TM infringement and false advertising claims related to putative open source software "fork" succeed

Neo4j, Inc. v. PureThink, LLC, 2021 WL 2483778, No. 5:18-cv-07182-EJD (N.D. Cal. May 18, 2021)

Neo4j specializes in graph database management systems. “Neo4j USA’s platform helps organizations make sense of their data by revealing how people, processes and digital systems are interrelated.” [I still don’t know what that means, but ok.] It has more than 400 commercial customers, including global enterprises such as Walmart, Comcast, Cisco, and eBay, and also does substantial business with government agencies, including US agencies. It has trademark registrations for the word mark “NEO4J.”

Neo4j originally offered a free and open source version of the Neo4j platform known as the Neo4j Community Edition, with limited features and no technical or administrative support. Neo4j Enterprise Edition was originally offered under both a paid-for commercial license and the free GNU Affero General Public License, version 3, but Neo4j then replaced that AGPL with a stricter license (the Sweden license), which prohibited the non-paying public from engaging in commercial resale and certain commercial support services. Eventually, they released Neo4j EE version 3.5 under a commercial license only.

PureThink is a software and information technology consulting company that specializes in supporting agencies within the U.S. Government. The parties previously partnered nonexclusively so that PureThink would sell and support the commercial version of Neo4j; upon termination, PureThink expressly agreed to “cease using any trademarks, service marks and other designations of Plaintiffs.”

Neo4j ultimately considered PureThink’s Neo4j Government Edition to be a problem. PureThink’s principal created a new entity, iGov, which stated:

The principal behind PureThink and the Government Package has created a new corporate entity called iGov Inc, which is not a Neo4j Solution Partner. …

* * *

iGov Inc’s new Government Package for Neo4j can be added to any Neo4j instance making it a “Government Edition”. By default, all Government Packages for Neo4j now comes with Neo4j Enterprise included under its open source license!

Many details omitted, but eventually defendants’ principal helped found an organization that began promoting a software called “ONgDB.” This used Neo4j EE version 3.4 as a base, but replaced the Neo4j Sweden Software License with the AGPL. “Defendants continued to promote ONgDB as ‘free and open source’ by replacing the Neo4j Sweden Software License with the AGPL in certain LICENSE.txt files alongside the source code. Doing so removed certain legal notices identifying Neo4j Sweden as the copyright holder and licensor, and removed the Commons Clause, effectively allowing Defendants to commercially use and support ONgDB.”

On GitHub, the landing page was called “ONgDB – Neo4j Enterprise Fork: Graphs for Everyone,” contained numerous references to Neo4j throughout, and was very similar to that of Neo4j EE. Defendants characterized it as a “drop in replacement” for Neo4j CE and EE. On their sites, various links including the sequence “neo4j” remained active for a couple of years, despite going to OngDB pages; conversely, some hyperlinks on their sites redirected to operations and developer manuals on Neo4j’s website. They also regularly used the Neo4j Mark as a hashtag on Twitter.

After nearly two years, the ONgDB software had been downloaded over 14,000 times, “signaling its widespread success.” At the same time, some consumers who encountered compatibility issues, technical problems or glitches with ONgDB sought assistance from Neo4j. And some have “expressed uncertainty about the propriety of Defendants’ modification to the Neo4j Sweden Software License. This has caused some confusion about whether and when a commercial license from Neo4j USA is necessary to use, modify or redistribute the software in a commercial setting.”

Trademark claims: As to nominative fair use, Neo4j argued that it didn’t apply because defendants had used the mark to identify their own product, “Neo4j Enterprise”/“Government Package for Neo4j,” before rebranding that as ONgDB. But that wasn’t a Neo4j product; it was made of the last public Neo4j EE code, the Neo4j CE code, and “glue code” authored by others, even though defendants assured potential customers that it was the “same official Neo4j Github Repositories as Neo4j Inc uses for their paid commercial licensed builds” except distributed under an open source license.

Thus, this was not nominative fair use, but rather a use that created the misleading perception that defendants’ products were Neo4j products.  “Any reasonable consumer reading about ‘Neo4j Enterprise’ would conclude that they are getting official Neo4j EE, or in the case of the ‘Government Package for Neo4j,’ consumers would conclude they are getting Neo4j EE in a specialized government package.” So too with defendant’s iGov’s use of the Neo4j Mark in its email address and URL.

By contrast, to the extent Defendants offer “support services” targeted at software that Neo4j Sweden or Neo4j USA provide on an open source basis, “use of the Neo4j Mark to explain those services could potentially benefit from a fair-use defense because such uses reference Plaintiffs’ products, not Defendants’.” They were also permitted by NFU to describe their product as an unaffiliated or independent “fork” of Neo4j source code “because that phrasing makes clear that the product is not itself a Neo4j product.” Perplexingly, the court also suggested that in comparative advertising defendants would be bound by Neo4j’s trademark guidelines, which does not seem exactly right unless those guidelines happen to reproduce the law (perhaps they do).

