PNC Fin. Servs. Grp. v. Plaid Inc.

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THE PNC FINANCIAL SERVICES GROUP, INC., Plaintiff, v. PLAID INC., Defendant.

No. 2:20-cv-1977

United States District Court, W.D. Pennsylvania

August 7, 2024

OPINION

MARK R. HORNAK, CHIEF UNITED STATES DISTRICT JUDGE

Before the Court are the parties' Cross-Motions for Summary Judgment. (ECF Nos. 341, 343). PNC seeks summary judgment in its favor as to most of the claims that it asserts as Plaintiff- it does not seek summary judgment on Count IV, its false advertising claim.^[1] (ECF No. 47 at 23). It also seeks summary judgment on a number of Plaid's affirmative defenses. Plaid seeks a wall-to-wall summary judgment on all of the claims asserted against it, but not as to its affirmative defenses. (ECF No. 343).

Both Motions are denied in full. This action will now proceed to trial.

I. BACKGROUND

The Court writes principally for the parties, who are familiar with the record in this case.

Plaintiff PNC is a large, diversified financial institution offering retail and wholesale banking services. Defendant Plaid essentially operates as a third-party software broker. (ECF No. 47 ¶ 22).

Plaid, via its products and services, connects cash payment and investment account applications (referred to hereafter as “fintech apps”)-such as Venmo, Robinhood Coinbase, etc.-with a user's banks, thus enabling the user to input the username and password affiliated with their bank account to create the connection between the user's bank and the fintech app that the user was then utilizing. This connection then enables the subsequent transfer of money (that transfer can be, but does not have to be contemporaneous with the establishment of the connection) between the fintech app and the user's bank.

PNC alleges that Plaid's software violated federal and state trademark laws. (Id. ¶¶ 22-24). PNC says that “Plaid replicated the authentic PNC log-on screen in order to intentionally mislead consumers into believing that they are providing their private and sensitive information to PNC or to an entity affiliated with PNC in order to overcome the otherwise present and reasonable apprehension to providing financial information to an unknown third-party.” (Id. ¶ 29). PNC claims that by having users give their information to Plaid rather than directly to PNC, Plaid was able to collect data from consumers' accounts. (Id. ¶ 26). More specifically, PNC alleges that Plaid's software, as it then existed at the time the events giving rise to this action occurred, (1) attempted to bypass PNC's authentication process by having users give their PNC log-in information to Plaid, rather than directly to PNC; and (2) had a user interface for bypassing PNC's authentication process that infringed on PNC's marks and logos. (Id.; see id. at 12-13 for a visualization of what this looks like in practice). Each of PNC's claims in this action involves the allegedly infringing use of its marks.

For its part, Plaid says that PNC knew about Plaid's use of PNC's marks as early as 2017 but did nothing about it, and in fact, was working hand-in-glove with PNC relative to the involved Plaid products to enable and ease the ability of PNC customers to connect to fintech apps. In support of this assertion, Plaid has pointed to record evidence that it says demonstrates that PNC, through its representatives (at times, senior PNC officials), knew that its marks were being applied by Plaid in those circumstances, well before the Complaint was filed in this case. (ECF No. 403). Specifically, according to Plaid, the two had an ongoing working relationship that did not become hostile until a 2019 Cybersecurity Event whereby a third-party actor or actors gleaned PNC customer information that had been obtained by Plaid via Plaid Link (“2019 Cybersecurity Event”), which led to PNC consumer account information being leaked on the “Dark Web.” PNC blames Plaid for that event, and its occurrence signaled the end of the companies' working relationship.

After that event, PNC blocked Plaid's product from being able to access and link PNC user account information via the Plaid Link software embedded within fintech apps. In plain English, after the 2019 Cybersecurity Event, PNC took the steps necessary to block individuals who banked with PNC from using Plaid Link to connect their PNC bank accounts to fintech apps.

