IP Law Chat : IP Law Chat -- Hendricks & Lewis, intellectual property, trademark, copyright and technology attorneys

Not surprisingly given the parties involved, the opposition filed by Microsoft to Apple's application to register its APP STORE mark has garnered significant interest.

First, the basic background.

Apple filed an application to register its APP STORE mark in July 2008 in connection with, in part, the following services:

Retail store services featuring computer software provided via the internet and other computer and electronic communication networks; Retail store services featuring computer software for use on handheld mobile digital electronic devices and other consumer electronics

In its application, Apple cited three prior registrations for APPLE STORE and THE APPLE STORE (Reg. Nos. 2,424,976, 2,462,798, 2,683,410) in connection with retail store services and online retail store services.

The PTO initially refused registration of the APP STORE mark on the ground that it was merely descriptive in that:

the mark APP STORE merely combines descriptive terms ["APP" defined as a computer application and "STORE" defined as a place where merchandise is offered for sale] without creating a new non-descriptive meaning.  The mark would be immediately understood as describing a feature, function, purpose or use of the services, including, retail store services featuring computer applications.

The initial Office Action refusing registration can be found here.

Apple, not surprisingly, disagreed with the PTO's conclusion, arguing that APP STORE was at worst suggestive of the relevant services and even argued that it was "completely arbitrary."  As to the latter point, although Apple grudgingly acknowledged that "APP" "may, arguably, sometimes be used as a slang abbreviation for the word 'application,'" it was also an abbreviation for other "app-formative words, such as apparatus, apparent, appendix, applied, appointed, approved and approximate."  Thus, when "used in connection with the word 'Store' it is not apparent what the goods or services are," Apple argued, making the mark at least suggestive.

Among other points, Apple also argued that APP STORE created "a clearly recognizable double entendre" that cannot be refused registration on a merely descriptive ground as long as one of its meanings is not merely descriptive.  Apple asserted that "in addition to other possible connotations, "APP" and "APP STORE" would be immediately recognized as an abbreviation of the well-known APPLE and APPLE STORE marks, respectively.

Apple's response to the initial Office Action can be found here.

The PTO subsequently made the refusal of registration final, however (final decision found here).  Apple filed a request for reconsideration reiterating its previous arguments but also asserting that as an alternative ground, APP STORE was registerable based upon acquired distinctiveness (request found here).

Although the sequence of events are not particularly clear from the PTO's public records, Apple was ultimately successful and APP STORE was published for opposition.

In July 2010, Microsoft filed an opposition to Apple's registration of APP STORE (opposition found here), claiming that it was generic and that Microsoft would be damaged by registration of the mark because it would "discourage or prevent Microsoft and retail stores that sell Microsoft apps from using APP STORE in connection with such services."  Apple's answer to the opposition can be found here.

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In a much welcomed if not perfect opinion, the Ninth Circuit rejected the so-called "Internet trinity" or "Internet troika" employed in the court's earlier opinion in Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036 (9th Cir. 1999) as the controlling test for every case of trademark infringement in the Internet context.

Network Automation and Advance Systems Concepts both sell job scheduling and management software and both advertise on the Internet.  Network sells its software under the AUTOMATE mark; Systems sells its software under the ACTIVEBATCH mark.

Network purchased "Activebatch" as a keyword in connection with Google's AdWords program as well as with a comparable program for Microsoft's Bing search engine.  As a result, according to the court, when users searched the term "Activebatch," an advertisement for Network would appear as a "Sponsored Link" or "Sponsored Site" alongside or above the organic search results.

Systems sent Network a cease and desist letter threatening litigation if Network did not immediately cease use of the term "Activebatch" in its search engine advertising.  Network filed a declaratory judgment action and Systems counterclaimed for trademark infringement, moving for a preliminary injunction.

The District Court granted injunctive relief to Systems concluding that Systems was likely to succeed on its Lanham Act trademark infringement claim, emphasizing three of the Sleekcraft likelihood of confusion factors as the significant factors in "cases involving the Internet."

