H&R Block, Inc. v. Block, Inc. ( 2023 )

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 22-2075
___________________________
H&R Block, Inc.; HRB Innovations, Inc.
Plaintiffs - Appellees
v.
Block, Inc.
Defendant - Appellant
____________
Appeal from United States District Court
for the Western District of Missouri - Kansas City
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Submitted: September 21, 2022
Filed: January 24, 2023
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Before GRUENDER, MELLOY, and ERICKSON, Circuit Judges.
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ERICKSON, Circuit Judge.
Block, Inc. appeals from an order granting in part H&R Block, Inc. and HRB
Innovations, Inc.’s (collectively, “H&R Block”) motion for a preliminary injunction.
The district court enjoined Block, Inc. from engaging in the following conduct:
1. from using “Block, Inc.,” or “Block,” or a close variant, such as
“Blocks,” in connection with or in close proximity to Cash App Taxes
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or the green square Cash App Taxes logo. This means that Defendant
cannot operate Cash App Taxes as a feature of Cash App or be linked
to Cash App through a separate application so long as Cash App also
refers to Block, Inc. It also means that Cash App Taxes cannot be
owned by a legal entity with the word “Block” in it.
2. from publicly communicating though advertising, press releases,
social media, on its websites, or other public tools, that it is associated
with Cash App Taxes or any platform or internet function that contains
or embeds Cash App Taxes or other brands or products associated with
taxes or tax services.
H&R Block claims that use of “Block” and a green square logo in connection
with tax services: (1) is likely to cause confusion because H&R Block and Block,
Inc. both offer overlapping services, including tax preparation and filing, other
related financial services, and charitable services; (2) has confused consumers, the
media, and investors; and (3) will cause irreparable harm, as it will undermine H&R
Block’s ability to control its public image and perception and lead consumers to
incorrectly believe Block, Inc’s tax service is connected to H&R Block or one of the
“building blocks” in the Block, Inc. family of brands. For the reasons stated below,
we reverse and vacate the preliminary injunction.
I. BACKGROUND
H&R Block was founded in 1955 as a bookkeeping business. It now
specializes in income tax preparation and other tax and financial services. Having
invested billions of dollars on national advertising campaigns, H&R Block has
developed a broad market presence, both in person and online. H&R Block’s
financial services include: pre-paid debit cards, lines of credit, loans, access to credit
scores, money management, payment processing, and mobile banking platforms,
such MyBlock. Under its “Block Advisors” brand, H&R Block offers tax, financial,
accounting, bookkeeping, and payroll services to small businesses. H&R Block also
operates a community impact program called “Make Every Block Better.” The
company asserts that it is known today as not only “H&R Block” but also “Block.”
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As part of its branding, H&R Block owns several federal trademark registrations and
uses a green square logo in connection with its products and services.
Square, Inc., founded in 2009, began with a product called “Square” that was
a payment card reader and point-of-sale software, which allowed businesses and
individual sellers to accept customer payments. Over time, Square, Inc. acquired or
developed other businesses. One of its businesses is Cash App, which started in
2013 as Square Cash. Cash App is a peer-to-peer money transfer service that allows
users to deposit and store money on the app. Cash App’s name and logo are federally
recognized trademarks in the form of a stylized white dollar sign surrounded by a
green square logo with rounded corners. Cash App is purely digital, there are no
brick-and-mortar stores, and the services are not available in online marketplaces.
In November 2020, Square, Inc. acquired free tax service Credit Karma Tax, which
was rebranded “Cash App Taxes” and integrated into the Cash App platform for the
2022 tax season. Cash App Taxes users must download and install Cash App to
access the free tax services.
Square, Inc. was renamed Block, Inc. in December 2021. The company filed
an application to register the name “Block”. 1 In its trademark application, Block
1
While this appeal was pending, the United States Patent and Trademark
Office issued a Non-Final Office Action refusing to grant Block, Inc.’s application
to register a design mark using the work “Block” because of the similarity of the
registered mark(s) to the proposed mark and the similarity of the goods and/or
services is likely to cause consumer confusion. Block, Inc. has been given six
months from November 15, 2022, to respond with evidence and arguments in
support of registration. This tentative decision by the USPTO was not before the
district court when it granted H&R Block’s motion for a preliminary injunction.
