Bank and Trust Company ("JBT"). Id.
In 1993, BT Financial acquired First South Financial Corporation
and began to operate First South's six branches in Allegheny
County (Brookline, Brentwood, Pleasant Hills, Mount Oliver,
Carson Street in Pittsburgh's South Hills and McCandless Township
in Pittsburgh's North Hills) and one in Washington County
(Donaldson's Crossroads) as branches of another BT Financial
subsidiary, Fayette Bank. Id. at 25-26.
On October 10, 1997, BT Financial consolidated its three
affiliate commercial banks — Fayette Bank, JBT and Laurel Bank —
into one institution. BT Financial proposed to call the
consolidated entity "Laurel Bank." Dkt. no. 50, Exh. C, at 3.
"Laurel" was chosen to reflect the institution's wide geographic
distribution and to capitalize on the goodwill and customer
recognition associated with the name. Id. As a result of the
consolidation, the newly formed Laurel Bank had seventy-two
branch offices in twelve counties: Allegheny, Armstrong, Butler,
Fayette, Westmoreland, Somerset, Bedford, Blair, Cambria,
Indiana, Greene, and Washington.*fn3
Prior to the consolidation, Laurel Bank had operated at twelve
branch offices located across three counties — Blair, Cambria and
Indiana — variously 70 to 100 miles east of the Pittsburgh
In March 1997, the Plaintiffs learned of defendant BT
Financial's plan to merge Fayette Bank, JBT, and Laurel Bank into
an institution named "Laurel Bank." Dkt. no. 40, Exh. 1, at 12.
Concerned because some of the Fayette Bank and JBT branch offices
were located in or near areas already served by Laurel Savings
Bank,*fn4 Plaintiffs notified BT Financial of their prior use of
the "Laurel" mark in those areas. Id. at 19. In spite of the
Plaintiffs' continued assertion in a series of letters of its
superior rights in the mark, Dkt. no. 42, Exhs. FF, GG, and HH,
defendant BT Financial consummated its October 10, 1997
consolidation and began the process of renaming and advertising
the merged institution's new name. Dkt. no. 42, Exhs. II, JJ, KK
(print and billboard name change advertisements). The new Laurel
Bank put out a small number of advertisements and erected a few
billboards in the Pittsburgh area, using the color green and a
stylized "L" logo similar to that of Laurel Savings Bank. See
On November 19, 1997, Plaintiffs filed suit under the Lanham
Act, seeking a preliminary and permanent injunction to prevent
Defendants from using the "Laurel" mark or any similarly
confusing mark in connection with banking services in the
Pittsburgh area. Dkt. no. 1. On December 2, 1997, the parties
entered a consent decree preliminarily enjoining the Defendants,
pending a trial on the merits, from using "Laurel" or any
confusingly similar mark or logo in the six-county area of
Allegheny, Armstrong, Beaver, Butler, Washington, and
Westmoreland Counties ("the six-county area"). Dkt. no. 33, at 2
("Amended Consent Decree"). Discovery ensued and on June 15,
1998, both parties filed motions for summary judgment along with
extensive sealed supporting exhibits. Dkt. nos. 38, 48. I turn
now to these competing motions.
II. APPLICABLE LEGAL PRINCIPLES
A. Subject Matter Jurisdiction*fn5
1. The Statutory Framework & General Principles
"[a]ny person who, on or in connection with any goods
or services . . . uses in commerce any word, term,
[or] name . . . which [is] likely to cause confusion
. . . as to the affiliation, connection or
association . . . or as to origin, sponsorship, or
approval of his or her goods, services or commercial
activities . . . shall be liable in a civil action by
any person who believes that he  is likely to be
damaged by such act."
"Use in commerce" is defined by the Act to mean "the bona fide
use of a mark in the ordinary course of trade." 15 U.S.C. § 1127.
Specifically, a service mark is used in commerce "when it is used
or displayed in the sale or advertising of services and the
services are rendered in commerce, or the services are rendered
in more than one State. . . ." Id.
The Act also defines "commerce" to mean "all commerce which may
lawfully be regulated by Congress." 15 U.S.C. § 1127. It is
axiomatic that Congress may lawfully regulate, in addition to
interstate commerce, purely intrastate activities which have a
"substantial effect" on interstate commerce. See Rickard v. Auto
Publisher, Inc., 735 F.2d 450, 453 n. 1 (11th Cir. 1984) (`in
commerce' jurisdictional requirement requires only effect on
commerce); Pure Foods v. Minute Maid Corp., 214 F.2d 792, 795
(5th Cir. 1954) (Lanham Act extends to activities local in nature
which have substantial economic effect on interstate commerce);
Mother Waddles Perpetual Mission, Inc. v. Frazier, 904 F. Supp. 603,
611 (E.D.Mich. 1995) (interstate commerce jurisdictional
requirement may be met by showing that the defendant's use, while
intrastate, substantially affected interstate business).
