I love it when tech giants battle over stuff, particularly in the legal arena.  When you have two parties with virtually unlimited resources and an unfettered willingness to spend money on lawyers, it makes for interesting reading … and hopefully for more interesting law at some point down the line.  We don’t always have such excitement in the Boston legal community.

Such is the case with Microsoft’s recent filing at the Trademark Trial and Appeal Board (“TTAB”) (of the United States Patent and Trademark Office) contesting Apple’s attempt to trademark the term “APP STORE.”  Microsoft argues that “APP STORE”  is “generic for retail store services featuring apps and unregistrable for ancillary services such as searching for and downloading apps from such stores.”  The company further contends that “APP”  is “a common term for mobile software applications, while “STORE” is a common term for a “place where goods are sold.” 

Following so far?  A generic term can’t be registered for use as a trademark because it refers to the actual product class of which a particular product is a member and therefore can’t be protected as a mark.  It would be like trying to register the term “VIDEO GAME” for video games or—for those of us over 40 who still remember video games’ predecessors—the term “PINBALL” to describe pinball machines.

Microsoft’s argument has merit and the company has a reasonable basis to contest the mark.  Of course, this doesn’t mean that Apple won’t win in the end, but it should be an interesting read when the TTAB decision come out—at least to us trademark lawyers.  (And the parties may then have the opportunity to fight it out in federal court.)  Needless to say, neither party suffers from a lack of resources to fight to the bitter end.  But they could settle too, if for instance, Apple lets Microsoft use the term to describe its own “App Store.”

There are numerous factors which the TTAB and a court can take into consideration when determining whether a mark is generic, including:  how the potential trademark owner itself uses the term; whether third parties use the term as a common name for their own products; what the dictionary definition is (if any) for the term as a common name for a particular type of product; whether there are other available terms to describe the common name for the products; the period of time in which the trademark has been in use; how the press and others use the term; and of course, the results of any survey evidence that either party introduces (which are usually subject to vigorous attack by the other party).  There are other factors too, but these tend to be the main ones for determining “genericness.” 

Without going into too much detail here, Microsoft does have some favorable evidence to support its claim, as does Apple.  While there are a ton of trademark cases that discuss generic marks, a 4th Circuit decision comes to mind, Hunt Masters, Inc. v. Landry Seafood Restaurant, Inc., 240 F.3d 251 (4th Cir. 2001).  In that case, the court found that the term, “CRAB HOUSE” to describe a restaurant that, uh, served crabs “is a generic term referring to a class of restaurants that serve crabs.”  It found:

Here, the meaning of the individual words is fairly clear. A crab is “any of numerous chiefly marine broadly built crustaceans,” while “restaurant” is one of the many definitions of the word “house.”  Webster’s New International Dictionary 1096 (3d ed. 1961). Other common words that are often used as synonyms for “restaurant” include bar, parlor, and shop. When preceded by a type of food, these words describe various classes of restaurants, such as ale houses, tapas bars, ice cream parlors, and coffee shops. Each term denotes a class of restaurant serving a particular type of food, just as”crab house” denotes a class of restaurant that serves crabs. 

The court also rejected the plaintiff’s survey evidence when assessing genericness.  So “CRAB HOUSE” was deemed to be unprotectable.  While there are a few factors that differentiate this case and some of its principles from what Microsoft is arguing at the TTAB (such as time frame related to evaluating genericness), given the abundance of legal precedent in this area, the company can reasonably argue that ”APP STORE” is a generic term (or a merely descriptive one) for a place that sells applications.  Much of the fight will be over the term “APP.”

Of course, as any intellectual property or technology lawyer will tell you, trademark law is a highly nunaced area of practice, so these cases can turn on distinctions that at times seem more imaginary than real—especially in a sector as fast-paced as technology.  We’ll just have to wait and see.

I can’t help but get a little bit of personal satisfaction out of this story.  It seems that Dell Computers was engaged in a large scale “shell” game or “bait and switch” scheme in New York.  A New York judge recently found that Dell misled consumers repeatedly by engaging in “false and deceptive advertising” of its promotional financing terms/incentives and service warranties.  The New York Attorney General’s (“AG”) office logged over 1,700 complaints from consumers.