As Judge Kozinski once did, the court seemed to treat non-nominative uses as confusing by definition without further analysis (even citing the old terrible “metatags” cases for this result), so the bad conduct was a mix of stuff that probably was confusing and stuff that is more questionable: (1) extensively using “Neo4j’ and “Neo4j Enterprise” on iGov and PureThink websites without proper trademark notices; (2) using embedded “Neo4j” links to Neo4j USA’s website and GitHub repository on their websites; (3) hyperlinking to Plaintiffs’ build instructions, support documentation and change logs containing the Neo4j Mark rather than creating and hosting their own with the ONgDB name; and (4) using “Neo4j Enterprise” and “ONgDB” interchangeably to promote ONgDB on their websites.

Embedded links to Neo4j’s sites and documentation, along with the repeated references to “Neo4j,” “including in the title of the products themselves, create the misleading perception that Defendants and Plaintiffs are affiliated.” Plaintiffs’ motion for summary judgment on the trademark claims was granted.

False advertising under the Lanham Act/UCL: Neo4j alleged two basic categories of falsehoods: (1) statements that ONgDB and Neo4j Enterprise are “free and open source” versions of or alternatives to commercially licensed Neo4j EE; and (2) statements that ONgDB is a “drop-in replacement for an existing commercial licensed distribution of the same version number” of Neo4j EE.

For (1), Neo4j argued that “the Neo4j Sweden Software License did not permit Defendants to remove the commercial restrictions imposed by the Commons Clause,” so ONgDB is not “free and open source.” The court found that there is no reasonable interpretation of the Neo4j Sweden Software License that permits licensees such as defendants to remove the Commons Clause and redistribute the software under the standardized AGPL license. Thus, these statements were false.

For (2), Neo4j argued that ONgDB is not a true drop-in replacement because ONgDB contains source code filed that were wrongly licensed under the AGPL in violation of Neo4j Sweden’s copyright and because the software was not of the same quality and did not contain all of the features of Neo4j EE. Defendants argued that “drop-in replacement” didn’t mean that all the features were the same, but rather that users could move their data from a Neo4j instance and place into an ONgDB instance of the same version and have it function.

Neo4j rejoined that, even if “drop-in replacement” merely indicates compatibility, iGov’s representations related to ONgDB versions 3.5 and later are still false. After Neo4j EE 3.5 was released entirely closed source, GFI “no longer could ... reliably guarantee that [ONgDB] was a drop-in replacement”; it was “too hard to demonstrate” with the Neo4j EE code becoming more divergent. Yet iGov continued to make drop-in replacement claims for later versions. Thus, representations that the equivalent versions of ONgDB were “drop-in replacements” could not be verified and were therefore false or misleading. [Is this a lack of substantiation holding?]

As for earlier versions, were the statements misleading? Even though the phrase didn’t necessarily indicate identicality on its own, the full context of the statements implied it. [Not clear if the court is doing a necessary implication analysis; it is focusing on what defendants said, not on consumer reaction evidence.] E.g., the website said that “commercial packages available from Neo4j Inc and their partners are essentially support offerings ... [i]f you do not need support for your ONgDB Enterprise or Neo4j Enterprise open source licensed distribution, then simply download ONgDB Enterprise as a drop in replacement for an existing commercial licensed distribution of the same version number.” It further provided a chart comparing Neo4j EE and “Neo4j Enterprise open source license,” which is captioned: “There are no physical differences between Neo4j Enterprise commercial and AGPL open source licenses!” “No reasonable consumer would understand these statements to indicate mere compatibility with Neo4j EE.”

Further evidence of misleadingness was that consumers who chose ONgDB and encountered technical issues reached out to Neo4j USA for help, “indicating that those consumers thought they were operating genuine Neo4j EE.”

Materiality: “Because Defendants misrepresented ONgDB as a free version of Neo4j EE licensed under the APGL, there is no doubt that this price differential (free versus paid) was likely to influence customers purchasing decisions.” So statements about a free replacement were material.The court also found nothing to rebut Neo4j’s evidence that customers chose ONgDB based on misrepresentations to Neo4j’s commercial detriment. Summary judgment granted on state and federal false advertising claims.

False designation of origin: Yep.

Relief: Given the First Amendment interests involved, the Court “may not enjoin nominative use of the mark altogether.” Though it could be tweaked later, the court enjoined the specific things it had found to be false/misleading, including “free and open source drop-in replacement.” (I’m actually not sure how targeted the injunction was, since it also barred “infringing” on the marks or causing false association with Neo4j, so it isn’t all that clear what defendants can do.)