Moreover, the Supreme Court has long advocated liberal
construction of the Lanham Act's "in commerce" requirement, see
Steele v. Bulova Watch Co., 344 U.S. 280, 283, 73 S.Ct. 252, 97
L.Ed. 319 (1952), which has been characterized as minimal. See
Berghoff Restaurant Co., Inc. v. Lewis W. Berghoff, Inc.,
357 F. Supp. 127, 130 (N.D.Ill. 1973); see also 3 J. Thomas
McCarthy, McCarthy on Trademarks & Unfair Competition § 25:57
(4th ed. 1999) (hereinafter "McCarthy on Trademarks") ("It is
difficult to conceive of an act of infringement which is not `in
commerce' in the sense of the modern decisions. Thus, it may not
be inaccurate to predict that the `use in commerce' requirement
will not be much of an issue in future litigation, barring cases
with unusual twists in the facts.").
The Act calls for an assessment of the defendant's "in
commerce" use of the mark. See 15 U.S.C. § 1125 (any person
that "uses in commerce" a mark likely to cause confusion (i.e.,
defendant) "shall be liable in a civil action to any person who
believes that he or she is likely to be damaged by such act"
(i.e., plaintiff)); see also Schroeder v. Lotito, 577 F. Supp. 708,
715 (D.R.I. 1983) (the improper use must be in interstate
commerce). The courts, however, have repeatedly found
jurisdiction where the defendant's use is solely intrastate,
provided the plaintiffs business activities "involve" or "affect"
interstate commerce. See e.g., Falcon Rice Mill v. Community
Rice Mill, 725 F.2d 336, 343 n. 5 (5th Cir. 1984); Coca-Cola
Co. v. Stewart, 621 F.2d 287, 290 (8th Cir. 1980) ("substantial
effect" is present where "the trademark owner's reputation and
good will, built up by use of the mark in interstate commerce,
are adversely affected by intrastate infringement"); Burger King
of Florida, Inc. v. Brewer, 244 F. Supp. 293, 297 (W.D.Tenn.
1965) (advertising by plaintiff put the mark in interstate
commerce). Only those disputes which are "purely" intrastate fail
to implicate the Lanham Act. See Jellibeans, Inc. v. Skating
Clubs, Inc., 716 F.2d 833, 838 (11th Cir. 1983); Tax Cap
Committee v. Save Our Everglades, 933 F. Supp. 1077, 1080-81
(S.D.Fla. 1996) (no Lanham Act jurisdiction where the mark, used
in gathering petition
signatures solely in Florida for political purposes, was not used
When assessing the parties' activities, however, it is vital to
understand the conceptual difficulty inherent in the wording of
the Lanham Act. For the Act to apply, the mark itself must be
used in interstate commerce; it is insufficient that the parties'
business is, by its nature, interstate or is one that effects
interstate commerce. Very few courts have taken notice of this
distinction. It is perhaps best explained in Licata & Co., Inc.
v. Goldberg, 812 F. Supp. 403 (S.D.N.Y. 1993):
The Lanham Act's reach, while long, does not extend
to the full outer limits of the commerce power. Its
plain meaning — the Lanham Act utilizes the term "in
commerce" rather than "affecting commerce" or the
even broader "industry affecting commerce" — reflects
a legislative judgment that for the statute to apply,
the questioned advertising or statements, and not
merely the underlying commercial activity, must be
disseminated in commerce — i.e., not be purely local.