Given its tentative nature, we give this decision little weight. See Everest Cap. Ltd.
v. Everest Funds Mgmt., L.L.C., 393 F.3d 755, 764 (8th Cir. 2005) (upholding the
district court’s exclusion of USPTO decision suspending application of registration
mark because there may be a likelihood of confusion on the ground that “the
Trademark Office suspension notice had little probative value because it stated a
tentative opinion, not an administrative finding of fact based upon an adequate
record”).
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stated its intention to use the new name and logo for “holding company services,”
including business management, administration, promotion, and consulting services
for subsidiaries. It selected the name “Block” for a number of reasons, including its
association with “building blocks, neighborhood blocks and their local businesses,
communities coming together at block parties full of music,2 a blockchain, a section
of code, and obstacles to overcome[,]” and in connection with the adoption of a
“House of Brands” marketing architecture, which involves separating the corporate
identity from the names of the businesses or products the business owns. Block,
Inc.’s chief executive officer publicized the name change on his Twitter account,
which has over six million followers. The company’s business units, such as Cash
App, Square, and TIDAL, were included in publicity surrounding the name change.
References to Block, Inc. now appear on the Cash App website and in connection
with its mobile applications.
After announcement of the rebrand, some social media users posted comments
about whether the name change was too close to H&R Block, while others opined
that people know the difference between H&R Block and Block, Inc. Some articles
linked Cash App and its new tax services to “Block.” Other publications contained
stories about Cash App under profiles about H&R Block. H&R Block’s chief
executive officer testified that he was not concerned about the green square logos of
Cash App and Credit Karma 3 until Block, Inc.’s name change and its acquisition and
integration of Credit Karma Tax into Cash App Taxes.
2
Block, Inc.’s businesses also include TIDAL (a music streaming service),
Spiral (a business to promote the adoption blockchain-based currency Bitcoin), and
TBD (a decentralized finance platform in development, which is also based on
blockchain technology).
3
Prior to its purchase by Block, Inc., Credit Karma Tax operated within the
Credit Karma mobile app, which was identified by a dark green square with white
“ck” script letters.
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Fifteen days after the name change was announced, H&R Block commenced
this action alleging infringement on its trademark rights, in violation of the Lanham
Act, 15 U.S.C. § 1114, and Missouri law. Shortly after commencing the action,
H&R Block moved for a preliminary injunction. After analyzing the familiar
Dataphase4 factors, the district court granted in part H&R Block’s request for a
preliminary injunction. Block, Inc. timely filed this interlocutory appeal. We
granted Block, Inc.’s motion for a stay and expedited the appeal.
II. DISCUSSION
A preliminary injunction is an “extraordinary remedy never awarded as of
right.” Progressive Techs., Inc. v. Chaffin Holdings, Inc., 33 F.4th 481, 485 (8th
Cir. 2022) (quoting Winter v. Nat’l Res. Def. Council, Inc., 555 U.S. 7, 24 (2008)).
A plaintiff seeking a preliminary injunction bears the burden of showing that such
extraordinary relief is warranted. Dataphase, 640 F.2d at 113. Under the familiar
Dataphase analysis, a party seeking a preliminary injunction must demonstrate: (1)
the threat of irreparable harm; (2) the state of the balance between the harm and the
injury granting an injunction will inflict on other parties; (3) the probability it will
succeed on the merits; and (4) the public interest. Calvin Klein Cosmetics Corp. v.
Lenox Laboratories, Inc., 815 F.2d 500, 503 (8th Cir. 1987) (citing Dataphase, 640
F.2d at 113-14).
While mindful that a movant carries a “heavier” burden when granting a
preliminary injunction has the effect of awarding the movant substantially the relief
it could obtain after a trial on the merits, see id., we review the district court’s
ultimate ruling on a preliminary injunction “for abuse of discretion, with factual
findings examined for clear error and legal conclusions considered de novo.”
Brakebill v. Jaeger, 932 F.3d 671, 676 (8th Cir. 2019). “An abuse of discretion
occurs when a relevant factor that should have been given significant weight is not
4
Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en
banc).
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considered; when an irrelevant or improper factor is considered and given significant
weight; and when all proper factors, and no improper ones, are considered, but the
court, in weighing those factors, commits a clear error of judgment.” Novus
Franchising, Inc. v. Dawson, 725 F.3d 885, 893 (8th Cir. 2013) (quotation omitted).
