On July 13, 2021, the Ninth Circuit dismissed a trademark infringement lawsuit that Social Technologies LLC (“Social Tech”) filed against Apple, Inc. (“Apple”). The court held that Social Tech’s trademark was invalid.
The history of the case is as follows:
In 2016, Social Tech filed an “intent-to-use” trademark application with the United States Patent and Trademark Office (“USPTO”) for the trademark “Memoji” in connection with mobile phone application software. However, in order to complete a trademark registration, an applicant that files an intent-to-use application must provide “a verified statement that the mark is in use in commerce” (i.e., a “Statement of Use”).
Up until Apple announced its own Memoji feature on June 4, 2018, Social Tech had only engaged in some early-stage activities to develop a business plan and market its Memoji application to potential customers and investors, including creating promotional materials and securing funding in the amount of $100,000 from a single investor.
After Apple’s 2018 announcement, Social Tech accelerated its timeline to develop the Memoji software and on June 28, 2018, Social Tech launched its own Memoji mobile phone application, which Social Tech used to support a “Statement of Use” with the USPTO.
On September 17, 2018, while Social Tech’s “Statement of Use” was still being considered by the USPTO, Apple launched its new operating system, which incorporated Apple’s Memoji software into Apple devices. Then, one day later, Social Tech’s “Statement of Use” was approved by the USPTO and litigation with Apple commenced immediately thereafter.
Apple in turn, quickly commenced a “cancellation” proceeding before the USPTO to cancel Social Tech’s registration for the Memoji mark. Under the Lanham Act, “any person who believes that he is or will be damaged . . . by the registration of a mark” is authorized to file a petition to cancel the mark’s registration. 15 U.S.C. § 1064. Apple’s petition was based upon a lack of use in actual commerce, including non-sales activities, no leased equipment necessary to operate its business, no working capital or marketing plan, and no ordered goods from its supplier (until after the relevant period).
In 2018, Social Tech initially filed a lawsuit against Apple in the United States District Court for the Northern District of California. In response to Social Tech’s claim that Apple had infringed on its trademark, Apple argued that Social Tech’s registration should not have been issued because Social Tech had not engaged in a bona fide use of the Memoji mark in commerce.
The 9th Circuit agreed with Apple that Social Tech had not shown a bona fide use in commerce sufficient to establish rights in the mark under the Lanham Act and thus, Social Tech’s registration of the mark was invalid. Under the Lanham Act, use in commerce requires the 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.
According to the 9th Circuit decision, Social Tech couldn’t show that it had actually used the name “Memoji” in commerce prior to the date Apple announced its avatar feature in 2018, which was past the six-month time period in which Social Tech’s notice of allowance accrued. Thus, Social Tech was required to show actual use in commerce. Moreover, the 9th Circuit rejected the argument that roughly 5,000 downloads of Social Tech’s app were enough to constitute a bona fide use in commerce. Instead, the appeals court said Social Tech merely made “token use” of the “Memoji” name to reserve rights, rushed to market solely to reserve its rights in the mark, and the application it released three weeks later contained numerous bugs, which is not the kind of “bona fide use” required to secure trademark protection.
Authors Note: While Social Tech was found to have rushed its Memoji app to market following Apple’s 2018 announcement of their Memoji feature, Social Tech initially filed an intent-to-use application for the trademark in 2016, long before Apple’s announcement. Additionally, by securing a $100,000 investment and receiving roughly 5,000 downloads of their App, the 9th Circuit’s holding that Social Tech lacked any evidence whatsoever to suggest that they had developed their Memoji application for genuine commercial purpose appears to run afoul of the
very purpose of an intent-to-use trademark application. Following this ruling, large companies with deep pockets now can argue that smaller companies have not met this higher burden to prove “use in commerce” after time has accrued where a smaller company may still only be in early production phases.
U.S. Circuit Judges Michael D. Hawkins and Eric D. Miller also sat on the panel for the Ninth Circuit. Judge Restani, a U.S. Court of International Trade judge, sat on the panel by designation.
Social Tech is represented by James Kelly and John M. Pierce of Pierce Bainbridge PC.
Apple is represented by Dale Cendali, Mary Mazzello, Diana M. Torres, Lauren Schweitzer, and Megan L. McKeown of Kirkland & Ellis LLP.
The case is Social Technologies LLC v. Apple Inc., case number 20-15241”>20-15241, in the U.S. Court of Appeals for the Ninth Circuit.
* Lowe & Associates (“The Firm”) is an entertainment and business law firm located in Beverly Hills, California. The Firm has extensive experience handling cases involving trademark law, having provided top-quality legal services to its clients since 1991. The Firm is recognized for its many achievements, including successfully litigating many high-profile cases.
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