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H&R Block Wins Injunction Against Jack Dorsey’s Block Inc. (2)

April 29, 2022, 1:09 PMUpdated: April 29, 2022, 5:59 PM

H&R Block Inc. won a preliminary injunction against Block Inc., the digital payments company created by former Twitter CEO Jack Dorsey, after a Missouri federal judge found that the use of similar names and logos would likely cause consumer confusion.

Judge Nanette K. Laughrey ordered Thursday that Block Inc., which rebranded from Square last December, not use its new name in connection with its Cash App Taxes services and that app’s green square logo.

Block Inc. can’t communicate through advertising, press releases or social media that it is connected to the service, the judge said. Block Inc. and its attorney’s didn’t immediately respond to a request for comment.

Laughrey denied Block Inc.'s motion to dismiss on Friday, citing her injunction order. H&R Block posted a $250,000 bond that day.

H&R Block had shown that it was likely to succeed on the merits of a trademark infringement claim based on a six factor legal test, Laughrey said. The 67-year-old tax preparation company was also able to establish that it would face irreparable harm without an injunction against Block Inc., which expanded into tax services this year.

“H&R Block has no means of controlling the quality of Block, Inc.’s tax and financial services,” the judge said. “There is a substantial risk that consumers who are confused about the source of those services and dissatisfied with their quality may incorrectly form a negative view of H&R Block.”

The judge found that the Block mark in connection with tax services is strong, rejecting Block Inc.'s argument that the mark is descriptive—and therefore weak—because H&R Block was named after its founders, the Bloch brothers.

“H&R Block was named for its founders, but the company name is not the names of its founders,” Laughrey said.

H&R Block has a number of registered trademarks that include the word Block, such as “Blockworks,” “Block Advisors,” and “Block Has Your Back,” but not the word alone. However, the company has public and consumer evidence to support its common law rights to Block, and has established a family of trademarks that revolve around that word, Laughrey said.

H&R Block also has a trademark for its green square logo, which it said is confusingly similar to Cash App’s green square branding. The average consumer likely wouldn’t appreciate the “minor differences” between the logos, Laughrey said.

The court rejected Block Inc.'s argument that its name is never used in its consumer-facing brand, Cash App. Laughrey said the question isn’t whether Block is used in a consumer-facing brand, but whether Block has been used as a term or name in commerce.

Block Inc. has frequently marketed the idea that Cash App is a “building block” of its company, and consumers and the media have established a clear link between the two names, Laughrey said. Downloading the Cash App also requires accepting terms and conditions that identify Block as the company behind the app.

Block Inc. also isn’t a “parent company” because Cash App isn’t a separate legal entity, the judge said.

Laughrey found that there was some evidence of Block Inc.'s intent to infringe based on its name change not long before acquiring Credit Karma Tax in order to enter the tax preparation market. But she said the parties needed to have an opportunity to fully develop the record on that question.

The judge said that tax service consumers exercise a relatively high degree of care in distinguishing vendors, but in this case, both companies market to “underbanked” individuals who usually don’t have a relationship with traditional banks. These consumers are less likely to exercise a high degree of care, she said.

H&R Block is represented by Debevoise & Plimpton LLP, Dentons US LLP, and Berkowitz Oliver LLP. Block Inc. is represented by Armstrong Teasdale LLP and Quinn Emanuel Urquhart & Sullivan LLP.

The case is H&R Block Inc. v. Block Inc., W.D. Mo., No. 4:21-cv-00913, 4/28/22.

(Adds denial of motion to dismiss in fourth paragraph.)

To contact the reporter on this story: Isaiah Poritz in Washington at iporitz@bloombergindustry.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Carmen Castro-Pagán at ccastro-pagan@bloomberglaw.com