SOCIAL TECHNOLOGIES LLC, a Georgia limited liability company v. APPLE INC., a California corporation
No. 20-15241
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
July 13, 2021
D.C. No. 3:18-cv-05945-VC; Appeal from the United States District Court for the Northern District of California; Vince Chhabria, District Judge, Presiding; Argued and Submitted May 10, 2021; San Francisco, California
Before: Michael D. Hawkins and Eric D. Miller, Circuit Judges, and Jane A. Restani,* Judge. Opinion by Judge Restani
FOR PUBLICATION
OPINION
* The Honorable Jane A. Restani, Judge for the United States Court of International Trade, sitting by designation.
SUMMARY**
Lanham Act
Affirming the district court‘s summary judgment in favor of Apple Inc. in a trademark infringement action brought by Social Technologies LLC over the use of the MEMOJI mark, the panel held that there was no material issue of fact as to whether Social Tech engaged in bona fide use of the mark in commerce, such that its registration was valid and the mark was entitled to protection under the Lanham Act.
The panel held that mere adoption of a mark without bona fide use in commerce, in an attempt to reserve rights for the future, is insufficient to establish rights in the mark under the Lanham Act. Use in commerce requires use of a genuine character, in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind. Considering the totality of the circumstances, including relevant non-sales activities, the panel agreed with the district court that the evidence in the record showed that Social Tech‘s use of the MEMOJI mark was not bona fide in commerce. Accordingly, Apple was entitled to cancellation of Social Tech‘s trademark registration.
** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.
COUNSEL
James Kelly (argued) and John M. Pierce, Pierce Bainbridge P.C., Los Angeles, California, for Plaintiff-Appellant.
Dale Cendali (argued) and Mary Mazzello, Kirkland & Ellis LLP, New York, New York; Diana M. Torres and Lauren Schweitzer, Kirkland & Ellis LLP, Los Angeles, California; Megan I. McKeown, Kirkland & Ellis LLP, Houston, Texas; for Defendant-Appellee.
RESTANI, Judge:
This case involves a trademark dispute between Defendant-Appellee Apple Inc. (Apple) and Plaintiff-Appellant Social Technologies LLC (Social Tech) over the use of the MEMOJI mark under the Lanham Act,
BACKGROUND
In April 2016, Social Tech filed an intent-to-use trademark application for the trademark MEMOJI, in connection with mobile phone application software.1 Following substantive examination, the United States Patent and Trademark Office (USPTO) granted a Notice of Allowance to Social Tech (notice that upon proof of use of the mark in commerce, through the filing of a Statement of Use, the registration would be issued) on January 30, 2018. In March 2018, Social Tech sought, and was granted, a six-month extension of time in which to file its Statement of Use.
After Social Tech filed its application, Lucky Bunny LLC (LB) filed a trademark application based on actual use in commerce for the MEMOJI trademark on April 3, 2017, in connection with its mobile phone application software.2
The examination of LB‘s application was suspended until the final disposition of Social Tech‘s application became clear. In May 2018, a representative acting on behalf of Apple contacted Social Tech to inquire about its willingness to sell the rights and goodwill associated with the MEMOJI mark. Social Tech rejected this offer. Apple (through a third-party subsidiary) then contacted LB and negotiated an assignment of all of LB‘s rights and goodwill associated with the MEMOJI mark, including its suspended application filed in April 2017. This assignment was executed in May 2018 and recorded with the USPTO in June 2018.3 Apple announced its acquisition of MEMOJI from LB on June 4, 2018, at the Worldwide Developers Conference. And on June 25, Apple released a public beta version of a new operating system that incorporated the Memoji software.
After filing its initial application in 2016, but before Apple‘s announcement on June 4, 2018, Social Tech engaged in some early-stage activities to develop a business plan and market its Memoji application to potential customers and investors. Social Tech created promotional materials and an investor presentation outlining its business plan, unsuccessfully solicited investors in 2016, and maintained a website promoting its Memoji application beginning in January 2017. In 2018, prior to Apple‘s announcement, Social Tech secured funding in the amount of $100,000 from a single employee investor. Although Social Tech
In response to Apple‘s announcement, Social Tech accelerated its timeline to develop the Memoji software, and on June 28, 2018, just three weeks later, launched its own Memoji mobile phone application on the Google Play Store. Two days later, on June 30, 2018, Social Tech filed a Statement of Use with the USPTO. Its application matured to a Trademark Registration (Reg. No. 5,566,242) on September 18, 2018. One day prior, on September 17, 2018, Apple launched its new iOS 12 operating system, which incorporated Apple‘s Memoji software into Apple devices.
