Wells Fargo v. ABD Ins. & Financial Servs.

A district court abuses its discretion when it does not separately consider a false advertising claim and a trademark infringement claim because the claims have different tests.

Wells Fargo & Co. (“Wells Fargo”) acquired ABD Insurance and Financial Services (“ABD”). During the course of the transition, Wells Fargo maintained marks of ABD on documents and websites, even though they changed their name to Wells Fargo Insurance Services. When members of the original ABD company later left Wells Fargo, they started a new company and used the same name and mark of ABD that Wells Fargo had been using. Wells Fargo sued the new ABD company for trademark infringement, false affiliation and advertisement, and unfair competition and sought a preliminary injunction, which the district court denied. The Ninth Circuit held that the district court abused its discretion in the analysis of the first element required for a preliminary injunction, specifically a likelihood of success of the merits, because it did not separate its consideration of the false advertisement claim and the trademark infringement claim, each of which have distinct tests. The panel held that the district court also abused its discretion by misapplying the law when it analyzed whether Wells Fargo abandoned the use of the mark because “prospective intent to abandon is not properly considered when examining whether bona fide uses of the mark in the ordinary course of business have ceased,” and it “misconstrued the breadth of uses included within the scope of a ‘bona fide use in the ordinary course of trade.’” The panel finally warned against “resting a finding of the likelihood of success of a trademark infringement claim” on evidence of actual confusion at the preliminary injunction stage because normally the parties will not have gathered significant evidence of actual confusion at such an early stage, and it is thus of diminished importance. REVERSED and REMANDED.