Plaid must face jury on PNC's TM/advertising claims, but has good laches/acquiescence argument

PNC Financial Services Gp. v. Plaid Inc., 2024 WL 3687956,No. 2:20-cv-1977 (W.D. Pa. Aug. 7, 2024)

PNC is “a large, diversified financial institution offeringretail and wholesale banking services,” while Plaid connects cash payment andinvestment account applications like Venmo, Robinhood, and Coinbase with auser’s banks. This allows a user to input the username and password affiliatedwith their bank account to create the connection between the user’s bank andthe fintech app so money can be transferred between them.

PNC interface, L; Plaid connection interface with PNC logo, Rsample Plaid bank selection workflow

PNC alleged that Plaid infringed its trademarks byreplicating the authentic PNC log-on screen to get them to provide privatefinancial information, allowing Plaid to collect their data. Plaid respondedthat PNC knew about this as early as 2017 and worked with Plaid to make iteasier for PNC customers to connect to fintech apps. The relationship becamehostile in 2019, when a third party allegedy got PNC customer information thathad been obtained by Plaid and leaked it on the “Dark Web.” At that point, PNCblocked Plaid from accessing/linking PNC account information using Plaid Linksoftware in fintech apps.

Plaid allegedly then presented PNC consumers who were tryingto connect to fintech apps via Plaid Link with messaging screens, usingallegedly confusing branding, that said, “we’re currently experiencingconnectivity issues with this bank” and “PNC has made a change that preventsyou from being able to link your accounts.” One such screen also provided alink to the CFPB website and advised such users that they could file acomplaint against PNC about their lack of fintech app access with that federalenforcement agency, “which PNC says led to users (who were presumably PNCretail customers) filing complaints against PNC with the CFPB. Plaid’smessaging also encouraged PNC customers to change banks.” In late 2020, a newPlaid user interface finally propitiated PNC.

PNC sued for counterfeiting, infringement, and falseadvertising/unfair competition under federal and Pennsylvania law. This opiniondenies summary judgment to everybody on everything they sought, includingclaims and defenses.

Counterfeiting is probably the most eye-opening charge. Ajury could find that the marks used by Plaid were spurious, that is,substantially indistinguishable from PNC’s actual marks and suggesting a falseorigin. There were “subtle color differences,” but indistinguishability was a“hallmark” question of fact.  And,interestingly, counterfeiting has to cover the “same” goods and services as theregistrant’s, and the court considered it a jury question whether this was so.A jury could rationally conclude that Plaid and PNC do not offer the samefinancial services, given that “Plaid is not a bank.” Its customers areprimarily fintech apps, not bank account holders. However, a reasonable jurycould also find that Plaid offers the same “financial services” as PNC, or atleast that both offer “financial services” covered by PNC’s registrations,especially given statements Plaid made to the PTO that it offered financialservices. (The court did find that there was no judicial estoppel preventingPlaid from offering a defense that the services weren’t the “same,” given thegray areas involved.) A jury could also conclude that even if bank customersaren’t Plaid customers, they’re Plaid’s target audience—although how thatmatches up with the counterfeiting requirement I don’t know.

Trademark claims: The court declined to do a shortcut aroundthe likely confusion factors despite the similarity of the uses and relatedservices. (As is so common these days, the real issue is affiliation confusion,which also matters.)

The “consumer care” factor weighed against Plaid because ofevidence that “Plaid Link’s entire system was designed to make consumers feelmore comfortable in providing Plaid their banking information,” e.g. “[W]e usethe bank logo and color scheme because it has a significant impact onconversion. It gives users more familiarity and trust in completing the linkingflow.” Although banking may be “high engagement,” the evidence of confusion inthe survey was “rather high (perhaps surprisingly high) in the controlcondition” at 38%; Plaid’s own statements indicated that using the logos madeconsumers more “comfortable” “and thereby perhaps less likely to be carefulwith their banking information”; and Plaid’s own experts “emphasize[d] thatPlaid Link’s design structure promotes near-autonomous consumer decisionmaking.”

But other consumer-based factors were up for grabs. A jurycould readily conclude that “Plaid and PNC provide far different services andmarket to very different customers.” [Part of the issue here is: who’s confusedabout what? Plaid’s customers aren’t likely to be confused.]

