Facing a March court date, Brookline-based Bay State Federal Savings Bank last week agreed to stop using the brand name Bay State Bank as part of an out-of-court settlement with Bay State Savings Bank of Worcester.
Although the community banks have peacefully co-existed for almost 80 years, the conflict arose when the federal stock savings bank started using the name Bay State Bank in its advertising in February 1999. Bay State Savings Bank officials asked the Brookline bank to stop using the name, saying its customers often refer to their bank as Bay State Bank.
That change resulted in confusion between the two banks, Bay State Savings Bank President and CEO Robert J. Lewis said. In an affidavit filed with the suit, Lewis documented cases in which real estate brokers, customers and congressmen mixed up the banks. The Worcester institution has received phone calls inquiring about stock several times after Bay State Federal made investor announcements, he said.
The $165 million-asset Bay State Savings Bank filed a lawsuit against its namesake in November. The case transferred from the U.S. District Court in Boston to the U.S. District Court in Worcester and went to a preliminary hearing before the parties reached a settlement.
The agreement will require the Brookline bank to replace signage and reprint materials with the bank’s logo. The bank will be allowed to use up existing supplies with the old brand name, but some changes were made immediately. Operators at the bank last week already changed the way they answer the phone, from Bay State Bank to Bay State Federal.
Bay State Federal Savings Bank President and Chief Executive Officer John F. Murphy declined to discuss the settlement.
I have no comment about a settlement, Murphy said. It’s a private matter between the two companies.
Bay State Savings Bank officials declined to be interviewed, but said the settlement would be addressed in a forthcoming joint press release.
Confusion on the Web
In addition to the use of Bay State Bank as a brand name, the banks clashed over Internet domains and trademarks. Although the banks draw customers from different geographic areas, they may compete for customers in the same cities with online banking products. The need to distinguish the banks became even more pressing, officials said, as Bay State Savings prepared to introduce online banking.
Bay State Savings President and Chief Executive Officer Robert J. Lewis wrote to Murphy asking him to discontinue use of the shortened name in April 1999. Bay State Federal continued using the name, then registered the Internet domain name baystatesavingsbank.com in July, stopping the Worcester bank from using its name as a Web site address. Bay State Federal has transferred the domain baystatesavingsbank.com to the Worcester bank. The mutual bank plans to launch a Web site early this year and to introduce online banking at the site late in the second quarter.
Bay State Savings originally asked Bay State Federal to shut down its Web site at baystatebank.com to prevent further confusion. However, the settlement allows the bank to continue using the Web site for a transition period. The Brookline bank can continue to use the Internet domain baystatebank.com for an agreed upon time, but has added a disclaimer telling visitors the bank is not affiliated with the Worcester bank. At the end of the transition period the Web site will become a shared address with links allowing visitors to access the sites of either bank.
We’ve agreed to do it in a way that wasn’t harmful to them, said attorney James C. Donnelly Jr., who represents Bay State Savings Bank. This was really about the value of trade names and the risk of dilution.
The state-chartered mutual filed an application to register Bay State Bank as a service mark last July and received approval from the Massachusetts Secretary of State in the fall. Bay State Federal pledged that it will not try to register Bay State Bank as a federal trademark, and consented to Bay State Savings’ application to register the name on the federal level. Bay State Savings will not oppose Bay State Federal’s decision to register Bay State Federal Bank as a trademark.
The confusion arose mainly when the word ‘federal’ was eliminated, Donnelly said. That was one of the important differentiating factors.
Bay State Federal traces its history to the Coolidge Corner Cooperative Bank, which formed in 1920. The bank changed its name to Bay State Federal Savings Bank in 1960. The bank merged with Union Federal Savings Bank of Boston in 1997. A year later it converted to a stock-owned bank, forming a holding company called Bay State Bancorp. The company is listed on the American Stock Exchange under the symbol BYS. The bank has seven branches in Greater Boston and assets of $344 million.
We don’t want to interfere with a name they’ve used that long, Donnelly said. We just want to make sure that the identity of the bank is adequately protected. We’re agreeing that their identity deserves to be protected also.
Worcester’s Bay State Savings Bank was chartered in 1895. The bank has three Worcester branches and one each in Auburn and Holden.
Bay State Federal will also be restricted in how it prints its name. In the settlement the bank agreed that it will print the words on one line with equal prominence. If the name must be printed on two lines for space reasons, the words Federal Bank must be no less than 65 to 70 percent the size of the words Bay State.
Bay State Savings Bank commissioned a customer awareness survey in 1999 that showed that many people in the Worcester area associate the bank with the name Bay State Bank. In the August survey of 602 people, 35.9 percent of customers and 44.2 percent of non-customers said they think that Bay State Bank and Bay State Savings Bank are the same institution.
