Bank Tells Paul Ryan: Try New Path
Tuesday, May 31, 2011

Source: Pacific Coast Business Times.

In business and in politics, words actually do matter.

But whose words matter more? Unlikely as it sounds, a court may decide whether Montecito Bank & Trust has a prior and exclusive right to the phrase “Paths to Prosperity,” even though U.S. Rep. Paul. Ryan, R-Wis., has titled the Republican budget plan the “Path to Prosperity.”

Ryan, who chairs the House Budget Committee, has been using the phrase “Path to Prosperity” since the introduction of its budget plan in early April. The near-copy of Montecito’s motto caught my eye over the weekend, when host

David Gregory flashed the cover of the Republican budget plan to a national audience when he interviewed Ryan on “Meet the Press.”

But the potential problem had been noticed earlier by staff at Montecito Bank & Trust, which is not pleased that its trademark has become the catch-phrase for one of the most partisan political debates in recent decades. Rob Skinner, the bank’s general counsel and chief operating officer, told me the bank would be taking “appropriate steps” to protect its trademark, beginning with a letter to Ryan asking him to take voluntary steps to resolve the matter.

Ryan’s office says it would be premature to comment, and First Amendment experts told me that politicians get a lot of legal leeway when it comes to political speech — especially on the House floor. But is it the right thing to — or smart politics — for Paul Ryan to appropriate intellectual property that belongs to somebody else? That’s a more complicated question.

“We don’t want to be in the middle of a debate,” said Skinner. The region’s fourth largest bank, with assets of $933 million, registered the trademark in 2006 and developed a long-running ad campaign that shows how a diverse group of customers have found their own “paths to prosperity.” He said the phrase was meant to be as “broad and inclusive” as possible and doesn’t think Ryan or his staff intentionally copied the slogan from the bank. However, he said “it’s ironic” that it turned up in the middle of a highly charge political debate.

For anybody who knows Montecito Bank &Trust and owner Mike Towbes, this particular use of its slogan is more than ironic.

The bank has been a champion of private corporate philanthropy, giving away $1 million a year in Community Dividends via its rare status as a Subchapter S corporation. Its loans are made mainly to small businesses that are the backbone of the region’s and the nation’s economy.

Its board includes Republicans and Democrats, and it has been as successful as any bank could be at navigating the Great Recession. It declined TARP money because it was more than adequately capitalized, and being deliberately nonpartisan and inclusive is “part of the bank’s DNA,” Skinner told me.

Noted First Amendment expert Floyd Abrams said the bank has huge obstacles to overcome if it thinks it can get a court to order Ryan to change the name of his program.

In addition to free speech protections, Article I, Section 6 of the Constitution, the so-called “Speech and Debate” clause, provides a near-absolute protection for members when they speak on the House floor. For Montecito Bank & Trust to prevail legally would be “a mighty hard sell,” Abrams told me.

Politicians for years have been stealing the Wendy’s tagline, “Where’s the beef?” for example.

Glenn Dickinson, a First Amendment lawyer at LightGabler in Camarillo, agreed that political speech enjoys broad protections, adding that trademarks only protect the “goods and services that the offerer is offering.” For example, any stone merchant could offer a marble “path to prosperity” and probably tiptoe around Montecito Bank & Trust’s property.

But banks and politicians both survive on words and reputations. And both slogans are being used in the context of money and sound business practices, so in this case, protections are not entirely clear. Dickinson said that’s particularly true in the age of the Internet, where the cover of the Ryan budget plan might be found in adjacent position to a Montecito Bank & Trust ad online, in print or on television.

“It is not appropriate to comment until we hear from the bank,” Kevin Seifert, Ryan’s press secretary told me.

Herb Gooch, a professor of political science at California Lutheran University, thinks the situation is an awkward one for the House Budget Committee. “Somebody wasn’t doing his/her homework in Ryan’s office or at the RNC (Republican National Committee),” he told me via email.

If the House Budget Committee really wants to side with Main Street America, it will figure out a way to respect Montecito Bank & Trust’s trademark. Or it could play hardball, bring out the big guns of constitutional law and head for a showdown in court.

How phrase-gate gets resolved will tell us a lot about the true state of play in 21st Century American politics.