Within a month of its release, Social Tech‘s Memoji application was downloaded more than 100 times, and approximately 5,000 downloads are reported for 2018. It is undisputed that Social Tech rushed to develop its Memoji application after Apple‘s announcement and that the application it released three weeks later contained numerous bugs.5 Development of the software continued after the application was released, and at some point, Google removed the application for violating developer policies.
During the three weeks after Apple‘s announcement, Social Tech‘s co-founder and president, Samuel Bonet, exchanged a series of emails with a software developer to accelerate the timing of the application‘s development. In the first of these emails on June 7, Bonet described the circumstances to be “life changing” and concluded the email with: “Time to get paid, gentlemen.” In a series of subsequent emails, Bonet regularly followed up with the developer on the application‘s progress. On June 12, Bonet wrote: “the app needs to erase the background AND the body . . . Of course this may take a little work to get perfect, but as long as we can get close initially, we can start to test and put in commerce.” On the evening of June 13, Bonet wrote to the developer: “[i]n other news . . . the initial letter has been sent to Apple. The process has begun. Peace and wealth!”
Bonet continued to follow up on the application‘s progress over the next several days, noting that “the editing feature [was] vital” to “satisfy the ‘editing’ requirement of the trademark.” On June 18, Bonet wrote that Social Tech would release the application for Android in the Google Play Store first, proclaiming: “We are lining up all of our information, in preparation for a nice lawsuit against Apple, Inc! We are looking REALLY good. Get your Lamborghini picked out!”
Following the release of Social Tech‘s application, the correspondence continued between Bonet and the software developer. On July 7, 2018, Bonet directed the approach in updating the Memoji application for the purpose of “show[ing] updates for the lawsuit” against Apple. “[I]f possible,” he wrote, “[i]t‘s better if we split up the updates, so it looks like we have more of them for the lawsuit. To show we are currently trying to build as we go.” A week later, on July 14, he wrote again to the developer:
The lawsuit is coming together nicely. We should be done with the paperwork
and forms in the next several days, then we are just waiting for the trademark registration to file the lawsuit and get PAID. Almost there! How are we looking on everything? What else do you need from me . . . Of course, it seems best to split these [changes] up in to individual updates, so it appears like we are doing more work. We just need to show some progress.
Apple commenced a cancellation proceeding before the USPTO on September 26, 2018 to cancel Social Tech‘s registration for the MEMOJI mark.6 Subsequently, Social Tech filed suit in district court, alleging trademark infringement against Apple under the Lanham Act and at common law, along with unfair competition in violation of California law, and seeking declaratory judgments of non-infringement and of the validity of its MEMOJI mark registration. Both parties moved for summary judgment, and the district court granted summary judgment in favor of Apple on the ground that no reasonable jury could find that Social Tech engaged in bona fide use of the MEMOJI mark in commerce within the meaning of the Lanham Act. As a result, the district court held that Apple was entitled to cancellation of Social Tech‘s registration for the MEMOJI mark. Social Tech appeals the district court‘s determination that it lacked bona fide use of the MEMOJI mark in commerce.
