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Appeals court rejects H&R Block trademark claims against Block, formerly Square

In a 2-1 ruling, the Eighth Circuit reversed a preliminary injunction against the company that owns CashApp and Square, ruling H&R Block failed to show a likelihood of confusion between trademarks.

ST. LOUIS (CN) — H&R Block has not shown that consumers are likely to be confused between its trademark and that of Block Inc. when it comes to online tax services, a split Eighth Circuit panel ruled Tuesday.

The 2-1 ruling by the three-judge panel reversed a preliminary injunction issued by a federal judge in the Western District of Missouri and remanded the case back to the district court for further deliberations.

“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,” U.S. Circuit Judge Ralph R. Erickson, a Donald Trump appointee, wrote for the majority. “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.”

In a statement, H&R Block expressed disappointment in the ruling.

“We remain confident in the strength of our brand and trademark rights and are evaluating next steps,” the company said. “In the meantime, we look forward to providing help and inspiring confidence for our customers this tax season, as we have done for more than 65 years.”

Block Inc. did not immediately respond to an email requesting comment on the ruling.

Block, previously known as Square Inc., rebranded in 2021 and at the same time began offering tax services through its CashApp product, which uses a green square logo. The company also runs the digital payment platform Square, which lets retailers process credit card transactions using a device that attaches to a smartphone or tablet.

H&R Block filed a lawsuit seeking an injunction against Block, claiming the name and logo were confusingly similar to H&R’s green block logo that it has used for decades.

U.S. District Judge Nanette Laughrey, in a 67-page order issued in April, found in favor of H&R Block. The Bill Clinton appointee ruled that Block’s marks would likely confuse consumers into thinking it was affiliated with H&R Block.

Laughrey’s ruling prompted Block to appeal to the Eighth Circuit, where its lawyer Kathleen M. Sullivan of Quinn Emanuel argued during a September hearing that the injunction represented an unprecedented intrusion into an American company’s governance structure.

The argument seemed to sway Erickson and U.S. Circuit Judge Raymond W. Gruender, a George W. Bush appointee, who made up the majority opinion.

“Both parties have invested substantial time and expended millions of dollars on advertising and developing their products and services,” Erickson wrote. “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.”

H&R Block attorney David H. Bernstein, of New York firm Debevoise & Plimpton, countered during the hearing last year that Block’s name and green square logo are too similar to H&R Block’s name and logo and were likely to cause confusion among consumers.

The tax preparation giant submitted articles and social media posts that it said were evidence of consumer confusion, but the majority disagreed.

“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,” Erickson wrote. “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.’ The district court clearly erred in finding evidence of actual consumer confusion.”

U.S. Circuit Judge Michael J. Melloy, another George W. Bush appointee, dissented and noted that finding of a clear error by a lower court requires the appellant “to clear a high hurdle,” which was not met.

“Finding clear error requires finding that reasonable minds could not disagree based on the record,” Melloy wrote. “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.”

Melloy wrote that H&R Block has 10,000 store fronts, 2 million small business clients, and a website with over 50 million logins. As one of the most well-known tax service companies in the country, H&R Block has used “Block” in connection with tax services for decades, investing billions of dollars into the mark, the judge noted.

“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,” Melloy wrote. “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.”

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