In response, Plaid then presented PNC consumers who were trying to connect to fintech apps via Plaid Link with messaging screens, using what a fact finder could conclude was PNC branding, that said, “we're currently experiencing connectivity issues with this bank” and “PNC has made a change that prevents you from being able to link your accounts.” (Id.). One of these screens also provided users with a link to the federal Consumer Financial Protection Bureau's (“CFPB”) website and advised such users that they could file a complaint against PNC about their lack of fintech app access with that federal enforcement agency, which PNC says led to users (who were presumably PNC retail customers) filing complaints against PNC with the CFPB. (Id. ¶ 34). Plaid's messaging also encouraged PNC customers to change banks.

PNC says that regardless of its alleged prior inaction as to Plaid Link's use of PNC's marks (as to which it argues it was driven by a lack of knowledge about what of its marks/branding Plaid was using and the extent of that use), Plaid's actions both before the 2019 Cybersecurity Event and after-until November 2020, when Plaid introduced a new user interface in Plaid Link- constitutes trademark infringement under the Lanham Act.^[2]

PNC alleges six (6) causes of action: (1) Federal Trademark Counterfeiting under 15 U.S.C. §§ 1114(1)(b), 1116(d); (2) Federal Trademark Infringement under Section 32(a) of the Lanham Act, 15 U.S.C. § 1114(1); (3) Federal Trademark Infringement, False Designation of Origin, and Unfair Competition under Section 43(a)(1)(A) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A); (4) False Advertising under Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B); (5) Unfair Competition and Unfair or Deceptive Acts or Practices under 73 P.S. § 201-1, et seq.; and (6) Trademark Infringement, Unfair Competition, False Designation of Origin, and Misappropriation under Pennsylvania Common Law.

PNC has moved for summary judgment in its favor on all but Count IV, its false advertising claim. (ECF No. 341). PNC also moved for summary judgment on a number of Plaid's affirmative defenses, including fair use, laches, acquiescence, and extenuating circumstances. (Id.; ECF No. 90 at 11-12).

Plaid has moved for summary judgment on all of PNC's substantive claims, but Plaid did not move for summary judgment on any of its affirmative defenses. (ECF No. 343).

II. LEGAL STANDARD

Federal Rule of Civil Procedure 56(a) provides that summary judgment shall be granted if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Rule 56(c) provides that a party asserting that a fact cannot be disputed can rely on parts of materials of the record, including “depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other material.”

A material fact is a fact whose resolution will affect the outcome of the case under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party has the initial burden of proving to the district court the absence of evidence supporting the nonmoving party's claims. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Country Floors, Inc. v. Partnership Composed of Gepner and Ford, 930 F.2d 1056, 1061 (3d Cir. 1991). The burden then shifts to the non-movant to come forward with specific facts showing a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Williams v. Borough of West Chester, 891 F.2d 458, 460-61 (3d Cir. 1989) (stating that the non-movant must present affirmative evidence-more than a scintilla but less than a preponderance-which supports each element of his claim to defeat a properly presented motion for summary judgment).

Before digging in and explaining its disposition of the pending summary judgment motions, the Court believes that some preliminary observations are appropriate. First, the bulk of PNC's Motion relates to claims (or at least major elements of claims) as to which it carries the burden of persuasion. That means that it is in effect saying that no trial is needed and that this Court must conclude as a matter of law that any rational jury properly instructed would necessarily conclude that PNC has carried its burden and proven its case such that a jury must find in its favor on matters on which PNC carries the obligation of persuasion.

Such is not literally unheard of, see U.S. Equal Emp. Opportunity Comm'n v. Bob Evans Farms, LLC, 275 F.Supp.3d 635, 638 (W.D. Pa. 2017), but it is very uncommon, for obvious reasons. Summary judgment is most often entered when the moving party has pointed out how an opposing party simply does not have record evidence that meets their persuasive burden on claims or defenses that they advance. Anderson, 477 U.S. at 248; Celotex, 477 U.S. at 323. Here, PNC turns those tables, and says that it claims are so obviously and unquestionably proven by it that as a matter of law, it must prevail.

While as noted below, some of the claims and defenses in this action may end up carrying a more-than-usual amount of persuasive heft given the record in this case, none of them are of the ilk that either party “must” prevail at trial. And the volume level and earnestness with which the...