A. Probability of Success on the Merits
Trademark infringement may be established by showing “the use of similar
marks on similar or related products or services if such use creates a likelihood of
confusion.” Select Comfort Corp. v. Baxter, 996 F.3d 925, 932 (8th Cir. 2021). To
establish trademark infringement, H&R Block must show: (1) it has a valid,
protectible mark, and (2) there is a likelihood of confusion between its mark and the
marks that Block, Inc. is using. Sturgis Motorcycle Rally, Inc. v. Rushmore Photo
& Gifts, Inc., 908 F.3d 313, 322 (8th Cir. 2018); see also 15 U.S.C. § 1125(a)(1)(A).
Assuming, without deciding, the disputed issue of whether H&R Block has a
valid, protectible mark for “Block”, we turn to the second prong required for
establishing trademark infringement. The district court’s determination on
likelihood of confusion is a finding of fact that we review for clear error. Select
Comfort, 996 F.3d at 934. The “core inquiry” when assessing the likelihood of
confusion is “whether the relevant average consumers for a product or service are
likely to be confused as to the source of a product or service or as to an affiliation
between sources based on a defendant’s use.” Id. at 933. Our circuit has set forth a
list of nonexclusive, nonexhaustive factors to assess likelihood of confusion, which
includes: “(1) the strength of the owner’s mark; (2) the similarity of the owner’s
mark and the alleged infringer’s mark; (3) the degree to which the products compete
with each other; (4) the alleged infringer’s intent to ‘pass off’ its goods as those of
the trademark owner; (5) incidents of actual confusion; and (6) the type of product,
its cost and conditions of purchase.” Id. (citing SquirtCo v. Seven-Up Co., 628 F.2d
1086, 1091 (8th Cir. 1980)). “[N]o one factor controls, and because the inquiry is
inherently case-specific, different factors may be entitled to more weight in different
cases.” Cmty. of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus
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Christ’s Church, 634 F.3d 1005, 1009 (8th Cir. 2011) (quoting Kemp v. Bumble Bee
Seafoods, Inc., 398 F.3d 1049, 1053 (8th Cir. 2005)).
In evaluating and weighing each of these factors, the district court found that
none of the six factors favored Block, Inc. It concluded that one factor—competitive
proximity—favored H&R Block; two other factors—strength of the mark and
similarity of the marks—“heavily” or “strongly” favored H&R Block; one factor—
actual consumer confusion—“slightly” favored H&R Block, and one factor—
consumer sophistication—tipped in H&R Block’s favor or was neutral. Block, Inc.
contends the district court (a) legally erred by giving no weight to its evidence
regarding lack of consumer confusion; (b) wrongly compared H&R Block with
Block rather than the actual brands used for Block, Inc.’s tax services (Cash App
and Cash App Taxes); and (c) abused its discretion in weighing the equities.
1. Strength of H&R Block’s Marks
When examining the likelihood of consumer confusion, “[a] strong and
distinctive” mark is “entitled to greater protection than a weak or commonplace
one.” SquirtCo., 628 F.2d at 1091. We have noted that evidence regarding the
amount of money a company has spent on advertising “is circumstantial evidence of
commercial strength, but says little about ‘minds of consumers,’ which is the
relevant unit of analysis for likelihood of confusion.” ZW USA, Inc. v. PWD Sys.,
LLC, 889 F.3d 441, 446 (8th Cir. 2018) (quoting KP Permanent Make-Up, Inc. v.
Lasting Impression I, Inc., 543 U.S. 111, 117 (2004)). Although the parties disputed
many of the facts and their significance, there is adequate support for the trial court’s
finding that H&R Block demonstrated its registered marks are commercially strong
and its common law mark “Block” was relatively strong. Given the evidence in the
record, the district court did not clearly error in assessing the strength of H&R
Block’s marks or by finding this factor weighed in favor of H&R Block.
