Following H&R Block’s defeat in the United States Court of Appeals for the Eighth Circuit, the tax software provider is asking the full court to review its reversal of a district court’s order enjoining the parent company of a competing service from using similar branding.
In a petition for rehearing filed February 21, H&R Block urged the Eighth Circuit to reconsider its January 24, 2023, ruling finding there was not enough evidence to satisfy H&R Block’s burden of proof that Block Inc. infringed upon H&R Block’s trademark. The circuit’s majority opinion vacated the preliminary injunction imposed on Block, Inc. by the U.S. District Court for the Western District of Missouri.
Block, Inc. began in 2009 as Square, Inc., initially providing card reading and point-of-sale software. Square, Inc. later branched out in other areas of business, including peer-to-peer money transfer app Cash App. Square, Inc. acquired Credit Karma Tax, a free tax service. Credit Karma Tax was rebranded to Cash App Taxes and incorporated into the digital Cash App platform. Square, Inc. changed its name to Block, Inc. in December 2021, in part to denote a sense of building blocks or local businesses on a neighborhood block.
H&R Block took issue with not only Block, Inc.’s name, but also parallels in its logo used for Cash App Taxes, which it argued with the district court would confuse customers and violate H&R’s trademark, as the company is known for its green square branding. The District Court’s order granted in part H&R Block’s motion for a preliminary injunction that temporarily prevented Block, Inc. from using “Block” or similar variants in connection with Cash App Taxes, as well as through marketing and advertising campaigns.
The order agreed with H&R Block’s assertion that the similarities between the two entities would result in confusion. “That confusion has been amplified by Block’s public communications and worsened by third parties who have, and will likely continue, to link Block, Inc. to its ‘building blocks’ (e.g., Cash App and Square) and to its new Cash App Taxes service, all of which compete to some degree with services offered by H&R Block,” the district court wrote.
However, the Eighth Circuit sided with Block, Inc. upon appeal, pointing to “observable differences” between the two companies and their products. It ruled that H&R Block failed to demonstrate a likelihood of success on the merits of its trademark claims, nor would it be irreparably harmed or have its ability to control its public image undermined.
“While both companies are targeting consumers looking for free tax services, the products are available through different means,” read the Eighth Circuit’s majority opinion authored by Ralph Erickson. “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.”
In asking the circuit court to grant rehearing en banc, H&R Block contested that the reversal of the district court’s order was inconsistent with its own precedent. “These conclusions rested on an improperly broad view of the scope of clear error review and are wholly inconsistent with the clear error standard that this Court applies in reviewing district court orders granting or denying preliminary injunctions in trademark case,” read the petition.
Get all the latest tax, accounting, audit, and corporate finance news with Checkpoint Edge. Sign up for a free 7-day trial today.