Does trademark fair use allow a login screen to be copied? PNC v. PLAID

Trademark infringement is when someone, other than the owner of a trademark, uses a trademark in a way that causes consumers to be confused about the identity of the producer of a product. Clearly, if a competitor starts using a trademark to lead consumers to believe that products produced by the competitor came from the trademark owner, that would be trademark infringement. However, there are some instances when a competitor is allowed to mention trademarks it does not own without committing trademark infringement.

Nominative fair use, is a legal doctrine that provides an affirmative defense to trademark infringement. A person may use the trademark of another as a reference to describe the other product, or to compare it to their own. The test to determine if a defendant’s use of a trademark is a normative fair use can vary slightly between the different circuit courts but the test boils down to three points. One party may use or refer to the trademark of another if: (1) The product or service cannot be readily identified without using the trademark; (2) The user only uses as much of the mark as is necessary for the identification; and (3) The user does nothing to suggest sponsorship or endorsement by the trademark holder. This applies even if the nominative use is commercial.

The internet presents new questions that trademark law was not intended to deal with. When the law does not explicitly allow or disallow an activity it is up to the courts to interpret the law and apply it to the facts.

THE PNC FINANCIAL SERVICES GROUP, INC., v. PLAID INC., 2:20-cv-1977 (W.D.PA 2020) illustrates a case where nominative fair use of a trademark will be pushed to the limit.

Plaintiff is one of the largest diversified financial services institutions in the United States with 52,000 employees across more than 40 states and assets of $445 billion as of March 31, 2020. Plaintiff offers a broad array of retail banking (including residential mortgage), corporate and institutional banking, and asset management products and
services. One of the services Plaintiff offers is a mobile phone application which allows customers to login and monitor their accounts. The mobile phone app greets users with a login screen, which is represented above on the left. The login screen features Plaintiff’s orange circle logo and initials, both of which are registered trademarks. The login screen serves a dual purpose, it serves as a source identifier letting consumers know they are about to use the Plaintiff’s service, in addition the login screen has security features which may not be readily apparent to consumers.

Defendant is a financial technology company. Defendant acts as an intermediary between a primary website and several financial institutions. For example a stock brokerage website needs to verify that a customer has enough money to cover trades, it would be very expensive for the brokerage website to implement a method to communicate with every bank. Defendant offers a service that provides a single point of contact with several different banks. Consumers enter their banking login information into Defendant’s product and then Defendant retrieves the information from the bank posing as the consumer. An example of Defendant’s login screen for Plaintiff’s website is reproduced above on the right.

Not all of Defendant’s methods of communicating with banks are authorized. Plaintiff has sent Defendant cease and desist letters and repeatedly changed its login screen security features to prevent Defendant from logging in as a consumer. Defendant has managed to work around all Plaintiff’s changes. When Plaintiff makes a security change that frustrates the Defendant, the changes their login screen to include a link which invites consumers to file a complaint with the Consumer Financial Protection Bureau. Several consumers have filed complaints, thinking that they were following instructions from the Plaintiff.

In December 2020 Plaintiff sued Defendant for trademark counterfeiting, trademark infringement and several other causes of action. The Defendant has not answered the complaint yet, but fair use will undoubtedly be one of the defenses raised. A strong argument can be made that Defendant’s use of Plaintiff’s trademark is a nominative fair use. Whether or not Defendant will qualify for nominative fair use is a question that the court will have to decide.

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