NETWORK EFFECT GENERICIDE: THE BRANDING PAINS OF ONLINE SERVICE PROVIDERS

Posted By: Drew Weigel

Trademark-Symbol_32When is a book not a book? How do you remove the app from apple? Should Google be a verb? this post provides a brief look into the struggle for corporations to maintain trademark rights over ubiquitous online services.

GENERICIDE

Two pillars support trademarks as a long-standing tradition of market fairness. The first is the protection of consumers against fraud and confusion, the ability to associate goods and services with a reliable source. The second is the protection of vendors from others’ unjust enrichment by appropriating the goodwill they build in a mark. Both rest on the necessity for marks to be neither generic nor merely descriptive, and therefore easily recognizable and distinguishable. However, some brands become so iconic that consumers cease to identify them as marks, but as the products and services themselves.

The express provisions of 15 U.S.C. § 1064(3) state that a mark is subject to cancellation if it “becomes the generic name for the goods or service, or a portion thereof, for which it is registered.” It determines this by looking at the primary significance of the mark to the public. Courts have generally determined the primary significance test consistently. Ninth Circuit decided in Rudolph Int’l v. Realys Inc.  that if the primary significance of the trademark “is to describe the type of product rather than the producer, the trademark is a generic term and cannot be a valid trademark.”

To be sure, the issue of genericity is not always uniformly applied. Purported “front page of the internet” Reddit forced voluntary surrender of the generic mark GAYMER without USPTO or court interference. Sony’s denial of the mark LET’S PLAY, on the other hand, was rejected solely against a prior mark, despite being obviously generic. But the sheer ubiquity of some online service providers that establish markets through networks effects has resulted in more than a few threats to the distinctiveness of marks.

THE -BOOK (2011)

In Facebook, Inc. v. Teachbook.com LLC, Facebook filed a list of complaints against Teachbook.com LLC in the Illinois District Court after unsuccessfully suing in California District Court. The complaints included trademark infringement, trademark dilution, false designation of origin, and cybersquatting in violation of the Lanham Act, federal statute, Illinois statute, and common law.

Facebook had been using the “FACEBOOK” mark since 2004 and owned multiple federal registrations. Teachbook was a social networking website aimed at teachers which advertised itself with the following statements: “Many schools forbid teachers to maintain Facebook and MySpace accounts because of the danger that students might learn personal information about their teachers. With Teachbook, you can manage your profile so that only other teachers and/or school administrators can see your personal information, blogs, posts, and so on.” Based on these statements, Facebook contended that Teachbook was touting itself as a “substitute for Facebook,” and opposed Teachbook’s application for federal registration of “TEACHBOOK” under this theory of intent to confuse and trade on goodwill. Teachbook responded with a motion to dismiss.

Teachbook submitted USPTO records, dictionary definitions, and previous statements made by Facebook in other cases to support its motion for dismissal. It argued that Facebook couldn’t state a trademark infringement claim based on Teachbook’s use of the suffix “-BOOK,’ because it is generic and unlikely to cause confusion. It relied mostly on a previous case where “The Black Book” was found not to be infringing on “Le Book NY” because “book” was a generic component of the mark; therefore use in other marks was not infringement. The Court declined to take judicial notice to the evidence based on their disputable evidentiary value, but considered Teachbook’s motion to dismiss.

The Court acknowledged Facebook’s argument that it was not disputing the generic term “-BOOK,” but the similarity between its entire mark “FACEBOOK” and Teachbook’s mark. The Court summarized the hierarchy of marks, noting that generic marks “designate the products themselves rather than any particular maker,” descriptive marks “specifically describe a characteristic or an ingredient of a product” but can be protectible if proven to acquire secondary meaning, and suggestive/arbitrary/fanciful marks are “inherently distinctive,” separated from merely descriptive marks by a “degree of imagination” test.

The Court did not find Teachbook’s argument persuasive. It found no legal obligation to “splice” marks when determining similarity, and decided to approach distinctiveness by addressing the “aggregate effect of the conjoined parts.” Even so, it interpreted the social networking services as not falling within the categorical understanding of “books” and does not instantly call to mind a multiplicity of meanings (this reasoning, of course, failed to account for address books, although it would not have obviated secondary meaning of the mark). In absence of evidence to the contrary, the Court presumed—by virtue of acquiring federal registration—the mark at the very least had acquired secondary meaning.

After balancing the substantial similarity of the marks, bad intent, and another factors, the Court found sufficient evidence for Facebook’s claim of infringement. It also strongly hinted that Facebook would likely succeed in proving itself to be a famous mark and succeed in charging Teachbook with trademark dilution. It denied Teachbook’s motion for dismissal.

