Thursday, February 18, 2016

Uber and out: court grants limited but still tricky injunction against Uber

Uber Promotions, Inc. v. Uber Technologies, Inc., No. 15-cv-206 (N.D. Fla. Feb. 16, 2016)
This is a hardcore test of how you feel about consumer protection as the sole legitimate aim of trademark law.  Uber Technologies (Tech) rolled into Gainesville, over the unheeded objections of local senior user Uber Promotions (Promotions), which among other things provides party buses or limos to take people to events.  Someone who Googles “Gainesville party bus” would find, on page two of the results, a listing for “Uber Promotions.” Generally, its services include  “promotional and event planning services, . . . graphic, web design and print media photography services, . . . modelling and talent agency services, . . . private venue rental services,” and “passenger transportation services, including through limousine and charter services.”  It used “UBER,” “ÜBER,” “UBER PROMOTIONS,” and “ÜBER PROMOTIONS” since at least 2006.  Tech registered UBERCAB in 2010, then registered UBER in 2011.  It expanded permanently into Florida in November 2013, starting with Jacksonville and reaching Gainesville in August 2014.  But Tech is an elephant, and Promotions a squirrel.  Shall the strong do as they will and the weak do as they must?
Promotions sent Tech a letter in April 2014 demand ing that Tech “discontinue the use of the terms ‘Uber Promotions’ in connection with [Tech’s] marketing and advertising campaigns . . . and undertake in writing that [Tech] will not at any time in the future use any of [the] Uber Promotions name in any future mark[et]ing or advertising campaigns, Twitter Accounts, or apply for registration of any trademarks/service mark that may be confus ingly similar to Uber Promotions.” Tech responded by (1) removing the term “Uber” from the title of a page on its website that had previously been titled “Uber Promotions” and (2) responding (through counsel) that it didn’t agree that there was a problem, but that to avoid trouble it removed the “Uber Promotions” reference.
Soon after the lawsuit was filed, Tech launched a new service called UberEVENTS, which allows customers to purchase rides for others that can be used at a particular time in the future, “a popular option for corporate events.”
Promotions sought to keep Tech out of Florida.  It didn’t get everything it wanted, but what it did get might pose some interesting technical challenges.
First, the court addressed the lurking eBay issue: the court was inclined to agree that no presumption of irreparable harm was appropriate now.  But history also indicated that the practice of presuming irreparable harm from likely success “was grounded upon the sound principle that the harm associated with trademark infringement is typically irreparable in nature. So while a court must, in each trademark in fringement case, make a finding of irreparable harm before an injunction may issue, that finding will often be made due to the na ture of the harm.”  Still, the court has considerable equitable discretion to tailor its relief.
Likely success: First, the court agreed with Tech that its use of UBER related back to the registration of UBERCAB in 2010—though this is a question of fact under Hana Bank, “this Court is confident that Tech would be able to convince a jury that UBER and UBERCAB would be ‘considered the same mark’ by a reasonable consumer,” so UBER was effectively registered in 2010.
The court then asked whether Promotions was entitled to a reasonable zone of future expansion; §33(b)’s freezing provision suggests otherwise, but the case law seems to recognize such a zone even when the junior user is a federal registrant.  The court also asked what Tech’s nationwide rights were for—its registrations cover “computer software for coordinating transportation services,” not the provision of actual transportation services themselves.  (It’s a platform!)  It wasn’t necessary to resolve these issues, because there was no evidence of a zone of expansion outside Gainesville.  Promotions’ infrequent trips out of town to various places weren’t enough to show use or likely expansion, except perhaps for Promotions’ bus service to Ocala Poker and Jai Alai in Reddick, Florida, which it might have been servicing regularly for many years.  Thus, Promotions was the senior user in Gainesville.
This is a reverse confusion case, meaning that “the largest class of people who might be confused are people familiar with Tech’s marks who then encounter Promotions’ marks.”  Promotions primarily serves and advertises to college-age people.
The court first looked at the UBER marks except for UberEVENTS, which it analyzed separately.
Strength: Tech argued that the term UBER was laudatory and descriptive.  There wasn’t much competitive need for the term UBER, though UBER PROMOTIONS was a closer call on being laudatory and thus descriptive.  Though “uber” isn’t extremely uncommon, it’s also “less frequently encountered—and thus less likely to be perceived by the relevant public as merely self-laudatory—than a term like ‘super’ or even ‘ultimate.’” Thus, Promotions’ mark was suggestive.  The mark wasn’t especially strong conceptually, so this factor slightly favored Tech.
