Social Technologies LLC v. Apple Inc.
Not specified in text (2021)
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Rule of Law:
Use of a mark in commerce is not 'bona fide' under the Lanham Act if it is undertaken not for genuine commercial purposes, but merely to reserve a right in the mark, such as to provide a basis for an infringement lawsuit.
Facts:
- In April 2016, Social Technologies LLC (Social Tech) filed an intent-to-use trademark application for the mark 'MEMOJI' in connection with mobile application software.
- For the next two years, Social Tech's activities were limited to creating promotional materials, unsuccessfully soliciting investors, maintaining a website, and securing a single $100,000 investment from an employee; no code for the app was written.
- In May 2018, Apple Inc. (Apple) unsuccessfully attempted to purchase the rights to the MEMOJI mark from Social Tech.
- Apple then acquired rights to the MEMOJI mark from a third party, Lucky Bunny LLC, and on June 4, 2018, announced its own Memoji software feature.
- In response, Social Tech's co-founder, Samuel Bonet, instructed a software developer to accelerate the app's development, sending emails stating goals such as 'Time to get paid, gentlemen' and 'Get your Lamborghini picked out!' in anticipation of suing Apple.
- On June 28, 2018, just three weeks after Apple's announcement, Social Tech launched a buggy version of its Memoji application on the Google Play Store.
- After the launch, Bonet directed the developer to split software updates into smaller pieces 'so it appears like we are doing more work' for the purpose of the lawsuit against Apple.
- Social Tech's application was downloaded approximately 5,000 times in 2018 before being removed from the Google Play Store for violating developer policies.
Procedural Posture:
- Social Technologies LLC filed an intent-to-use trademark application for 'MEMOJI' with the U.S. Patent and Trademark Office (USPTO).
- After its application was allowed, Social Tech filed a Statement of Use, and its mark was officially registered on September 18, 2018.
- Apple Inc. commenced a cancellation proceeding against Social Tech's registration before the USPTO.
- Social Tech then filed a lawsuit against Apple in the U.S. District Court for the Northern District of California, alleging trademark infringement.
- Both parties filed cross-motions for summary judgment.
- The district court granted summary judgment in favor of Apple, holding that Social Tech had not made 'bona fide use' of the mark and ordering the cancellation of its trademark registration.
- Social Tech (as Plaintiff-Appellant) appealed the district court's decision to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does an entity's accelerated launch of a product, motivated primarily by a desire to secure trademark rights for litigation rather than for genuine commercial purposes, constitute 'bona fide use of a mark in commerce' under the Lanham Act?
Opinions:
Majority - Judge Restani
No. An accelerated product launch motivated by litigation is not a 'bona fide use of a mark in commerce' under the Lanham Act. To establish trademark rights, use in commerce must be a genuine use in the ordinary course of trade, not merely a token use to reserve rights in a mark. The court applied a 'totality of the circumstances' test and analyzed Social Tech's activities both before and after Apple's announcement. Prior to the announcement, Social Tech's activities were insufficiently public to establish an association in consumers' minds between the mark and the company. After the announcement, the evidence, particularly emails from Social Tech's co-founder, unequivocally demonstrated that the company rushed its buggy application to market not for legitimate commercial reasons, but solely to perfect its trademark rights to sue Apple. This type of use, intended to reserve a mark for litigation, is the exact 'token use' that the Lanham Act prohibits.
Analysis:
This decision reinforces the Lanham Act's prohibition against the warehousing of trademarks and clarifies the 'bona fide use' requirement. It demonstrates that courts will scrutinize the subjective intent behind a mark's use, especially when the use is timed suspiciously around a competitor's market entry. The ruling establishes that even if a product is technically 'sold or transported in commerce' (e.g., downloaded by consumers), that use can be invalidated if overwhelming evidence shows the primary motivation was to secure a legal claim rather than to engage in genuine trade. This precedent strengthens the position of companies defending against infringement claims from entities that engage in minimal, tactical use of a mark just to set up a lawsuit.