Id. at 409; see also Blazon, Inc. v. DeLuxe Game Corp.,
268 F. Supp. 416 (S.D.N.Y. 1965) (it is the transportation of the item
with the mark on it rather than the general scope of the business
which is determinative under the statute). Thus, we cannot base
jurisdiction simply on the obvious fact that these parties, both
banks, operate in or substantially affect interstate
What counts, then, are the steps taken by each party to place
its mark in interstate commerce. Where the parties advertise
beyond state borders or claim patrons residing outside the state,
the courts have been very liberal in favor of finding
jurisdiction. See Rickard, 735 F.2d at 453 n. 1 (buyers
responding to the defendant's ads and the sellers which place
them are occasionally from across state borders); Jellibeans,
Inc., 716 F.2d at 838 (patrons from beyond state borders);
Mother Waddles, 904 F. Supp. at 611 (defendant's radio ads
broadcast out of state); see also Annotation, What Constitutes
"In Commerce" Within the Meaning of § 32(1) of Lanham Trade-Mark
Act (15 USCS § 1114(1)) Giving Right of Action for Infringement
of Trademark "In Commerce", 15 A.L.R.Fed. 368 (1973 & Supp.
1998) (seemingly intrastate activity is sufficient where there
are records of out of state patrons and proof of advertising in
newspapers with interstate distribution).
Many of the cases where jurisdiction is deemed appropriate
involve national advertising. See e.g., Kampgrounds, 415
F. Supp. at 1290-91 (advertising in camping publications with
national circulation); Lobo Enterprises v. Tunnel, Inc., 822
331, 333 (2d Cir. 1987) (travel guides and other publications
with interstate circulation). I have yet to see, however, any
suggestion in the caselaw that the parties must actually intend
that their mark travel in interstate channels. Indeed, it appears
to be enough if, for instance, their radio or newspaper ads
happen to be regularly carried beyond state borders.
With the foregoing principles in mind, I turn to the evidence
of interstate use adduced by the Plaintiffs.
Defendants have affirmatively used their mark in interstate
commerce. First, and perhaps most importantly, they maintain an
Internet website which prominently features and promotes
defendant Laurel Bank's services in connection with the "Laurel"
mark.*fn7 This website is accessible to customers worldwide. As
the District Court for the Southern District of New York recently
Internet users constitute a national, even
international, audience, who must use interstate
telephone lines to access defendant's website . . .
The nature of the Internet indicates that
establishing a typical home page on the Internet, for
access to all users, would satisfy the Lanham Act's
"in commerce" requirement.
Planned Parenthood Fed., Inc. v. Bucci, No. 97-629, 1997 WL
133313, *3, 1997 U.S.Dist. LEXIS 3338, *10-12 (S.D.N.Y. Mar. 24,
1997), aff'd mem., 152 F.3d 920 (2d Cir.), cert. denied, ___
U.S. ___, 119 S.Ct. 90, 142 L.Ed.2d 71 (1998); accord
Intermatic, Inc. v. Toeppen, 947 F. Supp. 1227 (N.D.Ill. 1996); 2
Jerome Gilson & Anne Gilson Lalond, Trademark Protection and
Practice § 511 (1998) ("because Internet communications
transmit instantaneously on a worldwide basis, there is little
question that the `in commerce' requirement [of the Lanham Act]
would be met in a typical Internet message"). Accordingly,
Defendants' maintenance of a website prominently featuring the
"Laurel" mark strongly supports Lanham Act jurisdiction.
Second, there are at least forty Laurel Bank accounts held by
customers who reside outside of Pennsylvania. See Dkt. No. 68,
Exh. A; Jellibeans Inc., 716 F.2d at 838 (district court
finding of interstate contact not clearly erroneous where
plaintiff drew patrons from out of state); Rickard, 735 F.2d at
453 n. 1 (buyers and sellers who used the parties' publishing
services occasionally hailed from across state lines);
University of Florida v. KPB, Inc., 89 F.3d 773, 776 n. 1 (11th
Cir. 1996) (jurisdiction proper where 15% of student body from
out-of-state). This fact also supports Lanham Act jurisdiction.
Third, Defendants engage in some interstate advertising,
although its extent is very limited, and the fact that the
Defendants' chosen publications are circulated beyond state
borders appears to be merely incidental. Cf. Lobo Enterprises,
822 F.2d at 333 ("in commerce" requirement satisfied where
service mark was significantly advertised in travel guides);
Kampgrounds, 415 F. Supp. at 1291 (camping publications with
national circulation). The Pittsburgh Post-Gazette, for
example, is distributed outside of Pennsylvania. See Dkt. No.
68, Exh. B. Nonetheless, even small amounts of interstate
advertising have been repeatedly cited as strong support for
Lanham Act jurisdiction. See Mother Waddles, 904 F. Supp. at 611
("[i]nterstate advertising is sufficient interstate activity for
Lanham Act purposes").*fn8
Accordingly, these facts provide strong support for a finding
that both parties use the mark in commerce in connection with
their services. I therefore conclude that this court has ...