Why is it important to seek federal registration of a bank’s name and related trademarks? In the past century, by regulation, banks were for the most part creatures of one locality, with perhaps branches stationed a few miles away. Trademark law, the primary concern of which is avoiding consumer confusion, was not concerned with identical or very similar bank names so long as they were in different geographic markets. Thus, almost every town had a “First National Bank” without causing consumer confusion or running afoul of trademark law. With the whittling away of such regulations, nationwide and regionally, and with banking becoming so widespread, consumer confusion is increasing.

The difficulty with these two concepts — trademark law and bank footprint expansion — is best explained by the following example:

Bank A begins operation in the Seattle, Washington, area in 1950 under the name ANYBANK. It chooses not to register its trademark with the United States Patent and Trademark Office (USPTO). Bank B begins operation under the name ANYBANK in 1980 in the Miami, Florida, area and promptly files and receives a federally registered mark from the USPTO.

Despite a common misconception, Bank A actually acquires “common law” trademark rights to use its mark within its relevant geographic market — here, the Seattle, Washington, area. These rights would even be superior to Bank B’s federally registered mark since Bank A was the senior user. However, this priority only applies to the area in which Bank A is the senior user — the Seattle, Washington, market.

Nevertheless, by receiving a federally registered trademark, Bank B has the presumptive priority to use the ANYBANK mark in any part of the United States where there was no prior user before the time Bank B’s registration was granted.

Here is where the problem typically arises: Bank A decides to expand its operations throughout the US Northwest. Bank B, which either is likewise expanding from Miami to the Northwest or has a number of customers who now live in the area, objects to Bank A’s expansion. And chances are, if litigation ensued, Bank B would win, even though a) its main branch is more than 2,500 miles away and b) it originally used the ANYBANK mark 30 years after Bank A’s initial use.

Had Bank A initially filed for federal registration when it first began use of the ANYBANK mark, Bank A would be the senior user over Bank B throughout the country and would not be facing objection by Bank B when Bank A chose to expand its territory.

The moral of this story is that financial institutions should endeavor to seek federal registration of their marks as soon as possible after organization to prevent problems down the road when and if they choose to expand into other geographic markets. While a federal registration will not allow a bank to leapfrog another banking institution that was using the mark earlier in time in another geographic market, it will provide the best possible protection from encroachment by other institutions seeking to use the same or similar mark.