JURISDICTION & STANDARD OF REVIEW
We have jurisdiction under
DISCUSSION
I. The Lanham Act
The Lanham Act provides for the registration of trademarks.
commerce means
a. Use in Commerce Requirement
It is well-established that use in commerce within the meaning of the Lanham Act requires use of a genuine character. We have discussed in detail Congress‘s amendment of the Lanham Act in 1988 (also known as the Trademark Law Revision Act of 1988 or “TLRA“), which added the “bona fide” and “ordinary course of trade” requirements to
Furthermore, “trademark rights are not conveyed through mere intent to use a mark commercially.” Brookfield, 174 F.3d at 1052; see also Chance, 242 F.3d at 1158-59. Rather, an applicant must show use in commerce in a way “sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind.” New West Corp. v. NYM Co. of Cal., Inc., 595 F.2d 1194, 1200 (9th Cir. 1979) (internal quotation marks omitted); see also
We consider the totality of the circumstances to determine whether the “use in commerce” requirement has been satisfied so as to establish rights under the Lanham Act. Chance, 242 F.3d at 1159. Non-sales activities are relevant where they may indicate whether a good or service has been adequately and publicly used and displayed in commerce. See id.; see also Rearden, 683 F.3d at 1205 (“[N]on-sales activities such as solicitation of potential customers may be taken into account as part of the ‘totality of the circumstances’ inquiry.“). In Chance, we held:
[T]he district courts should be guided in their consideration of non-sales activities by factors we have discussed, such as the genuineness and commercial character of the activity, the determination of whether the mark was sufficiently public to identify or distinguish the marked service in an appropriate segment of the public mind as those of the holder of the mark, the scope of the non-sales activity relative to what would be a commercially reasonable attempt to market the service, the degree of ongoing activity of the holder to conduct the business using the mark, the amount of business transacted, and other similar factors which might distinguish whether a service has actually been “rendered in commerce.”
242 F.3d at 1159. Our previous cases make clear that the scope of the non-sales activity is “central to its weight in the totality of the circumstances assessment.” Id. at 1160 n.4; see also Brookfield, 174 F.3d at 1052-53.
In applying this approach in Chance, we determined that promotional mailings of 35,000 postcards, which resulted in 128 responses but not a single sale, were insufficient to raise a triable issue of fact as to “use in commerce” within the meaning of the Lanham Act. See 242 F.3d at 1159-60. Acknowledging that these early non-sales activities “may have been some evidence of a commercial intent when [] mailed,” we affirmed the district court‘s grant of summary judgment because the plaintiff “failed to come forward with sufficient evidence to establish a triable issue of fact that [it] genuinely continued to exploit the mark thereafter.” Id. at 1160. The court concluded that plaintiff‘s activities were insufficient to establish a bona fide use because plaintiff had not leased equipment necessary to operate its business, had no working capital or marketing plan, and ordered no goods from its supplier until after the relevant period. Id. In contrast, we determined that defendant engaged in significant activities using the mark on a continuous basis, including using the mark as part of its business name, developing a comprehensive public relations campaign, distributing brochures, presenting to potential customers, and providing interviews to major newspapers. Id. at 1154-55, 1160. We held that this conduct sufficiently established bona fide use in commerce. Id. at 1160.
In later applying this same approach in Rearden, after rejecting evidence of purely internal sales as insufficient to satisfy the Lanham Act, we determined that genuine issues of material fact existed because there was evidence that plaintiffs provided services on at least one occasion to an outside person. 683 F.3d at 1207-08. We cautioned that if plaintiffs had “never provided or even offered their incubation services to outsiders, their purported incubation business would fail to meet either element of the ‘use in commerce’ requirement” because they would have failed “to show use in a way sufficiently public in nature to identify or distinguish the services
b. Use in Commerce by Social Tech
Social Tech argues that the district court erred in granting summary judgment because the evidence sufficiently establishes a triable issue of fact over whether its registration is valid under the Lanham Act.9 Social Tech contends that Apple is not entitled to cancellation because a reasonable jury could infer that it engaged in bona fide use of the MEMOJI mark in commerce, and that its actions had
a legitimate commercial purpose and were “not made merely to reserve [its] right in [the] mark.”
