Five years ago, Apple launched its App Store, revolutionizing the way iDevice users could acquire and deploy new applications. Keeping pace, in early 2011 Amazon broke virtual ground on its Appstore for Android. Not surprisingly, Apple came calling, but not to welcome Amazon to the neighborhood. Apple accused Amazon of violating its trademark rights in the App Store name.
The problem, though, is Apple had not had any luck convincing anyone it had any trademark rights in the App Store name. The US Patent and Trademark Office had rejected – not once, but twice – Apple’s efforts at securing a registered trademark in the name, finding it “merely descriptive” of the goods or services being offered. Chief among the factors for consideration of whether trademark rights should obtain is whether a name, brand or mark is sufficiently unique, distinct or clever – or several other legal terms of art, such as arbitrary or fanciful – and not merely descriptive or generic for the goods or services being sold or offered. With the help of oppositions filed by Microsoft and others, the trademark examiner found that “App” was a common short term for “application,” and “Store” was just that, such that an “App Store” was a place where people buy applications. It therefore enjoyed no more protection than Book Store or Toy Store. Simple as that, except that Apple’s bank roll dwarfs Blackbeard’s famed treasure, so it continues to press the trademark application on App Store despite continued opposition by Microsoft and others.
Meanwhile, back at the litigation table with Amazon, Apple raised and Amazon called without flinching. The US District Judge dealt the flop, denying Apple’s bid for a preliminary injunction to shut down Amazon’s Appstore (at least, under that name). The Judge found from Apple’s own evidence that App Store was generic or, at best, merely descriptive. Apple wisely heeded The Gambler’s advice, folded and walked away from the suit – but not before two years of purely wasted time, effort and legal fees, which surely amounted to at least a high six-figure sum, and more likely a mid to high seven-figure sum, taking into account the fees spent on the trademark registration effort. As its explanation for why it simply abandoned the litigation, Apple remarked “With more than 900,000 apps and 50 billion downloads, customers know where they can purchase their favorite apps.” That’s marketing code for “We knew we were going to lose in court so we’d rather just beat our chest in the market instead.” See the Dismissal Order here.
The lesson to be learned from this high stakes game is there’s a balancing act to be employed when choosing a name, brand or mark for your business or product. On the one hand, you want to inform your consumers of what your business is or has to offer. On the other, you want to find a name that’s unique and distinct enough to distinguish your business or product from those of your competitors and that you can prevent your competitors from using as a path to their own success. Apple perhaps underestimated the future popularity and success of its App Store at the outset, spending little time and attention on the name of its virtual marketplace. Unfortunately for it, no amount of money and effort on the back end, could make up for that. This case just goes to show that no matter how big or small your business is, the early investment of a modest amount of money, time and thought when selecting your name, brand or mark will save many times that amount later when your business meets with success, and competitors, down the road.
Apple Inc. v. Amazon.com, Inc., et al., Case No. 4:11cv1327 ( N.D. Cal. July 9, 2013)
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