The Ninth Circuit reversed the grant of injunctive relief starting off its opinion with a quote from Brookfield that seems to often be ignored in cases that rely on the "Internet troika":  "We must be acutely aware of excessive rigidity when applying the law in the Internet context; emerging technologies require a flexible approach."

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This trademark case was back before the District Court after the Ninth Circuit's reversal of the court's grant of summary judgment for the defendant. 

The consolidated cases dealt with the parties' respective uses of the mark "WOULD YOU RATHER" in connection with board games and books involving questions posing humorous, bizarre or undesirable choices.  The District Court had previously granted summary judgment on Spin Master's (formerly Falls Media, LLC) claims for trademark infringement and unfair competition with respect to Spin Master's federally registered WOULD YOU RATHER . . .? mark, concluding that the mark was descriptive and lacked secondary meaning.  For the same reason, the District Court granted summary judgment on Zobmondo's counterclaim for cancellation of the registration.  The District Court entered final judgment which, in part, dismissed as moot Zobmondo's counterclaim for cancellation of Spin Master's registration based on fraud on the PTO in light of the court's ruling canceling the registration based on descriptiveness.

The Ninth Circuit reversed the grant of summary judgment, concluding that the issues of descriptiveness and secondary meaning were disputed issues of fact not amenable to summary judgment.  As a result of the Ninth Circuit's ruling, the District Court's cancellation of Spin Master's registration was reversed and Zobmondo's counterclaim for cancellation based on fraud on the PTO was revived.

The latter issue was before the District Court on Spin Master's motion for summary judgment on Zobmondo's counterclaim for cancellation of Spin Master's registration for the WOULD YOU RATHER . . .? mark based on fraud on the PTO under 15 U.S.C. 1064(3).

Emphasizing that the burden of proving fraud is "heavy" and relying on the Federal Circuit's In re Bose Corp. decision (580 F.3d 1240 (Fed. Cir. 2009)), the District Court concluded that Zobmondo failed to carry that burden and granted summary judgment to Spin Master on Zobmondo's counterclaim.  Specifically, the District Court concluded that Zobmondo had failed to offer clear and convincing evidence from which a jury could infer that Spin Master subjectively intended to deceive the PTO in connection with its intent-to-use ("ITU") application, an "indispens[a]ble" element of a fraud cancellation claim.

The District Court's opinion described in detail the actions Spin Master had taken with respect to use of the WOULD YOU RATHER . . .? mark in connection with board games during the relevant time periods (Zobmondo's fraud claims only applied to the initial ITU application and the first two extensions of time Spin Master requested after the PTO issued a notice of allowance for the application).  Although the District Court noted more than once that development of the game bearing the WOULD YOU RATHER . . .? mark proceeded slowly ("at a snail's pace"), the evidence regarding the development process was sufficient for the court to concluded that no reasonable jury could find a subjective intent to deceive the PTO by clear and convincing evidence.

Of note, the District Court rejected Zobmondo's repeated argument

that there is a negative inference to be drawn from the fact that [Spin Master] sought and obtained all possible extensions of time to file [its] statement of use.  But absent a subjective intent to deceive the PTO during this time, there is nothing wrong with [Spin Master] requesting (and being granted) all of the available statutory extensions.  Congress created the intent-to-use system and the Court will not treat compliance with statutory procedures as evidence of fraud.  Indeed, [Spin Master is] far from the only one[] to have used the full set of procedures created by Congress:  as of 2008, almost 15,000 registrations had been issued after the maximum number of extensions was granted.  Thus, Zobmondo cannot demonstrate fraud by pointing to the authorized use of the full system of statutory extensions.

But interestingly, the District Court earlier cited to the Senate Report on the amendments that created the ITU system which stated that only the "rare applicant" would take advantage of all of the possible extensions (a total of five, six-month extensions) before it filed a statement evidencing use of the mark in commerce.

The case cite is Spin Master, Ltd. v. Zobmondo Entm't, LLC, Case Nos. CV 06-3459, CV 07-0571 (C.D. Cal. Feb. 22, 2011).

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