Thursday, January 03, 2013

Apple's App Store claim is TM, not false advertising

Apple Inc. v. Inc., 4:11-cv-01327-PJH (N.D. Cal. Jan. 2, 1013)

Channeling in action, though not as explicit doctrine: the court rejects an attempt to make a trademark case into a false advertising case. Apple sued Amazon over Amazon’s use of “Appstore” for apps for Android and Kindle Fire devices.  Apple alleged trademark infringement, federal and California dilution, false advertising under the Lanham Act, and unfair competition.  Amazon sought and received summary judgment on the Lanham Act false advertising claim.

Apple’s false advertising argument was that Amazon’s use of “App Store” misrepresented the nature, characteristics and qualities of Amazon’s service since consumers would expect the high quality of Apple’s App Store and get an inferior service.  Amazon argued that Apple hadn’t identified any false statement of fact about the nature, characteristics, or quality of its Appstore, and that its claim was nothing more than garden-variety trademark infringement.

Apple conceded that it hadn’t identified any explicitly false statement, but argued that actionable falsity may be implied.  It relied on three cases and a citation from McCarthy (all quotes are the Apple court’s, not the original source’s):

(1), Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir. 2011), found false advertising based on implicit claims of government endorsement/official status by  The name of the site mimicked an official site, as did the site design.  But here there was no evidence that Amazon was mimicking Apple’s site or advertising, and the plaintiffs in had evidence of consumer confusion from surveys, emails from confused public officials, etc.

(2) Eastern Air Lines, Inc. v. New York Air Lines, Inc., 559 F.Supp. 1270 (S.D.N.Y. 1983), involved Eastern’s well-established “shuttle” service.  When NY started a new service on the same route, it also called it a “shuttle,” suggesting in its ads that it offered the same features (guaranteed seating, no need for reservations, and frequent service) as Eastern Air Lines’ “shuttle” service.  The court found that “shuttle” was generic, but upheld the false advertising claim, reasoning that “as used by Eastern, the term ‘shuttle’ had come to denote certain characteristics, and a competitor could not use the term to mislead customers into believing that it provided the same type of service that the public had come to expect from Eastern Airlines’ ‘shuttle.’ … New York Air Lines’ ads were misleading, because they purported to compare the two shuttle services and indicated that the features and amenities were comparable.”

(3) Potato Chip Inst. v. General Mills, Inc., 333 F.Supp. 173 (D. Neb. 1971), involved a lawsuit against General Mills for selling a product called “potato chips” that contained rice flour and dehydrated potatoes.  The court concluded that “potato chip” could in theory describe chips made in this way, but that the term was, “in the experience of consumers, so associated with slices of raw potatoes cooked in oil until crisp that using it to describe chips made from dehydrated potatoes would tend to mislead the public and therefore constitute false advertising.”  It relied on consumer surveys and dictionary definitions.

(4) Finally, the McCarthy treatise says, as part of its discussion of how to avoid genericity by using a generic descriptor to accompany another term that can serve as a trademark, that “a company that introduces a new product that does not establish trademark rights may have a false advertising claim against a junior user who uses a generic term to falsely imply that it is selling the same generic product or service identified by that term as does the established company.”

Apple argued that its cause of action was the same as in the above cases/authority, since Amazon’s service didn’t possess the characteristics and qualities that consumers had come to expect from an APP STORE, based on their familiarity with Apple’s services.

The court disagreed, finding these authorities “not noticeably relevant to the question whether it has provided evidence in this case sufficient to support the first element of the false advertising claim” (falsity).  In particular, “[t]he mere use of “Appstore” by Amazon to designate a site for viewing and downloading/purchasing apps cannot be construed as a representation that the nature, characteristics, or quality of the Amazon Appstore is the same as that of the Apple APP STORE.”  It’s true that implicit falsity is governed by the Lanham Act, but Apple provided no evidence, either through market research or consumer surveys, of exactly what false message was conveyed.  “Apple has presented no evidence that consumers or customers understand ‘app store’ to include specific qualities or characteristics or attributes of the Apple APP STORE, or that any customers were misled by Amazon’s use of the term.”  Apple argued that its store was better, with more apps and better device integration, but there was no evidence that consumers would expect Amazon’s store to be identical to Apple’s, especially since Apple’s store sold apps just for Apple devices, while Amazon’s sold apps solely for Android and Kindle devices.

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