Similarity: There are many ways to be familiar with Tech without using Tech’s services, given its wide recognition.  The court agreed that the differences between Tech’s app and Promotions’ logo, together with the fact that Promotions usually included “Promotions” in its name, made consumer confusion relatively unlikely on a full encounter.  But “the visual differences are much less significant for those consumers less familiar with Tech.”  Tech’s ads and promotional materials suggested that the most important feature of Tech’s mark was the word UBER, not any particular design element.  Indeed, Tech switched logos after the hearing in this case.  If anything, “[t]he fact of the change—and the fact that it was so well-publicized—might tend to increase reverse confusion by creating doubt among those familiar with Tech about what its ‘look’ really is.”  Regardless, visual similarity weighed slightly in favor of Promotions.  More importantly, “many consumers may have just heard of Tech or read a news story referencing it, in which case the visual differences are quite unimportant,” nor would the relatively common word “Promotions” help consumers distinguish the two.  Plus, Tech often uses “Uber Promotions” in connection with various promotional campaigns, which could easily create confusion.   
Similarity of services: Though both offered passenger transportation, the services differed in many important ways—Tech had “driver partners” using their own cars, while Promotions used more traditional vehicles such as charter buses, party buses, and limos. Tech focused on moving individuals or small groups, whereas Promotions focused more on group transportation. “These differences are not so great that they weigh heavily against confusion, particularly in light of Tech’s expanding roster of transportation options,” such as the UberXL service that provides SUVs and minivans, as well as UberPOOL, which allows customers traveling in similar directions to share a car and save money, though the latter wasn’t yet available in Gainesville.  People highly familiar with Tech would notice the absence of driver partners, but “those who only know that Tech has something to do with transportation or that it provides something like a taxi service could very well think that Promotions and Tech are affiliated based on Promotions’ services.”  (Also, Amazon just opened a physical bookstore—just because you start out without employees doesn’t mean you end that way.) This factor tilted slightly in favor of Tech.
Similarity of sales methods weighed heavily in favor of Tech, because Tech uses an app, whereas one must call, email, text, or send a Facebook mes sage to Promotions in order to set up a ride. Even people only vaguely familiar with Tech might well know that its services were app-based.
Similarity of advertising methods: both use social media extensively. Some of Tech’s affiliates even put ads for Tech’s services on Promotions’ Facebook page. Though the look of Promotions’ ads was quite different from the look of Tech’s ads, extensive use of social media and especially Promotions’ Facebook page raised the likelihood of confusion.  Also, Tech’s use of AdWords made it more likely that certain searches would lead to an ad for Tech being displayed above the results.  Weighed slightly in favor of Promotions.
Intent: In a reverse confusion case, the concern is that the infringer will “push[] its [smaller] rival out of the market,” thus “usurp[ing] [the rival’s] business identity.” Only intent to “usurp identity” through confusion is relevant.  (Here’s where the equity kicks in.  What about reckless indifference to the senior user’s trademark rights?  Tech clearly didn’t intend to misappropriate Promotions’ goodwill, but it might well have anticipated that its entry into Gainesville would extinguish that goodwill, which is a kind of “usurping” the identity of UBER in Gainesville.  How should we think about that?)  The court was skeptical:
It is difficult to believe that Tech acted with the intent to push Promotions out of the Gainesville market by using a confus ingly similar mark. Elephants don’t look out for gerbils when they plow through the bush. Tech adopted its mark before it ever knew of Promotions and expanded nationally thereafter. Surely it knew that it would collide with Promotions once it entered Gainesville, but that doesn’t mean it intended to confuse consumers and thereby hurt Promotions. This factor is not particularly relevant to the analysis in this case.
Actual confusion: There was a fair amount, which is interesting in light of the court’s conclusion that most of the standard circumstantial factors either favored Tech or only weakly favored Promotions.  Promotions received “numerous” phone calls from customers looking for tech.  The court found that some of the people who called Promotions looking for Tech “were indeed “confused” within the meaning of the Lanham Act—that is, they understood they were calling Promotions and thought Promotions was affiliated with Tech.” 
But Tech’s number is hard to find, so many of the callers were just misdirected, such as the ones who asked about becoming driver partners.  Especially since a Google search for “Uber Gainesville phone number” or “Uber Gainesville phone” brings up Promotions’ phone number, “it’s likely that a large fraction of the callers didn’t even grasp that they were calling something called Uber Promotions, but instead thought they were calling Uber Technologies. This is akin to being given a wrong number by a telephone operator.”  The confusion about who they’d reached isn’t relevant trademark confusion, at least not in a reverse confusion case—it would be highly relevant to initial interest confusion. “A person who does not even grasp that he is talking to Promotions on the phone, or that Promotions even exists separate and apart from Tech, is obviously not going to form a bad opinion of Promotions based on his ‘confusion,’ nor is Promotions going to lose any business.” The same was true with emails received by Promotions from people looking for Tech. “The Los Angeles customer appears to be someone so easily confused that even trademark law cannot protect her.”