i. Social Tech‘s activities prior to June 4, 2018
Social Tech‘s early activities fail to use the MEMOJI mark in a sufficiently public manner to establish rights under the Lanham Act. See Brookfield, 174 F.3d at 1051; Rearden, 683 F.3d at 1206-08; see also
Unlike in Rearden, there is no evidence that any outside person identified the MEMOJI mark with Social Tech prior to Apple‘s announcement on June 4. See 683 F.3d at 1206-07. Instead, Social Tech‘s activities prior to June 4 are akin to the promotional mailings we found insufficient to raise a triable issue of fact as to “use in commerce” in Chance. See 242 F.3d at 1159-60. While these activities may serve as some evidence of Social Tech‘s commercial intent to use the MEMOJI mark, as the district court correctly pointed out, trademark rights are not granted on the basis of commercial intent alone. See Brookfield, 174 F.3d at 1052. Because these early activities created no “association among consumers between the mark and the mark‘s owner” they were not “sufficiently
Social Tech argues that these activities had a legitimate business purpose, their limitations were based on reasonable commercial needs, and therefore, it is entitled to trademark protection for its use of the MEMOJI mark. Whatever Social Tech‘s intent at the time, its early activities were insufficiently public to “identify or distinguish” its MEMOJI mark “in an appropriate segment of the public mind.” See Rearden, 683 F.3d at 1205 (quoting New West, 595 F.2d at 1200);
ii. Social Tech‘s activities after June 4, 2018
By their nature, trademark disputes are highly fact intensive inquiries, so we are reluctant to decide them at the summary judgment stage except where it is unequivocally clear that there is no triable issue of fact. See Rearden, 683 F.3d at 1202. The Lanham Act requires a genuine use of a mark to merit trademark protection. It requires use in commerce that is “bona fide” and “not made merely to reserve a right in a mark.”
Social Tech acknowledges that following Apple‘s announcement of its Memoji application on June 4, it rushed to develop the code for and release its Memoji application, but disputes that it did so for the sole purpose of reserving its right to the MEMOJI mark. It is undisputed that Social Tech released its application three weeks following Apple‘s announcement and subsequently filed a Statement of Use with the USPTO to attempt to complete its registration. Contrary to Social Tech‘s arguments, emails exchanged with its software developer make clear that its use of the MEMOJI mark was merely to reserve its rights for a lawsuit against Apple. In correspondence between Social Tech and its software developer, Bonet stated: “The lawsuit is coming together nicely. . . . [W]e are just waiting for the trademark registration to file the lawsuit and get PAID,” “[w]e are lining up all of our information, in preparation for a nice lawsuit against Apple, Inc! We are looking REALLY good. Get your Lamborghini picked out!” and “[i]t‘s better if we split up the updates, so it looks like we have more of them for the lawsuit.” The significance of this correspondence is obvious. The timing of these emails, during the three weeks the application was almost entirely developed
Social Tech argues that the approximately 5,000 downloads of its Memoji application are enough to raise a question of fact as to whether its use in commerce was bona fide because our precedent has found that a single transaction in commerce may suffice.11 Social Tech‘s trademark deficiencies, however, are of a fundamentally different character. It is not the number of downloads that is lacking here, but a lack of any evidence whatsoever that suggests Social Tech developed its Memoji application for genuine commercial reasons warranting trademark protection. See La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1273 (2d Cir. 1974) (holding that use of a trademark was not bona fide where its “real purpose” in making sales “was to establish and maintain rights in [its] trademark“). To the contrary, the record contains overwhelming and clear evidence that Social Tech‘s use following Apple‘s announcement was not genuine. Rushed development of the Memoji software and correspondence with its developer make clear that the development of the Memoji application was for the purpose of reserving Social Tech‘s rights to the MEMOJI mark and winning a lawsuit against Apple. Thus, the district court‘s conclusion is amply supported by the record on summary judgment.
Because Social Tech failed to put forward evidence that the release of its Memoji application to the public was for genuine commercial purposes warranting trademark protection, we conclude that it established no triable issue regarding whether it engaged in bona fide use of the MEMOJI mark in commerce within the meaning of the
Lanham Act. While at the time of its original intent-to-use filing, Social Tech may have had some commercial intent to develop the Memoji application, at the time it filed its Statement of Use, its use of the MEMOJI mark was “made merely to reserve a right in the mark.”
II. Cancellation
The Lanham Act authorizes “any person who believes that he is or will be damaged . . . by the registration of a mark” to file a
CONCLUSION
For the reasons stated above, we affirm the district court‘s grant of summary judgment in favor of Apple.
AFFIRMED.