Length of time/actual confusion: Record evidence “unconnectedto Plaid’s messaging on the heels of the 2019 Cybersecurity Event” was “relativelysparse.” A consumer complaint cited by PNC might be relevant to falseadvertising, but didn’t obviously show trademark confusion:  

Venmo says they have lostconnection with my bank – sounds like Venmo’s problem. I attempt to reconnect.Then the ‘Plaid’ screen appears. (As noted, I’m sure it’s safer to have thisextra level of security – when it functions). Then the PNC (?) ‘Enter yourcredentials’ screen appears; when I enter my username and password the PNCscreen says ‘the username you provided was incorrect.’ I have called PNC toconfirm my username, and it’s the same one that works on the pnc.com site. Sowhat next?

Maybe the complaining consumer believed that Plaid is asecurity feature of PNC, but “this consumer complaint could also be read assaying that Plaid is an independent software service that provides anotherlevel of security. More importantly, there is minimal other record evidence ofactual confusion based exclusively off of Plaid’s use of PNC’s marks.” Therewas the survey, but a jury could find in Plaid’s favor.

Plaid’s purposes— “consumer ease of use and bankidentification”—were not bad faith as a matter of law. However, bad faith isn’trequired, only “intentional conduct” [what can this possibly mean? It seems toturn knowledge into bad intent]. And “statements from Plaid’s CEO regardingPlaid’s efforts to conceal its use of bank marks from the banks supports theconclusion that Plaid’s intent was willing and voluntary.” That is, the CEOtold employees to make sure that they did not send an email announcing the additionof over 6,000 new bank logos to Plaid Link to the banks themselves. “A jurycould readily conclude that Plaid wanted to guise itself in the marks of otherbanks, including PNC.”

PNC has a stake in another company, Akoya, designed tocompete with Plaid. “[W]hile a jury could reasonably conclude that PNC islikely to indirectly compete with Plaid and that Plaid’s use of PNC’s marksharms PNC’s hypothetical future efforts in the account linking and dataaggregation field, a jury could also conclude that PNC is prosecuting this caseless to foster its own expansion plans and more to undermine Plaid beforeadvancing its competing product.”

False advertising: This claim was based on Plaid’s messagingscreens blaming PNC after PNC implemented changes that prevented users fromusing Plaid to link their PNC accounts with their chosen fintech apps. Plaidencouraged consumers to report PNC to the CFPB, and Plaid customer servicerepresentatives told those customers to switch banks.

Surprisingly, the court found that these statements could be“intentionally misleading,” because the statements “implicitly place theculpable fault on PNC for the measures it took to protect its customers’ dataafter the 2019 Cybersecurity Event. … [A] jury could conclude that Plaid didnot tell PNC customers the full story, namely that there had been a securitybreach involving Plaid by which PNC customers’ private data was leaked on the ‘DarkWeb.’” And the reference to the CFPB “could also be found to imply that PNC’sconduct was at least wrongful, if not illegal.” [But the precedents usuallyagree that statements by laypeople about violations of laws that arearguable/not yet decided are not factual and therefore can’t violate the LanhamAct. Unless Plaid was under a duty to disclose the security incident, it’s usuallyok to give only information that favors yourself.] And PNC identified “multiplecommunications from consumers to the CFPB regarding their dissatisfaction withPNC after Plaid’s messaging screens went live,” such as “PNC has blocked accessto Plaid, which allows me to transfer funds in and out of my account. It’sextremely inconvenient and I will have to switch banks because of it.” But thatdoesn’t demonstrate deception! That was true! Still, the court found this to beevidence of materiality.

Nor could Plaid win summary judgment on harm. A jury couldfind harm to goodwill.

PNC didn’t manage to kick out laches/acquiescence as adefense. PNC delayed four years before objecting, and another before suing, “despiteevidence that shows that PNC worked with Plaid during much of that four-yearperiod and had access to demos that showed PNC what the Plaid Link userinterface looked like.” Prejudice was a closer question; it may have run up thepotential damages, and Plaid could argue that to the jury. Acquiescence wassimilar: there was “plenty of record evidence that suggests that PNC made athoughtful decision to continue working with Plaid despite having access toPlaid’s allegedly infringing user interface, at least in demo version, suchthat PNC conveyed implied consent to Plaid to use PNC marks as it did.” A jurycould find this was more than mere inaction, especially given the participationof PNC senior executives.