Two instances of confusion by former customers of Promotions were more helpful: they clearly understood what Promotions is, understood what Tech is, and thought they were affiliated. Also, there was evidence that “a few Tech customers—and even some driver partners and others affiliated with Tech”—thought the parties were related.  The calls/emails were less important, especially since their confusion could be easily corrected.  “That said, it strains credulity to think that at least some of the many dozens of callers were not actually confused, and certainly two of the emailers were.”  Even a few instances of actual confuison were worthy of note because of how difficult actual confusion is to find.  This factor weighed in Promotions’ favor, “but it by no means weighs so heavily that a finding of a likelihood of confusion is inevitable.”
All together: The court was especially impressed by the difference in sales channels: “anyone who has used Tech’s services necessarily understands that those services are accessed via a smartphone app, and is unlikely to think that Tech has all of a sudden started to make its services accessible via other means.”  So, the people who might be likely to be confused are people who have “heard of, but not used, Tech’s services.”  But the people in that group most likely to encounter Promotions’ mark is young people, a group that’s relatively tech-savvy and therefore likely sensitive to the difference in sales channels.  (NB: I don’t think tech-savvy means that; an ability to spit out emojis super fast is not sophistication in business organizations.)  Plus, a person who’s heard of Tech might be aware that Tech is available in many locations, not just Gainesville, “and the local focus of Promotions’ advertising will not tend to create confusion.”  (Though doesn’t Tech roll out new services place by place?)
If there were no evidence of actual confusion, the court wouldn’t find likely success on the merits.  But there was, so it did. “[G]iving great weight to evidence of actual confusion helps ensure that a judge doesn’t rely (perhaps subconsciously) too heavily on his own subjective view of the likelihood of confusion” and “helps counteract the empathetic deficiencies that necessarily distort the analysis of the remaining factors.”  There were about five clear instances of people who truly thought that Promotions and Tech were related “despite having a more-than-casual relationship with the two entities.”  Even a few can be enough, though.  It was a close call, but the court found likely success on the merits.
As for UberEVENTS, confusion was much more likely if it were allowed to grow in Gainesville pending trial:
First, the more “Uber _” services there are, the more likely it is that a consumer might think that Promotions is just another branch on the Uber Technologies tree. Second, UberEVENTS is accessed through a webpage, thus eliminating one of the key differences between Tech and Promotions. [Ed.: But no reasonable consumer would expect that, right?] Third, the service allows users to coordinate transportation at a set time in the future for a large number of people, just like Promotions.
Though most driver partners’ vehicles were probably less lively than a party bus, the services were far closer than with any of Tech’s other offerings. This one wasn’t a close case.
Tech’s laches and estoppel affirmative defenses weren’t pursued in opposition to the preliminary injunction, and anyway wouldn’t work as to UberEVENTS because that launched after the lawsuit began.
Irreparable harm: Without an injunction, more people would be confused about the relationship between Tech and Promotion.  “But so what? Where’s the harm? The harm usually cited as flowing from confusion in a reverse confusion case is the loss to the senior user of the ‘value of the trademark—its product identity, corporate identity, [and] control over its goodwill and reputation.’” These harms, if they occur, aren’t easy to quantify and redress with money damages, which makes them irreparable. But nonetheless, the harm must be likely, not just possible.
The court identified three reasons for concern: (1) Tech’s high rate of growth in the Gainesville market, allowing it to do Promotions more harm before trial.  (2) UberEVENTS, which might even cause Promotions to lose business to forward or initial interest confusion. (3) Tech’s “massive” public relations problems. The court pointed to the top Google News search results (as of 5:00 p.m. on February 11, 2016) for “uber florida”:
Bad press for "uber florida"
“With all due respect to Tech, Promotions has every reason not to want potential customers and other members of the public to associate it with a company that has inspired protests in cities around the world.”
Balance of hardships: enjoining Tech from using UBER in Florida would go way too far.  Promotions argued that Tech could “make a new app with a new name and operate as a sort of parallel universe version of itself in the Gainesville area.”  But this would be technically infeasible, if not impossible, and economically unwise.  Plus, Tech would have to give up the value of its trademark in Gainesville, “and would have to mount a massive campaign to introduce itself to the Gainesville public. Promotions’ proposal seems to ignore the value of name recognition and brand identity, which are the very things that trademark law seeks to protect.”  (Look, I’m not a big believer in protecting brand identity.  But if Promotions is the senior user in Gainesville, Tech doesn’t have any right to name recognition or brand identity in Gainesville, any more than Delta Dental has a right to expand into airlines under its existing brand.  The court’s reasoning seems to ignore §33(b), which freezes the senior user in, but also freezes the junior user out.)
