Foley & Lardner LLP: Court Denies Apple, Inc. a Preliminary Injunction to Protect Its APP STORE Mark

Foley & Lardner LLP: Court Denies Apple, Inc. a Preliminary Injunction to Protect Its APP STORE Mark

          By Jeffrey A. Simmons (jsimmons@foley.com)

 In a decision that may have surprised many observers, in July 2011, the U.S. District Court for the Northern District of California denied Apple, Inc.'s (Apple) motion for a preliminary injunction that would have prohibited Amazon.com, Inc.'s (Amazon) use of the APP STORE mark to sell applications for Android mobile devices. The decision in Apple, Inc. v. Amazon.com, Inc., Case No. 11-cv-1327 (N.D. Cal. July 6, 2011), 2011 U.S. Dist. LEXIS 72271 [enhanced version available to lexis.com subscribers ]
 shows both the difficulty of proving a likelihood of confusion when the parties' goods are not interchangeable and the difficulty of proving that a mark is "famous" for purposes of the federal Trademark Anti-Dilution Act.

Apple has used the APP STORE mark since at least July 2008, when it began selling applications for its iPhone® and other mobile devices through its online "App Store" service. In March 2011, Amazon.com launched an "Amazon Appstore for Android," which offers software applications that can be downloaded onto Android mobile devices. According to the district court, many of the applications offered at Amazon's "Appstore" are the same as some of the most popular titles offered at Apple's App Store.

When Apple became aware of Amazon's plans, it filed suit and moved for a preliminary injunction, claiming that it was likely to prevail on claims that Amazon's actions constituted trademark infringement and dilution under the Lanham Act.

The district court denied the motion and found that Apple had not shown that it was likely to succeed on either of its Lanham Act claims. In evaluating whether Amazon's use of "Appstore" created a likelihood of confusion for purposes of Apple's infringement claim, the court applied the eight Sleekcraft factors used by courts in the Ninth Circuit: (1) the strength of the mark; (2) the proximity or relatedness of the goods; (3) the similarity of the marks; (4) evidence of actual confusion; (5) the marketing channels used; (6) the degree of care used by customers purchasing the goods; (7) the defendant's intent in selecting the mark; and (8) the likelihood of expansion into other markets.

Apple argued, among other things, that because it has authorized Amazon to sell certain Apple products on its Web site, "consumers are likely to be confused when they also see Amazon is offering a mobile download service using Apple's mark." But the district court was not persuaded by Apple's argument.

The court found that only two of the Sleekcraft factors - relatedness of the goods and the similarity of the marks - favored Apple. The rest of the factors, it concluded, were either neutral or favored Amazon. In particular, the court questioned the strength of the APP STORE mark and was especially influenced by the fact that the applications offered at Amazon's Appstore can only be used on Android products. According to the court, the latter fact "suggests that the class of purchasers is not the same" for Apple and Amazon products and "Amazon will not be able to offer apps for Apple devices unless Apple licenses Amazon to do so." Moreover, the court said, "Amazon's website makes clear that the apps it offers are to be used with Android devices only." The court seemed to believe that owners of Apple products would never be confused into buying applications from Amazon's store.

Apple fared no better on its trademark dilution claim. Dilution occurs "when a mark previously associated with one product also becomes associated with a second." Dilution can occur when a junior mark "blurs" the distinctiveness of the senior mark or "tarnishes" the goodwill associated with the senior mark. However, the federal dilution statute does not protect all marks. It only protects marks that are shown to be famous. Under the statute, a famous mark is one that is "widely recognized as a designation of source of the goods or services of the mark's owner."

The court found that Apple failed to show that its APP STORE mark is famous. Apple presented evidence that it had spent hundreds of millions of dollars advertising and publicizing its App Store service, and more than 160 million users of Apple mobile devices had been exposed to the mark. However, Apple failed to present any survey evidence or other expert testimony regarding the degree to which consumers actually recognize the mark. In addition, there was evidence that other companies use the term App Store as a descriptive term for a place to obtain software applications for mobile devices, which cast doubt on whether consumers solely associated that mark with Apple.

The decision shows the difficulty trademark owners face when attempting to enforce their marks against sellers of goods that are not interchangeable with their own. Here, the court was heavily swayed by the fact that owners of Apple mobile devices would likely realize that Amazon's products would not work on those devices and, therefore, were unlikely to be confused into buying Amazon's products. Given that fact, a claim for dilution was a logical alternative for Apple. But the court seemed to set a high evidentiary bar for showing that the APP STORE mark is famous. Based on this decision, it is best to have a consumer survey showing the widespread recognition of a mark if you want to show it is famous.