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2. Similarity of the Marks
When analyzing the similarity of the marks at issue, courts are to examine
“the impression that each mark in its entirety is likely to have on a purchaser
exercising the attention usually given by purchasers of such products.” Id. (quoting
Duluth News-Trib., a Div. of Nw. Publ’ns, Inc. v. Mesabi Publ’g Co., 84 F.3d 1093,
1097 (8th Cir. 1996)). “Otherwise similar marks are not likely to be confused when
used in conjunction with the clearly displayed name of the manufacturer.” Id. at 447(cleaned up). Here, the district court found visual similarities between H&R Block’s
standalone green square and the Cash App logo consisting of a dollar sign
surrounded by a green square logo with rounded corners. It further found that
“Block” is the distinguishing feature in H&R Block’s family of “Block” marks and
that Block, Inc. is also using “Block” as its distinguishing feature. The district court
determined that the similarity factor weighed “strongly” H&R Block’s favor.
Below (and on appeal), Block, Inc. highlighted social media posts recognizing
H&R Block and Block, Inc. as different companies. Block, Inc. also pointed to
market conditions and the way consumers interact with the products to demonstrate
that similarity and confusion between Block, Inc. and H&R Block is diminished. As
noted by the district court, conditions of purchase provide an opportunity to
differentiate the parties’ products—Cash App is accessible only by downloading an
app while H&R Block’s services are widely available in person, through stand-alone
software sold at many retailers, and on an app. Block, Inc. asserts it only offers tax
services under Cash App’s branding, not Block, Inc.’s branding. To get to Cash App
Taxes, Block, Inc. maintains that customers must first download Cash App from
either the Google Play Store or the Apple App store, navigate through the Cash App
application, and select the Cash App Taxes feature. During that journey, Block, Inc.
asserts that consumers encounter its corporate name in “fine print,” such as in the
Cash App Terms of Service, the Cash App Consent to Disclosure, and other
necessary legal disclosures that are required to reference the official corporate entity.
In discounting these aspects of the products, the district court determined that “an
‘appreciable’ number of consumers are likely to read agreements to which they are
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committing themselves” and that “Cash App itself has several references to Block,
Inc.,” although it provided no cite to evidence in the record or other authority
supporting these findings. Dist. Ct. Order at 36.
Upon review of the record, there is apparent similarity between the marks at
issue. The district court’s findings on the similarity factor are a permissible view of
the evidence; however, there is evidence in the record, as highlighted by Block, Inc.,
to undermine the district court’s ultimate conclusion that the similarity factor
“strongly” favors H&R Block. When examining all the evidence in the record, there
are observable differences between the two logos and the competing products.
While both companies are targeting consumers looking for free tax services, the
products are available through different means. Based on the record as a whole, it
was clear error for the district court to conclude the similarity factor “strongly”
favored H&R Block.
3. Product Competition
H&R Block and Block, Inc. provide some overlapping services and compete
for consumers interested in free tax preparation services. Direct competition can
increase the likelihood of consumer confusion. ZW USA, Inc., 889 F.3d at 448; see
Anheuser-Busch, Inc. v. Balducci Publ’ns, 28 F.3d 769, 774 (8th Cir. 1994)
(citations omitted) (noting the likelihood of confusion has an expansive
interpretation that protects against use of a “mark on any product or service which
would reasonably be thought by the buying public to come from the same source, or
thought to be affiliated with, connected with, or sponsored by the trademark
owner”). Although the products provided by each company are accessible through
different channels, a reasonable consumer looking for free tax services might assume
that a brick-and-mortar service provider, like H&R Block, could also have an app.
The district court did not clearly err in finding the two companies are in close
competitive proximity, which renders confusion more likely, or that this factor
favored of H&R Block.
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4. Intent to Confuse the Public
The district court found the record had not been fully developed on whether
Block, Inc. intended to mislead and cause consumer confusion when Square
acquired a tax business and changed its name to Block, Inc. Without a developed
record, the court found this factor favored neither party. We find no clear error in
the district court’s examination of the intent factor.
5. Evidence of Actual Confusion
In analyzing evidence of actual confusion, the district court relied on articles
that appeared to associate Cash App with H&R Block and credited the social media
posts submitted by H&R Block reflecting consumer confusion. The court found
unpersuasive the social media posts from Block, Inc. suggesting confusion would be
unlikely. H&R Block did not submit evidence identifying any consumer who had
ever actually confused Cash App taxes with any of H&R Block’s products. H&R
Block conceded at oral argument that it had “not identified for us a single customer
who used Cash App, thinking it was an H&R Block product.” Hrg. Tr. 90:19-21.
The district court clearly erred in finding evidence of actual consumer confusion.
