Considering whether the federally registered trademark for credit scoring, “300-850” was invalid as merely descriptive, the U.S. Court of Appeals for the Eighth Circuit upheld a district court’s summary judgment that the mark was invalid and upheld a jury verdict concluding that the trademark registration was procured by fraud. Fair Isaac Corp. v. Experian Information Solutions, Inc., Case No. 10-2281 (8th Cir., Aug. 17, 2011) (Wollman, C.J.).
The primary plaintiff, Fair Isaac Corporation (FICO), is a consumer credit rating agency that was the first to develop sophisticated algorisms for generating credit scores that reflect consumer creditworthiness. FICO’s credit scores are the most widely used scores in the industry and are calculated by applying FICO’s proprietary credit-scoring algorithms to aggregated credit data provide by credit bureaus, such as Experian, Equifax and TransUnion. FICO’s algorithms produce credit scores within a credit-score range of 300-850. FICO applied for a federal trademark registration for “300-850” in 2004, and the mark was registered in 2006. The defendants, which are credit bureaus, created a joint venture to develop their own credit-scoring algorithms that would compete with FICO. In October 2006, FICO filed suit, asserting claims for antitrust violations and trademark infringement of its registered 300-850 mark.
FICO scored badly prior to trial. The U.S. District Court for the District of Minnesota entered summary judgment on FICO’s antitrust claims because FICO failed to demonstrate that the defendants’ conduct gave rise to any actual or imminent harm to itself. The district court also granted summary judgment to defendants on the trademark claims, holding that FICO’s “300-850” registered trademark was invalid for being merely descriptive. FICO’s score continued to plummet at trial, when the jury determined that FICO procured its “300-850” trademark registration by fraud.
FICO was unable to rehabilitate its litigation score on appeal. First, the 8th Circuit affirmed the district court’s summary judgment holdings, agreeing that “FICO has failed to demonstrate that it has suffered any antitrust injury that would entitle it to seek damages under §4 of the Clayton Act.” The court also found that the “300-850” designation was merely descriptive of the range within which FICO reports its credit scores. The court credited defendants’ evidence “that the mark conveyed the approximate range of FICO’s credit scores and that FICO had selected the mark for that reason.”
In what was perhaps a closer call, the 8th Circuit upheld the jury’s verdict that FICO obtained its trademark registration for “300-850” by committing fraud on the U.S. Patent and Trademark Office (USPTO) during prosecution. The jury found that a FICO official made a false representation to the USPTO namely, that “to the best of [her] knowledge, only the FICO score uses the 300-850 range as a unique identifier for credit bureau risk scores.” FICO argued that its representation to the USPTO was true because only FICO, and none of its competitors, had ever used 300-850 as a trademark. The defendants, however, argued that FICO’s use of 300-850 was not as a source identifier or trademark, but merely to descriptively identify a credit score range. The court held that “a reasonable jury could have rejected FICO’s contention and determined that the statement was false.” FICO’s outside trademark counsel also represented to the USPTO that the mark was not descriptive because “300-850 is the credit scoring scale only for [FICO’s] credit bureau-based risk products and not for … other credit bureau-based risk products that competitors develop.” The court held that a reasonable jury could conclude from one of FICO’s competitor’s own use of the 300-850 credit score range, that counsel’s representation was false, and that a reasonable jury could properly infer that these representations were made with deceptive intent.
FICO’s score dropped further when the 8th Circuit also affirmed the denial of its post-trial motion for judgment as a matter of law (JMOL) and for a new trial based on licensee estoppel. The court noted that, although the credit bureau defendants were all FICO licensees, their joint venture (which was also a defendant) was not a licensee and thus had standing to challenge the validity of the 300-850 trademark. In the end, FICO managed to increase its score a few points by persuading the court to affirm the trial court’s denial of an award of attorneys’ fees to defendants.