Dell was luring consumers to purchase its computers by offering free financing, rebates, upgrades, and  other incentives for “well qualified” customers.  However, according to the AG, as few as 7% of consumers actually qualified for the promotions.  The vast majority of applicants were instead offered hefty interest rates between 16% to 30%, conveniently financed through Dell Financial Services.  The judge, among other things, enjoined Dell from advertising certain promotions without first  prominently disclosing to consumers how many applicants were likely to qualify for them.

On the service end of things, the judge found that many consumers were placed on hold for technical support for inordinately long periods of time, had to call repeatedly to get through to a technical representative (who I’ve found to be useless anyway), and many instances where the company refused to provide on-site service.  Some customers apparently waited for months or even years for service.  So much for their “next day” service guarantee.

As an owner of 2 Dell computers that have been nothing but trouble within months of buying them, it’s somewhat gratifying to see the company get slammed for its deceptive conduct.  Almost all of my experiences with Dell’s technical support have been, uh, well—what’s the Hindi word for “abysmal”?  I stopped calling them long ago and now use my own pricey IT consultant.  In any case, my frustrations are clearly widespread and well-founded.

As I’ve said before, the “unfair or deceptive” standard used by almost any AG’s office is an especially broad one that easily encompasses conduct which may not meet the higher standard used for “fraud.”  With fraud, it must be shown that a company actually knew that what it was doing was wrong—although in this case, the folks at Dell seemed to be fully aware of their actions.  How could they not be? 

But an AG doesn’t need to jump through hoops to prove fraud anyway.  Showing unfair or deceptive conduct is much easier.  And once the AG has a high-profile and wealthy corporate defendant in its sites that is the subject of 1,700 consumer complaints, rest assured that it will  pursue the company vigorously.  Given my own problems with Dell, I say: “Give ‘em hell!”

      There was an interesting consumer protection suit filed by the Pennsylvania Attorney General (“AG”) recently.  It seems that Waltham, Massachusetts resident Areg A. Sakanyan, who was operating a website,  www.unclaimedmoney.us.com, to supposedly help people locate unclaimed money, didn’t provide the advertised service.

     According to the AG, the site lured consumers to conduct an initial free search and then enticed them to purchase a “membership” for $24.95 which would give them the details they needed to claim any assets that the search uncovered.  The problem was that everyone apparently qualified for unclaimed assets—even superheroes and cartoon characters.  When the AG’s undercover investigators input names such as “Batman” and “Wily E. Coyote,” the site stated that they had multiple unclaimed assets waiting for them.  Not surprisingly, no details or information about a person’s supposed unclaimed assets were ever provided by the site once the $24.95 fee was paid.

     In many ways, this is a standard type of consumer action that one would expect an AG to undertake:  A service was advertised, money was paid, and nothing was provided.  What was interesting, however, was one of the disclosures that the site allegedly failed to make.  According to the AG, the site—among other things—failed to inform consumers that its unclaimed money database is based upon publicly available sources which could generally be accessed without charge.   

     While this was just one part of the AG’s complaint, it’s somewhat troubling if the AG is attempting to establish precedent that a for-profit content or database website would have to make disclosures that its information is available from free public sources.  The internet is replete with such services.  For example, while many lawyers can find cases, statutes, and other public records for free, for-profit services such as Westlaw and Lexis provide the same service for what can sometimes be a hefty fee.  Would a disclosure be warranted in this instance?  Perhaps not just yet . . . .

      Again, given some of the overtly fraudulent conduct alleged in the AG’s complaint, this is only one small part of the action.  But all AGs are given a great deal of discretion when deciding to pursue those businesses that it deems to be engaging in unfair or deceptive practices.  And most businesses settle or fold once the AG has them in its sights, especially given the lengthy and expensive proceedings that can ensue, as well as all of the negative publicity that such actions generate.  The proverbial “slippery slope” gets even slipperier if aggressive and politically-motivated AGs (i.e., those seeking higher office) are specifically looking for “high value targets” upon which to focus their energies.  And failure to put appropriate disclaimers on a site are particularly easy targets to pursue.