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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND NORTHERN DIVISION

COMMUNITY FIRST BANK Plaintiff and Counter-Defendant v. COMMUNITY BANKS Defendant and Counter-Plaintiff * * * * * * * * * * * *

* * * * * * * * * * * * * * * * * * * * * CIVIL NO. RDB 04-1359

MEMORANDUM OPINION This is a trademark infringement action brought by Plaintiff Community First Bank ("CFB") against Defendant Community Banks alleging Maryland state trademark violations. CFB is a small banking institution with a single location in Pikesville, Maryland. Community Banks is a much larger bank based in central Pennsylvania. CFB brought this action after Community Banks expanded its operation into Carroll County, Maryland, and announced its intention to further expand throughout Maryland. Defendant Community Banks has filed a Counterclaim seeking to cancel CFB's Maryland trademarks, and seeking damages. Pending before the Court are cross Motions for Summary Judgment filed by both parties. Both Motions were fully briefed, and this Court held an extensive hearing regarding those motions on March 4, 2005. For the reasons that follow, Defendant Community Banks' Motion for Summary Judgment will be GRANTED as to Plaintiff's trademark infringement claims and partially GRANTED as to Defendant's Counterclaims. Plaintiff CFB's Motion for Partial

Summary Judgment will be DENIED as to its infringement claims, and GRANTED as to the damages sought in Defendant's Counterclaim. I. Background Defendant Community Banks was founded in 1998, as a result of a merger between Peoples State Bank and Community Banks, Inc. Community Banks, Inc., existed for some time prior to the 1998 merger as a Pennsylvania-based banking institution. Peoples State Bank also operated in Pennsylvania, although the Peoples State Bank name was dropped as a result of the merger. Currently, Community Banks, a subsidiary of Community Banks, Inc., has more than forty-seven branches throughout Pennsylvania. In November of 2002, Community Banks opened a drive-thru banking location on Hanover Pike in Manchester, Maryland. Shortly thereafter, Community Banks opened a full-service location in Westminster, Maryland. Both of these locations are in Carroll County. The Carroll County branches represented the "initial phase" of Community Banks' anticipated expansion into Maryland. (Pl.'s Opp. & Mot. Partial Summ. J. Ex. 8.) CFB was formed in 1998 by Malcom Berman, Michael Shomper, and William Gisreal. CFB has one full-service banking branch, located on Old Court Road in Pikesville, Maryland. From the time that CFB opened, until after this action was brought, CFB concentrated most of its marketing in local media in Baltimore County, Maryland (Baker Dep. at 52), and garnered most of its deposits from customers in Baltimore County (Shomper Dep. at 11, 23). CFB was concerned about Community Banks' plans to expand into Maryland, in light of the potential for confusion resulting from the similarity between the names of the two institutions. Consequently, on January 2, 2003, CFB registered the following marks with Maryland's Secretary of 2

State: (1) the textual mark of "Community First Bank"; (2) the stylized mark of "CFB Community First Bank"; and (3) the stylized mark of "CFB." In its registration statements, CFB claims that the marks have been in use by the company since April of 1998. (See Pl.'s Compl. Ex.s 1-3.) CFB did not seek to register the marks with the federal government. Defendant Community Banks has not attempted to register any trademarks with any state or federal authority. When Community Banks opened its Maryland branches, it engaged in a brief advertising campaign. That campaign included advertisements which aired on a radio station based in Carroll County, Maryland, the signal of which extends to the Baltimore metro area. (Keffer Dep. at 17-19.) Community Banks also published an advertisement for its certificate of deposits in the Baltimore Jewish Times in December of 2003. CFB is a major advertiser in the Jewish Times, which enjoys a wide circulation in Pikesville. CFB contends that the Community Banks' advertisements in that newspaper created confusion on the part of its customers. CFB also contends that customer confusion resulted from a billboard advertisement erected, in the summer of 2003, by Community Banks on Maryland Route 140, which runs from Pikesville to Westminster. On March 10, 2004, CFB filed a Petition for Permanent and Interlocutory Injunction in the Circuit Court for Baltimore County alleging Maryland trademark infringement. On April 27, 2004, Community Banks filed a Notice of Removal to this Court based on the complete diversity of citizenship of the parties, pursuant to 28 U.S.C.

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Maryland Law