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Prosperity Bancshares, Inc., and Prosperity v. Town and Country Financial Corporation and Town and Country Bank

February 4, 2012

PROSPERITY BANCSHARES, INC., AND PROSPERITY BANK, PLAINTIFFS,
v.
TOWN AND COUNTRY FINANCIAL CORPORATION AND TOWN AND COUNTRY BANK, DEFENDANTS.



The opinion of the court was delivered by: Sue E. Myerscough, U.S. District Judge:

E-FILED 3:12-cv-03179-SEM-BGC # 26 Page 1 of 25 Tuesday, 05 February, 2013 05:00:14 PM Clerk, U.S. District Court, ILCD

OPINION

This matter comes before the Court on the Motion for Preliminary Injunction ("Motion") filed by Plaintiffs, Prosperity Bancshares, Inc., and Prosperity Bank (collectively "Prosperity") (d/e 2). Prosperity seeks a preliminary injunction prohibiting Defendants, Town and Country Financial Corporation and Town and Country Bank (collectively "Town and Country"), from using Prosperity's registered trademarks, "Prosperity Bancshares, Inc." and "Prosperity Bank." (collectively the "Prosperity Marks"). On August 1, 2012 and August 9, 2012, this Court held a hearing on the Motion where both parties presented evidence and called witnesses. Prosperity called Tim Timanus, Chief Operating Officer of Prosperity, and Charlotte Rasche, Executive VP and General Counsel for Prosperity. Town and Country called Micah Bartlett, Chairman, President, and Chief Executive Officer of Town and Country. Prosperity's Motion is DENIED because Prosperity has not demonstrated a likelihood for success on the merits in this trademark infringement action.

I. BACKGROUND

Prosperity began offering banking products and services under the Prosperity and/or Prosperity Bank name in 1983. Prosperity is currently a publicly traded company with shareholders throughout the country and 213 full-service banking locations in Texas.

Prosperity recently entered into an agreement to acquire Coppermark Bancshares, Inc., an Oklahoma Corporation. Pls.' Supplement at 1-2. The agreement has not been completed. Coppermark has banking locations in Oklahoma City, Edmond, and Norman, Oklahoma. Coppermark also has banking locations in Dallas and Plano, Texas.

Prosperity's services and products include checking accounts, savings accounts, money market accounts, IRA accounts, loans, trust services, debit cards, credit cards, and online banking. One hundred and forty-thousand Prosperity customers nationwide use the online banking services. Tr. 47. This includes the 208 Prosperity customers in Illinois, none of whom live in Quincy, who have about $6 million in loans and $2 million in deposits. Tr. 11-12.

Any Prosperity customer can use the online services at an Internet accessible location via Prosperity's registered domain name www.prosperitybanktx.com. But customers must appear at a physical bank branch in Texas to open an account before using Prosperity's online banking services.

Prosperity Chief Operating Officer Tim Timanus testified that Prosperity continually looks for growth opportunities. Tr. At 24-25. For example, Prosperity advertises on Sirius XM Satellite Radio channels including CNBC, Bloomberg, and Fox. Prosperity's expenditures for these advertisements totaled $56,000 in 2009, $103,700 in 2010, $83,648 in 2011, and $38,250 in 2012. Tr. 19-21 (Pls.' Ex. 2). Moreover, Prosperity advertises on its Internet website, through social media, on billboards along Texas interstate highways, and in advertisements on a sign behind the batter's box at Houston Astros baseball games, which are broadcast on television. Some Astros games are broadcast outside of Texas, including in Illinois. Tr. 48-49. Finally, Prosperity has received recognition for the quality of its banking services in three national magazines including Forbes, The American Banker, and Bank Director. Tr. 12.

On May 18, 2012, Defendants Town and Country opened the bank's newest branch location in Quincy, Illinois, and named the branch Peoples Prosperity Bank. Illinois and Federal banking regulations require that Town and Country always identify Peoples Prosperity Bank in Quincy as a division of Town and Country. Tr. 83. The Quincy branch store-front sign reads Peoples Prosperity Bank A Division of Town and Country Bank. Prosperity Bank appears larger than other words on the sign. The words Peoples Prosperity Bank appear in dark red bold font. A Division of Town and Country Bank appears in a light gray font. The sign appears as follows:

Additionally, Town and Country's website www.townand countrybank.com features a logo on the top, left corner of almost every web page that states: Town and Country Bank Peoples Prosperity Bank SidebySide. Peoples and Prosperity Bank appear to be the same size in the logo. The logo appears as follows:

Town and Country's main website also has a web page devoted specifically to the Quincy branch accessible at www.townandcountry bank.com/customer-center/prosperity. The web page identifies the Quincy branch as Peoples Prosperity Bank a division of Town and Country Bank. However, text on portions of Town and Country's website refers to the Quincy branch as solely Peoples Prosperity Bank.

Further, Town and Country registered the domain name www.ourprosperity.com with an Internet registrar and maintains a Facebook page at www.facebook.com/townandcountrybank.com that references the 2012 opening of Peoples Prosperity Bank in Quincy. Internet users who enter the www.ourprosperity.com domain name are automatically redirected to Town and Country's home page at www.townandcountrybank.com.

Prosperity first learned about the Quincy branch bank name on or about April 23, 2012. Prosperity's Chief Lending Officer read an article in the Quincy Harold Whig newspaper on that date. Tr. 33.

According to Prosperity, Town and Country initially planned to name the Quincy branch "Prosperity Bank." Pls.' Mem. Supp. Mot. at 7-8. Prosperity also claims Town and Country knew about the Texas Prosperity Bank as early as February 2012 and, despite this knowledge, used a name confusingly similar to the Prosperity Marks. Tr. 102-05.

Town and Country admits to knowing about the Texas Prosperity bank in February 2012 and learning about the federally registered Prosperity Marks on April 17, 2012. Tr. 104, 110. Nonetheless, Town and Country Chief Executive Officer Micah Bartlett stated that Town and Country chose the name Peoples Prosperity Bank to honor the original name of the Quincy branch: Quincy Peoples Savings and Loan Association. Bartlett testified that Town and Country found that people in Quincy generally referred to the original bank as Peoples. Tr. 87. Bartlett also stated that Town and Country considered a number of names with the word Peoples, such as, Peoples First. Tr. 87.

Ultimately, however, Town and Country settled on the name Peoples Prosperity. Town and Country believes the word Peoples pays "honor back to that original name" and that together with the word "Prosperity" "reflect[s Town and Country's] unique brand position" as "well [as] what it is that [Town and Country] stands for from a value proposition, particularly as it relates to improving the prosperity of people." Tr. 87-88, 106-07.

On or about April 25, 2012, Prosperity's general counsel, Charlotte Rasche, contacted Town and Country by telephone and requested that the Quincy branch stop using the Prosperity Marks or any other marks confusingly similar to the Prosperity Marks. Pls.' Mem. Supp. Mot. at 7-8. Prosperity states that Town and Country conceded the Prosperity name could cause confusion. Id. Prosperity asserts this led to Town and Country's decision to call the Quincy branch Peoples Prosperity Bank rather than just Prosperity Bank. Id. Prosperity continues to argue that the Quincy branch bank name Peoples Prosperity Bank is confusingly similar to the Prosperity Marks. Id.

On April 30, 2012, Town and Country filed for federal registration of the mark, Peoples Prosperity Bank a division of Town and Country Bank SideBySide. Town and Country also sought to register a design ...


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