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Tuesday, 14 June 2011

Cloud-to-Cloud lightning hits Apple in the States

The IPKat's friend, Queen Mary's very own Cloud-watcher Kingsley Egbuonu, has been gazing at the iClouds and pondering on the prospect of a perfect iStorm.  The particular object of his interest is the clash between a Titan and a Tiddler, the former being Apple, Inc and the latter being iCloud Communications.  Let Kingsley take up the story:
"The facts -- and the allegations 
On 9 June 2011, Arizona-based company iCloud Communications (iCC) filed a complaint in the District Court of Arizona against Apple, Inc, seeking 
“preliminary and permanent injunctive relief, monetary relief, and attorneys’ fees based on (i) federal unfair competition and false designation of origin in violation of § 43 of the Lanham Act, 15 U.S.C. § 1125 (a); and (ii) Arizona state trade mark infringement, unfair competition, and injury to business reputation in violation of Arizona common law” 
for the use of the its trade mark, iCloud.

iCC, formed in 2005, was a provider of inter alia, cloud computing services and products, computer telephony (telecommunications) – [contrast this to “25 years expertise and track record in voice-over-IP solutions to its customers” on its webpage].

In support of its complaint, iCC claims to have substantially invested in the long and extensive use of the iCloud marks (see page 4 of the complaint) at home and abroad, via various marketing channels as well as over $550,000 in infrastructure. With customers in North America, South America, Europe and the Middle East, it says that (prior to June 6, 2011) it established
“…significant goodwill and valuable rights in and ownership to the iCloud marks in connection with computer telephony and electronic data transmission and storage services”.
iCC alleges that, despite Apple’s claim to use the iCloud platform to store music, photos, apps, calendars, documents etc and to push them wirelessly them to all devices, its recent trade mark filings at the USPTO and OHIM show that: 
“the goods and services with which Apple intends to use the “iCloud” mark are identical to or closely related to the goods and services that have been offered by iCloud Communications under the iCloud marks since its formation in 2005”.
More importantly, iCC claims that as a result of the marketing and media coverage of Apple’s iCloud,
“the media and the general public have quickly come to associate the mark “iCloud” with Apple, rather than iCloud Communications” and “Apple was aware of or was willfully blind to iCloud Communications’ use of and rights in the iCloud marks”.
iCC began its convincing tale of Apple’s trade mark infringement history from the 1970s till 2010, including its trade mark filing strategy by which apparently, in its view (and probably in the view of many of us) 
“Apple is attempting to use a foreign jurisdiction’s laws to gain priority for its U.S. registrations while circumventing the notice and publication requirements for trademark applications filed here in the United States with respect to “intent-to-use” applications”. 
iCC also claims that Apple’s acquisition of the iCloud mark from Xcerion appears to have been “in gross” and thus invalid. A further argument goes that Apple’s launch and continued use of the iCloud mark caused irreparable harm to its business reputation and goodwill. Indeed, it claims to have received enquiries from existing and prospective clients regarding whether it is now economically associated with Apple, adding that such confusion and subsequent damage to its reputation will continue if Apple is not ordered to stop using the iCloud mark. iCC therefore seeks the following relief:
  • A preliminary and permanent injunctive relief against Apple’s use of the iCloud mark (identical or similar) in telecommunications services or its marketing, throughout the United States and the world;
  • Delivery up of the alleged infringing articles and account of profits;
  • An invalidation of the U.S. Trademark Reg. No. 3,744,821 as having been abandoned due to its “in gross” transfer to Apple;
  • Various damages plus interest, and
  • Transfer of the domain name, iCloud.com.
Kingsley's comments:

It is trite to say that registration is the best form of protection and that all brand owners should endeavour to monitor their trade marks, whether registered or unregistered. With this in mind, it’s quite amazing that Apple is now being dragged to court while another party made use of this same mark in question for a number of years under the noses of iCC.

Perhaps, it is unfortunate that Apple courted publicity with its iCloud.com acquisition, which may also (in the short term) pose a cybersquatting headache for its team. Ultimately, the question at trial will be that of likelihood of confusion.

Apple’s “i” branding strategy/campaign began at the launch of the iMac in 1998 when Steve Jobs successfully repositioned its products as being personal, beautiful, standalone, fast and, most of all, seamlessly able to utilise the internet . Since then, we’ve witnessed a range of Apple products and services under brands with the prefix, “i”, such as iTunes, iPod, iPhone to name but a few.

To be fair on Apple, a web search for “iCloud” while I was writing this earlier piece displayed no results (at least within the first two pages) relating to iCloud Communications.

In consideration of the above, here are some little questions in search of comments:

  1. Are there limits to clearance searches (both for registered and unregistered marks)?
  2. Should Apple now review its “i” branding strategy or is this just a knee-jerk reaction? and
  3. Has Apple truly educated its consumers to this “i” effect as a distinguishing factor to negate any claims for confusion?
  4. Is the alleged unlawful act wilful?
  5. Is there a lesson to be learned in respect of seeking trade mark registration covering vast class headings?".
For further reading see PC Mag.com, 11 June 2011, here.

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