Cf. Duluth News-Trib., 84 F.3d at 1098 (demonstration of actual confusion through
several instances of misdirected mail and phone calls failed to raise a factual dispute
because the evidence was vague, unreliable, de minimis, and showed inattentiveness
on the part of the caller or sender rather than actual confusion).
6. Consumer Sophistication
When examining consumer sophistication for purposes of trademark
infringement, a court is to stand “in the shoes of the ordinary purchaser, buying under
the normally prevalent conditions of the market and giving the attention such
purchasers usually give in buying that class of goods.” General Mills, Inc. v.
Kellogg Co., 824 F.2d 622, 627 (8th Cir. 1987) (quotation and citation omitted). The
district court, in applying this standard, found that even if conditions of purchase
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provide some opportunity to differentiate the parties’ products, the purchasing
conditions are not so different that they dispel the risk of confusion. Thus, even
careful consumers could be confused about whether H&R Block is affiliated with
Block, Inc., particularly in the context of do-it-yourself tax preparation. The district
court concluded this factor tips in H&R Block’s favor, or at a minimum, is neutral.
The district court’s interpretation of the evidence is sustainable on this record, and
we are not left with a definite conviction that the district court made a mistake in
analyzing or weighing this factor.
7. Overall Weighing of Evidence of Likelihood of Confusion
The district court’s weighing of the SquirtCo factors is a factual finding
subject to clear error review. See Kemp, 398 F.3d at 1053-54 (citations omitted).
To succeed on the merits of its trademark infringement claim, H&R Block must
show that Block, Inc.’s use of a protected mark “creates a likelihood of confusion,
deception, or mistake on the part of an appreciable number of ordinary” consumers.
Gen. Mills, Inc. v. Kellogg Co., 824 F.2d 622, 626 (8th Cir. 1987). The burden rests
on H&R Block to demonstrate a likelihood of consumer confusion. See KP
Permanent Make-Up, Inc., 543 U.S. at 124 (a plaintiff claiming infringement “must
show likelihood of consumer confusion,” while a defendant claiming a fair use
defense has no burden to negate confusion); ZW USA, Inc., 889 F.3d at 446 (stating
the owner of the mark must show “the defendant’s actual practice is likely to produce
confusion in the minds of consumers about the origin of the goods or services in
question”).
Before the grant of a preliminary injunction is warranted, our precedent
requires H&R Block to “show a probability of confusion, not merely a possibility.”
Lovely Skin, Inc. v. Ishtar Skin Care Prods., LLC, 745 F.3d 877, 887 (8th Cir. 2014).
To satisfy the requisite probability standard, “there must be a substantial likelihood
that the public will be confused.” Vitek Sys., Inc. v. Abbott Laboratories, 675 F.2d
190, 192 (8th Cir. 1982) (citation omitted).
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Analyzing likelihood of confusion is fact-intensive and reasonable minds may
disagree. “The ultimate inquiry always is whether, considering all of the
circumstances, a likelihood exists that consumers will be confused about the source
of the allegedly infringing product.” Hubbard Feeds, Inc. v. Animal Feed
Supplement, Inc., 182 F.3d 598, 602 (8th Cir. 1999). While actual confusion is not
required, it is “often considered the best evidence of likelihood of confusion.”
Safeway Transit LLC v. Discount Party Bus, Inc., 954 F.3d 1171, 1179 (8th Cir.
2020) (quoting John Allan Co. v. Craig Allen Co., 540 F.3d 1133, 1140 (10th Cir.
2008)). Moreover, even evidence of several isolated incidents of actual confusion
occurring initially upon the creation of a potentially confusing mark is insufficient
to demonstrate a likelihood of confusion. Duluth News-Trib., 84 F.3d at 1098.
As noted above, the district court considered and weighed the six
nonexclusive factors and found that three factors strongly favor H&R Block: the
strength of its marks, the similarity of the marks, and competitive proximity. It found
that one factor, actual consumer confusion, slightly favored H&R Block. Finally, it
found that the intent to confuse and consumer sophistication factors were neutral.
After our review of the district court’s factual findings related to the likelihood
of confusion, we conclude the district court committed clear error in two of its
SquirtCo factors analysis. First, as discussed in II.A.2, it clearly erred when it found
that the similarity of the marks strongly favored H&R Block. Second, the district
court also clearly erred when it found that the actual confusion factor slightly favored
H&R Block given the totality of the evidence in the record and H&R Block’s
admission that it had not “identified a single customer who used Cash App thinking
it was an H&R Block product.”
