H&R Block sues Square to drop the name 'Block'

H&R Block has filed a trademark infringement suit against Block (formerly Square), attempting to reverse the payment company's rebrand.

Both H&R Block and Block have financial services aspirations beyond their core lines of business, and the tax preparation firm says in its filing that it's "under attack" because the payment firm has changed its name to Block.

By using the name "Block," Square "would improperly capitalize on the goodwill and consumer trust cultivated by Block since 1955," H&R Block said in a press release.

While H&R Block, of Kansas City, Missouri, and the San Francisco-based Block are in different businesses, they are both expanding in ways that could bring their products into direct competition, H&R Block claims in its lawsuit. Square in 2020 acquired Credit Karma Tax, allowing consumers to use its Cash App to file taxes. Square's name change would be "overly confusing" for consumers given the products' overlap, H&R Block contends. Block did not return a request for comment. H&R Block referred questions to the complaint and press release.

While Block's roots are in offering payment acceptance hardware to micro merchants, it has added services for both consumers and larger businesses, including credit and business management products such as digital scheduling and mobile ordering. Block's Cash App is responsible for about three quarters of Block's revenue, supporting Block's Bitcoin trading business. Block has also launched a financial services business that will use its industrial bank license, which allows it to lend directly to businesses without using a bank as an intermediary.

Square announced its name change to Block early in December, saying it wanted to reflect these additions to its business model. The Square name remains for the business line that provides payment services to small businesses.

H&R Block was active in financial services in the past, but sold its banking unit to Axos Financial in 2015 before resuming its financial services business this year. H&R Block has a prepaid debit card that allows customers to deposit tax refunds.

H&R Block is developing a digital bank account that attempts to promote consumer use of the card beyond tax season. This puts H&R Block in a field of digital challenger banks that includes Chime, Varo and Green Dot.

H&R Block in 2020 entered a partnership with Meta Financial, a South Dakota-based financial holding company that is working with H&R Block on payment card strategies. Meta Financial is not related to Meta, the company formerly known as Facebook, which reportedly is behind a $60 million deal to buy the bank's trademark assets, according to Reuters.