Teachbook ended up settling and changed its name to TeachQuest. The company appears to have shut down since.

APPL-ICATIONS (2013)

In Apple Inc. v. Amazon Inc., Amazon challenged Apple’s trademark of “APP STORE” in California District Court. Apple had previously defended the same mark against attacks by Microsoft, partly through leveling claims of equivalent genericity in Microsoft’s WINDOWS mark. Proceedings in that case were suspended and waited on the outcome of this case. Apple had been selling “apps” through the branded service as early as 2008. Amazon, over the course of 2010-2011, created an “Amazon Appstore Developer Program” and launched Amazon Appstore for Android.

Apple sued Amazon for trademark infringement, false advertising and dilution under the Lanham Act, dilution and unfair competition under California law, and common law trademark infringement. Amazon sought partial summary judgment as to false advertising, claiming that it never made a false statement of fact in a commercial advertisement about its own or another’s product.

Apple claimed it had no need specific statements of fact under the Lanham Act, although the Court found this argument misconstrued the findings of prior cases where evidence had been introduced of attempts to mimic, ready implications, consequential consumer confusion. Nor did the Court find Apple’s argument that consumers would believe Amazon’s Appstore to offer the same number of apps relevant.

Amazon was granted summary judgment on that count. After an extended dispute, Apple eventually gave up the “APP STORE” mark, unable to imbue substantial secondary meaning in the term “application.” Apple continues to use the term generically, as do Amazon, and Windows.

GOOGLING (2014)

In the circumstances surrounding Elliot v. Google Inc., Google filed a complaint requesting transfer of 763 domain names containing the mark “GOOGLE” under the registrar’s dispute resolution policy. The domain names in question either combined the word “google” with another brand, e.g. googledisney.com, a person, e.g. googlebarackobama.net, a place, e.g., googlemexicocity.com, or with some generic term, e.g. googlenewtvs.com.

Plaintiffs David Elliot and Chris Gillespie sued Google in Arizona District Court under a theory that the federally registered Google mark had become generic because a majority of the public understands the word google, when used as a verb, to mean the indiscriminate act of searching on the internet without regard to the search engine used. Google countered by arguing that there was insufficient evidence pointing to a significant portion of the consuming public which did not identify the mark with their service.

The Court generalized the plaintiffs’ argument to be “a trademark ceases to function as such when it is used primarily as a verb,” to which it noted that verb use of a trademark is not fundamentally incapable of identifying a producer or denoting a source. It used an analogy of the term PHOTOSHOP. If “I will PHOTOSHOP the image” is discriminate mark-as-verb usage which means specifically the act of manipulating an image using the trademarked Adobe Photoshop graphics software, then it clearly performs the source-denoting function of trademark. If, however, “I will PHOTOSHOP the image” means the use of graphics editing software other than Adobe Photoshop, the indiscriminate mark-as-verb usage to refer to something other than the trademarked product does not perform that statutory function. Instead, it functions as a synecdoche, describing both the branded species of activity, and the genus to which is belongs.

The Court acknowledged that synecdoche alone does not render a mark generic. In order to become generic, the principal significance of the word must be as indication of nature or class, rather than origin. It further states that guiding generic inquiries with grammatical formalism is incompatible with the intentions of the Lanham Act. The Court found the plaintiffs unable to satisfy their burden of proving that the mark was generic. None of the dictionary entries cited failed to identify the verb as a trademark, no doubt due to the sizeable sums spent by Google policing and enforcing use of the mark. Furthermore, not only are Google’s competitors able to describe themselves without using the mark, but routinely distinguish their search engine services from Google’s.

Thus, as there was no genuine issue of material fact, Google was awarded summary judgment. Curiously, however, the company reincorporated itself under the umbrella name Alphabet barely a year later.

CONCLUSION

This is a recurring issue that, although amplified by internet technology, may not be a problem for the industry. A service which manages to defend against genericide one year can easily lose to future claims if their social positioning and impression changes. The cost-benefit ratio is esoteric, since many online services have pursued and attained market dominance by being the only or the best of their kind. The sales profits enhanced by ubiquity are substantial and the core of these businesses, yet so is the licensing and litigation afforded by active trademarks. What seems to be evolving is a means of discouraging companies from dipping too much into both resources, and forcing them to invest heavily in policing their marks if they wish to continue doing so.

Of course, this approach ultimately favors the inflation of ever larger companies, but that is an issue that, if ever solved, will probably rest on antitrust violations without ever touching trademark theory. In the meantime, ultimately it is consumers who benefit the most from trademark genericide, giving them the power to devaluate brands which become too monopolized, exploitative, and oppressive. So, in the name of fair competition, keep on snapchatting, ubering, and netflix-and-chilling.

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