descriptive fair use defeats counterfeiting claim (on PI motion)

Freelancer Int’l Pty Ltd. v. Upwork Global, Inc., 2020 WL 6271030, No. 20-cv-06132-SI (N.D. Cal. Oct. 23, 2020)

The parties compete in offering “software platforms matching freelancers with freelancing jobs.” Plaintiff Freelancer Tech has standard character mark registrations for FREELANCER for, inter alia, computer software for personal information management; computer software for accessing, browsing and searching online databases; computer software for identifying, locating, grouping, distributing, and managing data and links between computer servers and users connected to electronic communications networks; online retail store services featuring computer software; and online social networking services. (I have omitted some of the claimed goods/services.) The registrations are incontestable.

But Tech was also refused registration on descriptiveness grounds for “online business directories in the field of employment; providing a website allowing users to post messages offering or seeking job opportunities; providing online project management services for others for business purposes in the field of scheduling, accounting, business project management and business development, providing an on-line searchable database featuring classified ad listings and employment opportunities”, “Providing on-line electronic bulletin boards for transmission of messages among computer users concerning job opportunities”, and another list that was more clearly employment-related than the successful registrations.

Meanwhile, defendants have a registration for UPWORK and provide two Upwork-branded mobile apps, as shown in Apple and Google’s app stores:

 

One app is meant for use by clients, titled “Upwork for Clients,” while the other app with a reversed color scheme is meant for use by freelancers, titled “Upwork for Freelancers.” The latter app has been downloaded nearly three million times since 2019. Plaintiffs didn’t object to use of the term “Upwork for Freelancers.” But, on devices, the display name listed beneath the app’s “Up” logo icon is “Freelancer” on iOS devices and “Freelancer-Upwork” on Android devices. Plaintiffs also objected to app notifications allegedly using the “Freelancer” mark. Comparison of the parties’ apps as they display on devices (iOS on left, Android on right):

 

The court denied a preliminary injunction on infringement and counterfeiting claims. And here we have an important application of the Ninth Circuit’s recent counterfeiting ruling: plaintiffs can’t bootstrap the counterfeiting allegations (same mark/same services aka double identity) into a finding of infringement without showing likely confusion. Arcona, Inc. v. Farmacy Beauty, Ltd. Liab. Co., No. 19-55586 (9th Cir. Oct. 1, 2020). [Note that doesn't completely answer the question of the descriptive fair use/counterfeiting issue because, as the court noted, descriptive fair use can be available even where there is confusion, but it also seems implausible that a descriptive fair use should be deemed counterfeit, which is why "use as a mark" is such a useful concept.]

So, confusion: The court focused on descriptive fair use, and only analyzed the "use as a mark" element. Plaintiffs argued that they were only challenging instances in which Upwork used “Freelancer” as a mark, but didn’t show that the challenged uses were uses as a mark. “To determine whether a term is being used as a mark, we look for indications that the term is being used to ‘associate it with a manufacturer.’ ” At least two factors are relevant: (1) “whether the term is used as a symbol to attract public attention, which can be demonstrated by the lettering, type style, size and visual placement and prominence of the challenged words”; and (2) “whether the allegedly infringing user undertook precautionary measures such as labeling or other devices designed to minimize the risk that the term will be understood in its trademark sense.”

The key arguments around use as a mark involved (1) defendants’ app display names: “Freelancer” on iOS devices and “Freelancer-Upwork” on Android devices; (2) when defendants’ app states “This is a Freelancer account” instead of for example “This is an Upwork account for freelancers”; and (3) when defendants’ software prompts the user that “ ‘Freelancer’ Would Like to Send You Notifications”; and (4) a document that encouraged freelancers on the Upwork app to migrate to Upwork’s new app meant for freelancers. Plaintiffs also argued that capitalization of Freelancer showed use as a mark.

The court disagreed. These were all “proper and descriptive uses of a common word distinguishing Upwork’s freelancer app from its client app.” Bold font and a capital letter were insufficient, “especially when Upwork’s distinctive lime green logo or coloring is placed directly alongside the various notifications.” Defendants never claimed Freelancer as a mark, used a stylized font for it, or used a TM symbol for it.

Separately, plaintiffs didn’t show irreparable harm. They estimated that “up to as many as 1,800 users per day or 56,000 users per month” were diverted, but didn’t convince the court that any diversion was based on app display names shown post-download, especially given the “distinctively different logos.” The court noted that “the disputed titles only become apparent after a user makes a conscious decision to download the apps,” and plaintiffs didn’t object to the app store displays. Nor would post-download notifications cause irreparable harm, since they occurred only after that same conscious decision.