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A bank based in Coral Gables, Fla., has filed suit in U.S. District Court in Miami to preserve its brand name months before a growth-minded New Jersey institution named Commerce Bank plans to enter the state. The Coral Gables institution, Commercebank, with assets of $3.9 billion, is concerned about brand confusion and dilution in the Florida market in which it has operated for 23 years under the name, so the bank filed suit last month. The suit argues that if the New Jersey bank’s name is not altered before it expands into the state it would amount to a service mark infringement, infringement of Florida trademark law, unfair competition and common law unfair competition. The suit asks U.S. District Judge Joan Lenard to stop the New Jersey institution’s holding company, Commerce Bancorp Inc., from the “unlawful and unauthorized” use of the Commerce Bank name when it opens in Florida, scheduled for early next year. The New Jersey institution’s name “poses an immediate and direct threat to plaintiff’s trademark rights under federal and Florida law,” according to the suit that followed weeks of failed negotiations. “Commercebank has no adequate remedy at law against Commerce Bank’s threatened infringement in the Florida market of Commercebank’s service mark,” according to the suit. “Unless Commerce Bank is restrained and enjoined from using their substantially similar service mark, Commercebank will suffer irreparable harm.” Neither the Coral Gables bank nor the New Jersey institution would discuss the pending litigation or the failed negotiations that prompted the lawsuit, which was filed Oct. 6. The filing was anticipated by industry observers as the New Jersey institution prepares a 2006 launch of a seven-year strategy to build a 150-branch Florida footprint in Miami-Dade, Broward, Palm Beach and Martin counties. The New Jersey institution wants to open 10 to 15 new locations next year, and 20 to 25 branches annually thereafter until reaching a critical mass. The expansion includes the New Jersey institution’s acquisition of Palm Beach County Bank, a West Palm Beach commercial bank with seven locations and $350 million in assets. The acquisition was announced in July and is expected to be approved by state and federal banking regulators by January. The South Florida expansion for the New Jersey bank with assets of $34 billion that bills itself as “America’s most convenient bank” has caused problems for other locally based banks. Last summer, Fort Lauderdale-based BankAtlantic, the state’s second-largest bank and self-professed “Florida’s most convenient bank,” suffered stock downgrades by analysts and a 26 percent plummet in share price in the three months after Commerce Bank announced its $550 million Southeast Florida expansion plan. For the Coral Gables bank, the arrival of a similar competitor with the same name could undermine growth for the franchise. The bank operates 11 locations in Miami-Dade and Broward counties. The bank recently received regulatory approval to open a branch in Boca Raton, triggering the launch of its Palm Beach County expansion. The Coral Gables bank also operates a loan production office in the Tampa area, a normal way for banks to evaluate a market and build clientele before opening branches. The Florida bank also operates a branch in Houston and New York. The New Jersey bank also operates in New York. No suits have been filed over the name in New York or Texas, according to online federal dockets. Besides customer confusion, the Coral Gables institution also is focused on preserving its relationship within the banking industry, where it is common for institutions to participate in each other’s loans. The Coral Gables bank’s suit specifically references a New Jersey media report in which the New Jersey bank offered bonuses of $5,000 to managers who successfully contributed to the closing of competing nearby branches. “In addition to Commerce Bank’s overwhelming expansion program, Commercebank is also particularly at risk as a result of Commerce Bank’s attitude toward market competition,” according to the suit. In a September interview before filing suit, Guillermo Villar, president and chief executive of the Coral Gables institution, said he preferred to settle the naming issue “amicably.” But he was adamant that his institution would not be bullied into relinquishing its name to the larger New Jersey bank. “Our objective is that they add something to their name that differentiates their name from ours,” Villar said. The Cherry Hill, N.J., bank has had to alter its name before when expanding into different markets on the East Coast. The bank’s sister institution in Ramsey, N.J., is known as Commerce Bank/North and the Philadelphia bank subsidiary is Commerce Bank/Pennsylvania. It’s unclear if the New Jersey bank will take a similar approach in Florida. No new applications using a combination of Commerce Bank and Florida turned up during Internet searches of Florida corporate records and U.S. Patent and Trademark Office Web sites. Commerce Bank is a common name for a financial institution in the United States since no federal trademark has been issued. The Federal Deposit Insurance Corp insures 17 institutions — including three subsidiaries of the New Jersey bank holding company — that begin with these two names. The various Commerce Banks are located in 13 states from Oregon to Arizona, Minnesota to Texas. The Coral Gables institution isn’t the only Florida bank to use these two names. A Fort Myers institution is called the Commerce Bank of Southwest Florida. The New Jersey bank has been using the Commerce Bank name since 1973 but it didn’t file a federal trademark registration with the U.S. Patent and Trademark Office until 2000. The New Jersey bank’s application was refused and is currently on appeal to the U.S. Trademark Trial and Appeal Board, a Washington, D.C., appellate body that reviews examiners decisions. The Coral Gables bank filed its federal application in 2002 but suspended the process pending the outcome of the New Jersey bank’s appeal. The Coral Gables bank sought a federal registration after the New Jersey bank yet it appears to have the advantage in Florida, said Edward Acle, a trademark attorney with Malloy & Malloy in Miami. He is not involved in the case. The Coral Gables bank has operated under the Commercebank name since 1982, far more than the six years necessary for an entity’s trademark to be considered “incontestable.” “Since the Florida bank had established its market here prior to the New Jersey bank’s arrival here, and also before the New Jersey bank received a federal trademark registration, the law generally favors the Florida bank’s right to continue using its name here and even to exclude the New Jersey bank from using that name here,” Acle said. Bank-naming rights have been at issue in the Miami federal court before. In 1998, Puerto Rico’s Banco Popular, which at the time had assets of $15 billion, was stopped by U.S. District Judge Alan S. Gold from using its name in South Florida because of possible confusion with the former Popular Bank of Florida, a Coral Gables institution that at the time had assets of $310 million. The Puerto Rico bank was founded in 1893, long before the Coral Gables bank opened in 1979. Still, the South Florida bank began operating and subsequently obtained a Florida trademark ahead of the Puerto Rico bank. Popular Bank no longer exists, having been purchased by BAC Florida Bank in 1998. Banco Popular is once again focused on South Florida, having acquired Kislak National Bank in January. Acle said most trademark battles can be avoided with proper preparation and a nominal fee for a registration and attorney services. “Trademark counsel could have helped the New Jersey bank receive its federal registration in a timely manner and thereby avoid this situation,” Acle said. “Trademark counsel may also have helped the Florida bank conduct a proper search to identify the threat of the New Jersey bank, before it settled on its trademark. Since the appropriate measures were not taken, we now have a mess that could easily have been averted.”

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