Selling Applications Presents a Problem In Branding For Apple, Microsoft and Amazon

In July 2008, Apple began selling applications (colloquially, “Apps”) for its mobile devices through its APPSTORE. Contemporaneously, Apple applied to register the APP STORE mark with the U.S. Patent and Trademark Office. Two years later, in July 2010, Microsoft challenged the registration because, among other things, they claimed the proposed mark was a generic term. That challenge was brought to the Trademark Trials and Appeals Board (“TTAB”) for adjudication. Notice of Opp’n (Jul. 4, 2010). In September 2010, Amazon began soliciting developers to submit offerings for Android applications to be sold through its yet-to-be-launched Amazon Appstore. On March 18, 2011, Apple filed suit against Amazon for trademark infringement and dilution under the Lanham Act and for unfair competition under California’s Business & Professions Code § 17200. Apple Original Complaint (Mar. 18, 2011) (N.D. Cal.). Three days later, Amazon went live with its “Amazon Appstore for Android.”

The Preliminary Injunction

Soon after filing its suit against Amazon, Apple moved for a preliminary injunction arguing that it was likely to prevail upon the merits of its trademark infringement and dilution counts and would suffer irreparable harm if an injunction did not issue. Apple Motion for Prelim. Inj. United States District Judge, Phyllis J. Hamilton, disagreed that Apple was likely to prevail on either its infringement or dilution claims. The Court “assume[d] without deciding” that “APP STORE” is not a purely generic name as Amazon claimed but also that the name was not suggestive as Apple claimed. Rather, the Court said that “APP STORE” was descriptive and that the term arguably acquired a secondary meaning rendering it protectable. Order Denying Motion for Prelim. Inj. The Court found that Apple had not established a likelihood of success as to its infringement claim because of Apple ’s inability to show there was a likelihood of consumer confusion. The test for confusion is “whether a reasonably prudent consumer in the marketplace is likely to be confused as to the origin of the good or service bearing the mark.” Insofar as the offerings at the APP STORE are exclusively for Apple devices and the offerings at the Amazon site exclusively for Android users, Amazon persuaded the court that most of the so-called Sleekcraft factors used to determine whether a “’likelihood of confusion’ exists” fell in its favor. Similarly, the court determined that Apple’s dilution claim was not likely to succeed. First, the court found that Apple failed to show that the “APP STORE” mark is famous. Second, Apple could not demonstrate that blurring occurred as a function of Amazon ’s use of the term “Appstore.” Although the terms are similar, the use of either by many companies to describe a place to obtain software applications for mobile devices reduces the liability of Amazon, which the court found “did not intend to create an association between its Android apps and Apple’s apps….” Finally, the court found inadequate evidence of tarnishment as Apple did not offer testimony that Amazon used “App Store” in a disparaging or degrading context. See generally Order on Motion For Preliminary Injunction.

The False Advertising Claim

In November 2011, Apple amended its Complaint to include a claim alleging false advertising under the Lanham Act. Second Amended Complaint. The following month, at Microsoft’s request, the TTAB issued an order suspending Microsoft’s challenge pending the outcome of the Apple suit against Amazon. Amazon then moved for partial summary judgment on the false advertising claim. In January 2013, the court granted Amazon’s motion. Order on Summary Judgment. Apple alleged that by using the phrase “Appstore,” Amazon was equating its “store” with Apple when in fact the two are different in nature and breadth of offerings. Amazon argued that it had made no false statement and that the false advertising claim was a trademark infringement allegation in disguise. Apple conceded that it had no evidence that Amazon made any affirmative or overt false claim. Rather, it argued that a false statement could be “’implied’ because the Lanham Act’s false advertising prong embraces innuendo, indirect intimations and ambiguous suggestions” and would be actionable when the consuming public misapprehends an advertisement. However, Apple did not introduce a market study or consumer survey in support of the idea that the term “app store” includes “specific qualities or characteristics or attributes of the Apple APP STORE, or that customers were misled by Amazon’s use of the term.” The Court concluded that absent such evidence, Apple could not establish that Amazon was liable for false advertising and dismissed the claim. Sources: Apple Inc. vs. Amazon.Com Inc., Case No. 4:11-cv-01327-PJH (N.D. Cal.) (Docket Nos. 1, 18, 52, 56 and 102); Trademark Trials and Appeals Board Opposition No. 91195582.