The practical effect of enjoining Tech’s use of its marks in the Gainesville area would be its cessation of operations.  This would set back Tech’s efforts to build a customer base before trial.  (Note the assumption that ultimately it will be able to operate in Gainesville; if true, the court’s got a point.)  Of course, self-inflicted injury can be discounted, but here the infringement wasn’t willful.  Plus, Promotions could have sued earlier; it waited over a year after Tech moved into the Gainesville market to file suit. This might not be enough for laches, but it factored into the balance of hardships.  Thus, the injury to Tech from a flat ban in Gainesville was more significant than the injury to Promotions.

The court was also concerned to avoid “arming squirrels with bazookas.”  (AKA trademark trolling.)  An injunction against the name in a large market could cost Tech far more money than Promotions could ever hope to make, creating a windfall for Promotions given that it could sell the injunction to Tech for “a sum far exceeding its anticipated profits but still far below the cost to Tech of obeying the injunction.”  A permanent injunction after a finding of infringement might be appropriate in such a case, given the adjudicated violation of trademark law. But a preliminary injunction required more caution.  The risk of holdup was a concern in any preliminary injunction proceeding, but was particularly acute in a reverse confusion case, where a small, regional plaintiff takes on a national behemoth. “[A] preliminary injunction should not serve as a bazooka in the hands of a squirrel, used to extract from a more fearsome animal a bounty which the squirrel would never be able to gather by his own labors—at least not when the larger animal is mostly without sin.”  (A skeptic might suggest that courts, like guns, were created by societies precisely so that the big could not simply do to the small what their size permitted them to do—and that courts are better equalizers than guns for a variety of reasons.)
Thus, the court would grant Promotions only narrow relief. The injunction would aim at (1) preventing people looking for Tech’s phone number from coming across Promotions’ phone number and (2) preventing UberEVENTS from causing further confusion.  Much confusion stemmed from the fact that Promotions comes up when one searches “Uber Gainesville phone” or “Uber Gainesville phone number” on Google. Thus, Tech would be required to set up a local (352 area code) number to handle calls from Tech customers and driver partners in the area.  (Won’t this further entrench Tech’s dominance/crushing of the goodwill of Promotions in Gainesville?)  Tech would also be preliminarily enjoined from using its marks in connection with UberEVENTS in the area.
Public interest: a full injunction against Tech using UBER in Gainesville wouldn’t serve the public interest, because that would harm Tech’s driver partners and customers, including its “Freedom in Motion” program, in which it “facilitates on demand, subsidized transportation services for residents of senior citizen communities,” and in the “Safe Rides” program, “which gives university students discounted rates on their rides when returning home late at night.”  Yanking away Tech’s lower-cost on-demand transportation, especially when Promotions doesn’t directly compete with Tech and couldn’t replace its services, would harm citizens.  But more limited relief would help reduce confusion without harming consumers.  “While enjoining any further growth of UberEVENTS might impact Tech’s driver partners, the effect is likely to be very minor given the fact that UberEVENTS is relatively new and has not yet taken off in Gainesville.”
Bond: Tech asked for a security bond of $64 million, based upon a broad injunction covering all of Florida. The court had little to go on for the more limited injunction, so settled on $10,000.
Now take a gander at the injunction’s components, and consider how Tech can accomplish them: (1) No advertising of UberEVENTS in Alachua County, including a posting promoting UberEVENTS placed on the Facebook wall or page of people/entities in the county.  (2) UberEVENTS can’t book events in the county.  (3) Uber has to set up a local phone number and list it in all available directories.  (4)  The kicker:
Defendant must ensure that a search conducted with the Google, Yahoo, or Bing search engine using the keywords “Uber Gainesville phone” or “Uber Gainesville phone number” returns a result containing Defendant’s 352 areacode number along with words clearly indicating that the result is associated with Defendant. Such words may in clude “driver partner,” “app,” or “ride.” Defendant must ensure that this result, while prominently displayed on the search results page, does not replace the result for Plaintiff’s phone number that is currently returned when a search is conducted using these keywords. Compliance may entail using the search engines’ paid advertisement features such as Google AdWords.
In addition, Tech was required to “ensure” that a search conducted with the Google, Yahoo, or Bing search engines using the keywords “Uber promotions Gainesville phone” or “Uber promotions Gainesville phone number” didn’t return Tech’s phone number.
Court's suggested configuration of Google search page

Thoughts on the technical feasibility of these measures?

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