Nominative fair use of a logo on a motion to dismiss: common sense has its day

Xfinity Mobile v. Globalgurutech LLC, 2023 WL 3998459, No. CV-22-01950-PHX-SMB (D. Ariz. Jun. 14, 2023)

I’ve been thinking a lot after Jack Daniel’s about the role of common sense in trademark. Judge Leval in scholarship, Trademark: Champion of Free Speech, 27 Colum. J. L. & Arts 187 (2004), and the Seventh Circuit in practice, are all about using common sense rather than doctrine to limit the scope of trademark rights. This works if we generally share common sense and a consensus about what kind of “confusion” is actionable; it fails if some judges think that free riding is unfair and therefore confusing about something.  Here, common sense works to protect activity related to resale of legitimately produced goods from trademark liability, but note that it also requires theories of implicit sponsorship/affiliation to be rejected. Those theories are probably wrong! (As Justice Sotomayor’s concurrence noted, consumers generally don’t think about these supposedly implicit claims at all, and thus aren’t confused about them, as opposed to when they see explicit claims of affiliation/sponsorship like “official partner” or “FENTY x PUMA.”)

Xfinity accuses GGT of unlawfully obtaining cell phones to be lucratively resold. Xfinity sells cell phones to customers that buy its high-speed internet service. Customers are offered financial incentives to purchase the phones, and Xfinity recoups its investment by servicing customer accounts on its mobile wireless network.

Xfinity sued for various business torts, “trafficking in computer passwords,” “unauthorized access,” and trademark/contributory trademark infringement. “Xfinity alleges GGT is using fake or stolen identities to obtain Xfinity phones, and that GGT ‘unlocks’ those phones before reselling them abroad for a profit.”

Notably, the other business torts/CFAA claims survived, so GGT is not off the hook, so to speak.

However, GGT’s website use of Xfinity’s logo was nominative fair use as a matter of law. The complaint’s only alleged use of the Xfinity mark was to identify one of the carriers from which it would buy customers’ phones. The court agreed that using Xfinity’s logo along with the logos of other carriers doesn’t suggest endorsement, rejecting the argument that GGT “falsely suggested that they were sponsored or endorsed by [Xfinity].” The website image allegedly “allow[s] co-conspirators to sell brand new carrier-locked phones by clicking on their respective logos.”

logos from D's website

This was nominative fair use:

Given the large number of mobile service providers, the mark’s use in the Complaint was to differentiate the carrier of origin for the iPhones GGT would buy. Without use of the mark, it would not be apparent to GGT which carrier an iPhone was associated with, if any. Similarly, Xfinity’s logo was used for the limited purpose of this identification and differentiation. Finally, nothing in the Complaint suggests a use by GGT that suggests sponsorship or endorsement by Xfinity. The website provides an instruction to “select carrier” and allows users to choose between Xfinity and many other carriers. At most, the Complaint alleges that GGT used Xfinity’s mark to advertise its willingness to purchase carrier-locked iPhones registered on Xfinity’s network.

Xfinity also argued that the phones were materially different and thus infringing. But the complaint only alleged that GGT used the logo to categorize the phones that it would purchase, before any alleged modification; the complaint further alleged that the iPhones GGT sold are “new” and “factory-sealed.”