Wednesday, December 30, 2015

Selfie restraint: It's hard to show fame and irreparable harm

ArcSoft, Inc. v. Cyberlink Corp., 2015 WL 9455516, No. 15-cv-03707 (N.D. Cal. Dec. 28, 2015)
ArcSoft makes the Perfect365 selfie editing app, and sued defendants for infringing and diluting the trademarks/trade dress of that app with their YouCam Perfect selfie editing app.  ArcSoft claimed first use of the Perfect365 mark as of Nov. 2, 2011, and registered it in 2012, along with a design mark for “Perfect365” and the image of a human face.  It alleged that over 20 million US consumers have downloaded the app, and that it had “significant acquired distinctiveness and goodwill” in its mark and in the term “Perfect” for selfie editing apps.  “The famous Kardashian family, including Kim Kardashian, Kendall Jenner, and Kylie Jenner (perhaps the world’s foremost authorities on the selfie), reportedly use the Perfect365 app to edit their widely-consumed selfies,” amplifying Perfect365’s consumer recognition.  ArcSoft also alleged substantial media coverage of the app.
Interface for Perfect365

Logo for Perfect365

In addition, ArcSoft claimed to own the following trade dress: A distinctive purple color scheme throughout the app and app icon; the Perfect365 mark; the “distinctive (in function and form) photo-taking feature, which utilizes the smart device’s camera within the app to enable the user to easily take and edit selfies all within the confines of the app,” with a circular shutter button at the bottom of the screen comprised of an inner white circle surrounded by circular bands in ArcSoft’s purple; and the photo-editing and beautification function of the app, featuring icons reflecting selfie editing options (e.g., for editing “Blemishes,” “Blush,” and eye features) at the bottom of screen in ArcSoft’s purple when selected, over a white rectangular band.  It alleged that this trade dress had both inherent and acquired distinctiveness.
YouCam Perfect interface

YouCam Perfect logo

Trademark dilution: ArcSoft failed to sufficiently allege federal fame (also required under California law).  Alleging 20 million US downloads, along with “widespread and favorable recognition of its Perfect365 Mark throughout the United States,” was insufficient, despite allegations of celebrity use and media coverage from outlets from the New York Times to Allure and TechCrunch.  Although the Perfect365 mark was registered, other factors in assessing fame weighed “heavily” against ArcSoft.
Defendants’ alleged use began in February 2014, and ArcSoft didn’t plausibly allege that it acquired fame in the approximately 28 months that passed between its first use date of November 2, 2011 and then.  It didn’t allege that the widespread recognition and media coverage occurred before February 2014, or allege details about its advertising.  Even assuming, contrary to the court’s expectation, that 20 million downloads sufficed (in a nation of over 318 million), again ArcSoft didn’t allege how many of those occurred before February 2014.  Nor were there any nonconclusory allegations about the extent to which consumers actually recognized the Perfect365 Mark.  Dilution claims dismissed, with leave to amend.
As for trade dress infringement, ArcSoft likewise failed to plead nonfunctionality.  Given the explicit functionality of many of the features claimed in its initial description, ArcSoft retreated in its moving papers to claiming (1) “a distinctive purple color scheme,” (2) “a unique app icon for the Perfect365 app,” (3) the “Perfect365 Mark itself,” (4) “a circular shutter button at the bottom of the screen comprised of an inner white circle surrounded by distinctive circular bands in ArcSoft’s purple,” and (5) the “icons reflecting selfie editing options the bottom of [the] screen in ArcSoft’s distinctive purple when selected, over a white rectangular band,” or even further, to “how the shutter button [and] [selfie editing] icons look.”  However, given the importance of defining trade dress sufficiently to give defendants adequate notice, Arcsoft’s “shifting-sands approach” to defining the trade dress was insufficient.  Given the apparent concession that the trade dress described in the complaint wasn’t the trade dress ArcSoft wanted to assert, this claim was also dismissed with leave to amend.
That left only alleged word mark infringement in ArcSoft’s motion for preliminary injunction, which the court denied for failure to show irreparable harm.  After Herb Reed Enterprises, LLC v. Florida Entm’t Mgmt., Inc., 736 F.3d 1239 (9th Cir. 2013), likely confusion isn’t enough to show irreparable harm, nor are conclusory statements about lost control over reputation and damage to goodwill.  Thus, ArcSoft’s claims of actual confusion and lost goodwill, and allegations that these losses were “incalculable,” were insufficient.  So were claims that ArcSoft’s success depended on a “broad and loyal user base,” perhaps meaning to evoke the idea of network effects.
ArcSoft offered one incident that provided “some, but not much, support for its claim of loss of goodwill.” A user, “Rosiella ShadowsHeart,” posted a one-star review of ArcSoft’s Perfect365 app, stating “they stole the whole ui and all from You Cam Makeup.” This evidence was “on the right track,” but still didn’t show irreparable harm.  First, the reference to the whole user interface meant that the user was relying on the (not-yet-protected) trade dress, not just the word mark.  Second, a review consisting of “a single, somewhat ambiguous sentence by an anonymous internet user” was of minimal probative value even under the relaxed evidentiary standard applicable to preliminary injunction motions.

An additional declaration from ArcSoft’s legal counsel was no more helpful.  The declaration stated that the number of users of its app in 2015 had materially decreased by about 1/3 compared to 2014, while defendants engaged in increasingly aggressive promotional efforts.  Moreover, ArcSoft “commenced in-depth discussions with a major cosmetics company to enter into a partnership to implement looks sponsored by said company in our Perfect365 app,” but the company ultimately elected to use the YouCam Makeup app.  This didn’t show a sufficient connection between the infringement and the lost business, since the timing of defendants’ incorporation and marketing didn’t support a reasonable inference that the number of Perfect365 app users decreased because of confusion.  Any decrease in downloads, users, and ad sales reflected economic injury, which could be remedied by money damages.  Also, the cosmetics company, on these allegations, understood the difference between the two and chose YouCam. “That is what happens when products compete.”

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