After setting aside the clearly erroneous findings on the SquirtCo factors, we
count only two factors as strongly favoring H&R Block—the strength of its marks
and the products’ competitive proximity. One factor, the similarity of the marks,
slightly favors H&R Block. All other SquirtCo factors are neutral.
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While the record supports possible confusion by some consumers, there is a
paucity of evidence to rise to the level of substantial confusion by an appreciable
number of ordinary consumers. Thus, it was clear error for the district court to find
a likelihood of confusion. First, “[a]ctual confusion in the marketplace is often
considered the best evidence of likelihood of confusion.” Safeway Transit LLC, 954
F.3d at 1179. Here, the district court clearly erred in finding evidence of actual
confusion. The record shows several incidents of potential confusion occurring
shortly after Block, Inc.’s name change. These incidents include social media
posts—some of which reflect consumer confusion and others that do not—and
several news articles published within a couple months of Block, Inc.’s name change
that can be read to reflect confusion about whether the Cash App services are being
offered by H&R Block. This dubious evidence is insufficient for H&R Block to
satisfy its burden of showing a substantial likelihood of confusion about whether
Cash App Taxes is affiliated with H&R Block by an appreciable number of ordinary
consumers. Second, in the context of this case, we think that the actual confusion
and similarity factors carry significant weight because an appreciable number of
ordinary consumers must be likely to be confused. See Select Comfort, 996 F.3d at
933; Gen. Mills, 824 F.2d at 626. Yet here, at most H&R Block has shown that the
marks are slightly similar, its own marks are strong, and there is competitive
proximity. Keeping in mind that there must be “a substantial likelihood that the
public will be confused,” Vitek Sys., 675 F.2d at 192, it was clearly erroneous for
the district court to conclude there is a likelihood of confusion.
The burden of showing a likelihood of success on the merits is on H&R Block,
and it has not met its burden to “show a probability of confusion.” See Lovely Skin,
Inc., 745 F.3d at 887. It was clear error to find a likelihood of confusion from the
thin evidence here. This error tilts the entire balance in favor of reversal. See
Hubbard Feeds, Inc., 182 F.3d at 601 (quoting Nat’l Credit Union Admin. Bd. v.
Johnson, 133 F.3d 1097, 1101 (8th Cir. 1998) (stating that a district court abuses its
discretion when its decision is based on “any clearly erroneous findings of fact or
any clear error on an issue of law that may have affected the ultimate balancing of
the factors considered for a preliminary injunction”).
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B. Irreparable Harm
Without showing a likelihood of confusion, H&R Block is not entitled to a
rebuttable presumption of irreparable harm. See 15 U.S.C. § 1116(a) (plaintiff
entitled to a rebuttable presumption of irreparable harm upon a showing of likelihood
of success on the merits). Regardless of the applicability of the statutory
presumption, H&R Block has shown, at best, that factual questions exist about
whether a consumer will likely be confused and nothing more than speculative harm.
To demonstrate irreparable harm, H&R Block must show harm that “is certain and
great and of such imminence that there is a clear and present need for equitable
relief.” Novus Franchising, Inc., 725 F.3d at 895 (quotation omitted). In other
words, the harm must not only be “more than the mere possibility” of irreparable
harm, it also “must be more than mere speculation.” Padda v. Becerra, 37 F.4th
1376, 1384 (8th Cir. 2022) (citations omitted). “[F]ailure to demonstrate irreparable
harm is a sufficient ground to deny a preliminary injunction.” Phyllis Schlafly
Revocable Trust v. Cori, 924 F.3d 1004, 1009 (8th Cir. 2019) (quoting Gen. Motors
Corp. v. Harry Brown’s, LLC, 563 F.3d 312, 320 (8th Cir. 2009)).
