And What You Can Learn About Trademark Law Basics from the Decision

If you are a trademark lawyer, you’ve probably heard by now that Amazon last week fought off Apple’s attempt to block Amazon from using the mark APP STORE for its online shopping site.  It’s a high-profile decision (download here) that made the front pages of most online news sites.  But it’s also a really handy case for non-trademark lawyers to learn about trademark law because it touches nearly every major issue involved in a trademark lawsuit:  the importance of registration, the elements of proof, the evidence you need to prove those elements, and the additional challenges posed by preliminary injunctions.

To prove trademark infringement, you have to prove two things:  first, that you own a protectable mark; and, second, that there is a “likelihood of confusion” between your mark and the mark you want to stop.  (You also sometimes have to prove “seniority,” that is, you used it first in the relevant market–but that didn’t come up in the Apple v. Amazon decision.)

Sounds simple, but it isn’t.  That second factor–“likelihood of confusion”–is very fact-intensive (and we’ll go into it in more detail below).  The first factor is usually not so difficult because usually sophisticated parties like Apple have gone to the trouble of registering their marks with the United States Patent and Trademark Office (“USPTO”).  There are many advantages to registering your marks.  One of the nicest is that your mark is presumed to be protectable.  The other side can try to puncture that presumption, but, in theory, at least, you don’t need to bring forth any further evidence of protectability beyond a certified copy of the U.S. trademark registration.

Only Apple didn’t have a U.S. trademark registration.  To be sure, Apple had applied for one for APP STORE, but the USPTO doesn’t just hand out registrations to anyone who asks.  The USPTO’s examiners must first satisfy themselves that the mark might be protectable, and this might involve some back and forth between the USPTO and your lawyers.  Some marks don’t make it out of this stage–or do so but in a weakened form.  APP STORE did survive this stage, but it got mired in the next stage.*

*  Updated comment:  And it may not survive the next stage, for pretty much the same reasons Amazon brought up in this decision.

The next stage is triggered when the USPTO publishes the trademark application in the wonderfully named Trademark Official Gazette.  The idea is to give notice to the world that you are seeking U.S. registration for your mark, and–this is the important part–to give others an opportunity to intervene in the registration process.  And intervene they do.  They intervene because of another big advantage that registration confers:  nationwide coverage.  Without registration, your use of the mark is limited to the geographic extent of your customer base.  Thus, two companies can use the same mark for the same goods, so long as they are far enough away from each other.  But the owner of a U.S. trademark registration can move into new geographic markets and sweep away other users of the same mark, even if the other users had been using the mark for some time.**

**  Provided (1) that you really are the first to use the mark in the United States for those particular goods or services, (2) you filed your application before the others’ use of the mark, and (3) you didn’t lie on your application about (1) and (2).  If the first isn’t true, a more senior user can make its own application to register the same mark and undercut your registration.  If the first is true but the second isn’t, the other users are “frozen” into (and can keep you out of) their limited geographic markets as they existed when you filed your application, but you get the rest of the country.  To this day, there is a BURGER KING restaurant in Mattoon, Illinois that is unrelated to the national chain.  Neither can do anything about the other’s use of BURGER KING.  If the third isn’t true, your registration is “void ab initio,” which is legalese for nuked, and you’ve got bigger problems.

Microsoft wasn’t going to let Apple have the exclusive right throughout the United States to use APP STORE to describe an online site for sale of computer applications.  One need not speculate very long to guess why:  Microsoft has its own smart-phone operating system, and it probably wants to call its online application-sales presence an APP STORE, too.  These sorts of interventions (called “oppositions”) are like stripped-down lawsuits.  They move rather faster than regular lawsuits and don’t cost as much, but they still take time and cost a fair amount of money.  By the time Apple found out about Amazon’s plans to open its own APP STORE, Apple still hadn’t resolved its dispute with Microsoft.

Thus, Apple sued Amazon without one of the most important weapons in its arsenal:  a U.S. trademark registration.  This meant that Apple had to prove that APP STORE was a protectable mark, and that’s not so easy (and we’ll get to that in a moment).

There’s more.  Apple didn’t want to stop Amazon from using APP STORE in a couple of years–which is how long it’d take for the lawsuit to run its course (to say nothing of appeals).  Apple needed to stop Amazon right now, before Amazon made good on its plans to use APP STORE.  Otherwise, Apple’s own use of APP STORE would suffer two years or so of confusing use by Amazon, and even if Amazon could be made to stop then, the public confusion probably wouldn’t go away.  The APP STORE mark might be completely ruined.  This meant that Apple needed to ask the court for a “preliminary injunction,” which is an order that prohibits the complained-of action pending a full trial on the issue.  The idea is that some actions will cause so much harm to the plaintiff that, if they’re allowed to continue, there’d be no point in having a trial–the harm would be done and couldn’t be undone.  (In an extreme case, the plaintiff might be driven out of business before justice could be done.)

Courts are reluctant grant preliminary injunctions.  Yes, they are sometimes necessary, but they risk unnecessarily interfering with the defendant’s business.  Many business initiatives have only a small window in which they can be effective, and if a preliminary injunction delays the initiative, the whole thing might have to be shelved.  Thus, it is sometimes said that cases are won or lost at this stage, despite the temporary “place-holder” nature of preliminary injunctions.  (Preliminary injunctions are not rare for being difficult.  They’re particularly common in copyright and trademark cases, less so in patent cases.)

Because of this reluctance, courts place some stringent requirements on those seeking preliminary injunction.  What is required varies from place to place, but generally speaking, you need to prove at least that you’re likely to win at trial, and that you’ll be irreparably harmed without a preliminary injunction.  Thus, Apple not only had to win a kind of mini-trial on the merits, but they had only a matter of weeks, not years, to gather the evidence–and they had to gather more evidence than usual.  And Apple couldn’t just roll over a smaller opponent–Amazon was no push-over.

In the next blog post, we’ll look at what Amazon did to hold off Apple–and learn about generic “marks” (and why that defense is scary but rarely successful), descriptive marks (and why they can be hard on the markholder), and likelihood of confusion.  Thanks for reading!