It is getting to be a familiar refrain: A small bank builds a name for itself in its hometown, only to have a bigger, out-of-state bank with a similar moniker move in, setting the stage for a battle over the rights to the name.
The latest skirmish is between the $39 billion-asset First Horizon National Corp. of Memphis and the $1 billion-asset Horizon Banks of Limon, Colo. The smaller Horizon has been operating in its markets under that name for more than five years and has about 15 branches.
First Horizon moved into Colorado last year when it won permission from the state's Division of Banking to buy the charter of State Bank in Rocky Ford. It now has branches in Englewood and Glendale operating under the name First Horizon Bank and a loan office in Parker.
The two companies have one overlapping market, Englewood, where each has a branch, and First Horizon filed a trademark infringement lawsuit against Horizon Banks in July in the U.S. District Court for Colorado — though the smaller Horizon was in the market first.
Kim Cherry, a spokeswoman for First Horizon, said it cannot talk about the pending suit. But Horizon Banks' chief executive, Daniel Allen, said in an interview Tuesday that the suit is outrageous.
"It's frustrating to have worked really hard to establish our reputation and credibility in our hometown under this name and then have a large, out-of-state bank come in and try to change what we've worked so hard to achieve," he said.
Mr. Allen said he believes his bank can win the lawsuit, but Jason A. Bernstein, a trademark lawyer, says he is skeptical.
More and more banks have moved into new markets and won such suits against hometown banks with similar names, said Mr. Bernstein, a partner at Powell Goldstein LLP in Atlanta.
Though established banks generally have first dibs on names over banks moving into their markets, if a new entrant registers its name with the Patent and Trademark Office before the established bank first used its name, the newcomer wins, Mr. Bernstein said.
Case in point: In 2005 the $372 million-asset Horizon Bank in Duluth, Ga., had to change its name, because First Horizon was entering its market and had first rights to using "Horizon" in its name; the small bank is now named Haven Trust Bank.
"A lot of small banks don't bother registering their trademarks with the U.S. office, but they should always do it in bank formation, after they do a search first" on who else may have their desired name, Mr. Bernstein said. "It doesn't matter who is in your hometown — it matters who is across the country, because they can always move in."
First Horizon bought the rights to use the Horizon name from another bank that had registered the name with the Patent Office in 1974. Horizon Banks registered its name with the state of Colorado in 2001, after changing its name from First National Bank of Limon, but did not register the new name with the federal Patent Office.
Colorado Bank Commissioner Richard Fulkerson said in an interview last week that when First Horizon applied to the state division last year to buy a state charter, the division decided to let the company use the First Horizon Bank name, because it was not "deceptively similar" to Horizon Banks'.
But Mr. Bernstein said that since the banks have products that are nearly identical and are vying for the same customers, the names are similar enough under trademark infringement law.
"If the names look the same, sound the same, and mean the same, putting the word 'First' in front of one usually doesn't make much difference," he said.
Disputes have erupted over other common names. In 2001, Citizens National Bank in Evans City, Pa., sued to block Royal Bank of Scotland Group PLC's Citizens Financial Group Inc. in Providence, R.I., from using the Citizens name for retail branches in Pennsylvania it bought from Mellon Financial Corp.
After a lengthy legal battle, the courts ruled that the out-of-town bank would have to rename branches in the local bank's markets, but the local bank ultimately settled the matter by changing its name to Nextier Bank.