The harm H&R Block identifies stems from consumer confusion that
purportedly risks damaging its brand. Given the paucity of evidence concerning
consumer confusion, H&R Block’s worry about potential negative publicity and loss
of intangible assets, such as reputation and goodwill, is speculative and inadequate
to demonstrate “a clear and present need for equitable relief.” See Padda, 37 F.4th
at 1384-85 (determining that without more detailed information, movant failed to
specifically identify the harm he will suffer or how the harm is more than reparable,
economic damages); see also Calvin Klein Cosmetics Corp., 815 F.2d at 505(concluding that because the district court erred in finding success on the merits, its
findings regarding irreparable harm and the balance of hardships are also insufficient
to support the grant of a preliminary injunction). Because the record contains
insufficient evidence demonstrating that H&R Block will suffer irreparable harm
absent a preliminary injunction, H&R Block is not entitled to injunctive relief.
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C. Remaining Dataphase Factors
As to the remaining Dataphase factors, the litigants are million-dollar
companies. Both parties have invested substantial time and expended millions of
dollars on advertising and developing their products and services. There is no
indication that Block, Inc. would be unable to provide adequate compensation if
found liable for trademark infringement. In contrast, the injunction prohibits Block,
Inc. from operating Cash App Taxes. The balance of equities does not favor
injunctive relief. See MPAY Inc. v. Erie Custom Comput. Applications, Inc., 970
F.3d 1010, 1020 (8th Cir. 2020) (appellant failed to show balance of harm tips in its
favor when injunction would prevent appellees from using the software that forms
the basis of their business).
III. CONCLUSION
Our task is to examine “whether the district court abused its discretion in
assessing whether the balance of equities so favors [the movant] that justice requires
the court to intervene to preserve the status quo until the merits are determined.”
Wildhawk Invs., LLC v. Brava I.P., LLC, 27 F.4th 587, 598 (8th Cir. 2022) (cleaned
up). Because the evidence in the record is inadequate to establish substantial
consumer confusion by an appreciable number of ordinary consumers, nor
irreparable harm that is concrete and imminent, H&R Block failed to satisfy its
burden. If there is in fact trademark infringement, H&R Block will have a full
opportunity to demonstrate that infringement at a trial on the merits. We reverse and
vacate the preliminary injunction.5
5
We decline to consider Block, Inc.’s other argument that the preliminary
injunction violates the First Amendment by restricting commercial speech. See
Anderson v. Rugged Races, LLC, 42 F.4th 955, 962 (8th Cir. 2022) (declining to
address arguments not presented to the district court).
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MELLOY, Circuit Judge, Dissenting.
I respectfully dissent. The district court granted H&R Block a preliminary
injunction prohibiting Block, Inc. from using “Block” in connection with Cash App
Taxes. A finding of clear error requires the appellant to clear a high hurdle. Because
I do not believe the appellant met the burden in this case, I would affirm. It was not
clear error to find a likelihood of confusion or an abuse of discretion to grant the
limited injunction as applied to tax services.
A. Likelihood of Success
The district court wrote a lengthy and detailed opinion analyzing the SquirtCo.
factors in a well-reasoned opinion. After reviewing all of the SquirtCo. factors the
district court concluded, “Block, Inc.’s use of ‘Block’ in commerce in the context of
the relevant market is likely to cause confusion.” I find no clear error in the analysis
of the individual factors or the weighing of the factors.
The majority found no clear error in the district court’s conclusion that
strength of mark and competitive proximity favor H&R Block.
In my view, strength of mark strongly favors H&R Block. H&R Block has ten
thousand store fronts, two million small business clients, and a website with over
fifty million logins. It is one of the most well-known tax service companies in the
country, serving millions of customers each year. Not only has H&R Block used
“Block” in connection with tax services for decades, it has also invested billions of
dollars into the mark. The success of this investment is confirmed by consumer
surveys which show consumers associate “Block” with H&R Block in the tax space.
The long-term and wide-spread use shows the strength of H&R Block’s mark.
Competitive proximity also favors H&R Block. Both H&R Block and Block,
Inc. service the same population in the tax services market. Both target the
“underbanked.” Using the name Cash App Taxes does not mean Block, Inc. is not
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competing with H&R Block. Cash App Taxes is not a separate entity, therefore
Block, Inc. is directly competing against H&R Block in this market. Both entities
use “Block” in the same market to target the same consumers. Additionally, both
companies offer charitable services under a “Block” umbrella.
The district court and majority both conclude two factors are neutral,
consumer sophistication and intent. I agree future development of the record as to
these two factors is required.
The majority disagreed with the district court as to only two factors: similarity
of marks and actual confusion.
I find no error in the district court’s conclusion that the similarity of marks
factor strongly favors H&R Block. Finding clear error requires finding that
reasonable minds could not disagree based on the record. The ample evidence
presented, and the extended litigation, shows that reasonable minds can disagree.
Both companies use the term “Block” and green square logos in connection with tax
services. Block, Inc. argues that their “house of brands” model prevents Block, Inc.
from being associated with the tax services offered by Cash App Taxes. The
evidence indicates otherwise.
Block, Inc. publicly connected Cash App Taxes to Block in several ways.
First, the terms and services for Cash App Taxes, which legally binds the consumer,
references “Block, Inc.” Second, Block, Inc.’s social media posts and websites
connect “Block, Inc.” to Cash App Taxes. Finally, when customers complain about
Cash App Taxes to the Better Business Bureau Block, Inc. responds as “Block, Inc.”
not Cash App Taxes.
In addition to the actions taken by Block, Inc., actions by individual
employees and third parties connect Cash App Taxes to Block. Employees of Cash
App Taxes publicize that they work for “Cash App at Block, Inc.” The Wall Street
Journal wrote an article that referred to “Block’s Cash App.” Other media websites
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linked articles about Cash App Taxes to pages associated with H&R Block. There
is ample evidence to conclude that both companies use the same word, “Block,” in
connection with their tax services.
Likewise, I find no error in concluding actual confusion slightly favors H&R
Block. As discussed above, several companies have used phrases such as “Block’s
Cash App” or linked articles about Cash App Taxes to H&R Block. Some of the
connections might have been made by algorithms, but the result is a webpage that is
easily confusing to the average consumer. Additionally, several people noted on
social media platforms that Block, Inc.’s new name might be confusing to
consumers. There is evidence that actual people saw the possibility of confusion.
By acting quickly to enforce its legal rights, H&R Block got ahead of any potential
confusion with customers. H&R Block should not be punished for taking swift
action. Accordingly, the minimal evidence of customer confusion should not be
used against H&R Block. 6
Because no factors favor Block, Inc. and several factors strongly favor H&R
Block, there was no clear error in finding the totality of the factors shows a likelihood
of confusion. As the majority points out, “no one factor controls, and because the
inquiry is inherently case-specific, different factors may be entitled to more weight
in different cases.” Cmty. of Christ Copyright Corp. v. Devon Park Restoration
Branch of Jesus Christ’s Church, 634 F.3d 1005, 1009 (8th Cir. 2011) (quoting
Kemp v. Bumble Bee Seafoods, Inc., 398 F.3d 1049, 1053 (8th Cir. 2005)). In a
case where two companies operating within the same industry, and targeting the
same customers, use the same mark and a similar logo it is difficult to say it is clear
6
Presumably there will be significantly more evidence as to this and the other
facts when the case returns to the district court. As the majority opinion noted, the
injunction was stayed by our Court. We are now entering the second full tax season
where Block, Inc. and H&R Block compete. Based on two years of actual tax
preparation, I anticipate both sides will be able to produce evidence of actual
consumer confusion or lack thereof.
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error to find a likelihood of confusion. Reasonable minds may disagree, but it was
not clear error for the district court to conclude there was a likelihood of confusion.
B. Irreparable Harm
Likewise, it was not clear error for the district court to conclude that the threat
to goodwill was irreparable harm. Even without direct evidence of customer
complaints or harm to reputation this court has found that it was not clear error to
conclude that a threat to goodwill was an irreparable harm. United Healthcare Ins.
Co. v. AdvancePCS, 316 F.3d 737, 742 (8th Cir. 2002). Again, this analysis is very
fact dependent, and I do not believe the district court clearly erred in its analysis.
C. Balance of Harms
Finally, it is not contested that H&R Block has spent a significant amount of
time and money building a brand around “Block” and that harm to the goodwill of
“Block” would harm H&R Block’s business. It is also uncontested that an injunction
would harm Block, Inc. It is not clear error to find that the harm would be greater
to the entity who has spent decades of time and great sums building a brand, versus
a company who just recently began using a mark.
Conclusion
Because I find no clear error in the analysis of individual likelihood-of-
confusion factors or in the overall synthesis of those factors, and because I find no
abuse of discretion in the balancing of preliminary injunction factors, I would affirm
the well-reasoned judgment of the district court.
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