latest gadgets and technology: Trademark Lawsuit Defense: We Aren't Nearly As Good

When confronted with an Apple lawsuit alleging trademark violations for logo merchandise and a Flushing (NY) store named ?Apple Story,? the defendants had a quick explanation: they weren?t located in quality malls?like Apple stores, didn?t have experienced and knowledgeable personnel, had no Genius Bars, didn?t have award-winning architecture, and had not become attractions like Apple. In fact, the attorney for defendants Janice Po Chiang and Jimmy Kwok claimed, Apple?s sophisticated customers would never mistake his clients? stores for an Apple store. Instead, they would ?do a double-take? and conclude it was something much less. But on July 25, 2011 U.S. District Court Judge Kiyo Matsumoto disagreed with the defendants? argument and issued a temporary restraining order against Chaing and Kwok, ending their sales of various protective cases bearing Apple?s trademarks. He also ordered U.S. Marshals to assist Apple?s investigators in searching two homes and two retail stores, and in seizing any items they found that infringed Apple?s trademark. While Apple?s legal case was primarily based on the defendants? alleged import and sales of?iPod, iPhone and iPad cases that bore the ?bite of Apple? logo, it was bolstered by the fact that Chiang and Kwok were selling the items from an ?Apple Story.?
Download (pdf) the complete collection of legal documents in the case: Apple?s lawsuit, the private investigators report, and the defendants? legal filings.
Apple became aware of the defendants? Apple Story and Fun Zone retail stores in the suburbs of New York City earlier this year, and learned they were selling products that bore Apple?s name and logo. The company sent undercover investigators to purchase products over a period of time, and discovered the products were counterfeits.
The company took its findings to attorneys, who prepared and filed documents with the U.S. District Court, Eastern District of New York. They asked for an injunction, a restraining order and the right to search certain properties and seize counterfeit merchandise. They asked the judge to seal the lawsuit filing so the defendants would not find out and possible destroy evidence.
Much of Apple?s lawsuit filing is background material on the company?s history, its famous Apple logo and branding in general. The filing notes Apple operates over 300 stores which have become ?attractions.? The company has trademarks on the logo and various words, including ?iPod,? ?iPhone? and ?Apple Store.? The trademarked words??APPLE STORE? not only are ?inherently distinctive, but have acquired distinctiveness and are famous,? the lawsuit states. (In its legal filings, Apple?s attorneys always put the words ?Apple Store? in all-caps, while the defendants capitalize only the first letter of each word.)
The remainder of Apple?s filing outlined how its lawsuit fulfills the federal trademark violation proof requirements, a seven-step process. The company?s attorneys?whose offices are a mere six blocks from Apple?s Fifth Avenue (NYC) retail store?also explained why Apple was elegible for a temporary restraining order and preliminary injunction against the defendants, ordering them to stop selling the merchandise and to hand over any counterfeit items.
?Defendants? APPLE STORY mark incorporates all of Apple?s APPLE mark and it differs from Apple?s APPLE STORE mark by only one letter.? ? Apple
?Defendants sell counterfeit Apple accessories in a store they have name ?APPLE STORY,?? the lawsuit states. ?Their intent to associate their store with Apple and Apple?s APPLE STORE retail locations is obvious.? Apple?s attorneys argued to the court, ?By naming a store selling counterfeit Apple products ?APPLE STORY,? Defendants intend consumers to associate their store and counterfeit products with Apple.?
Apple asked for a expedited process of discovery, involving obtaining documents and taking depositions from the defendants. They also requested that the lawsuit be filed under seal so as not to tip off the defendants who, Apple argued, might destroy evidence if they learned of the lawsuit.
In the June 25, 2011 order granting a temporary restraining order, Judge Matsumoto prohibited the defendants from using ?Apple or ?Apple Story? in any way, ?or any names or marks confusingly similar?as a store name.? He also the search of several premises and the seizure of any counterfeit products.
During an August 4, 2011 hearing, the defendants agreed to the conditions of the restraining order and injunction, and to cooperate with Apple?s investigation of the trademark violations, including handing over documents.
Private Eye Investigates
Apple hired a former New York City police officer and now private investigator to confirm its suspicions that the defendants were selling counterfeit Apple products. Jame Ricaurte filed a declaration in the lawsuit that said he visited the APPLE STORY on Main Street in Flushing (NY), and so did several of his investigators on ?multiple occasions.?
Ricaurte said he and the others saw the APPLE STORY sign, the Apple logo on products, and made several purchases. The products were shipped back to Apple?s headquarters in Cupertino (Calif.), where employees confirmed the products were not made by Apple and were otherwise not authorized to be made.
Ricaurte?s investigators also followed Chiang and Kwok, determining that they were obtaining product stock for their two stores from two residential homes, one in College Point (NY) and another in Whitestone (NY). Later, U..S. Marshals and Apple?s investigators would raid those homes and find boxes of counterfeit products. According to Apple, the product shipping boxes indicated that the items originated in China.
Apple?s Senior Manager of Investigations for the Americas, Adrian Punderson, also filed a declaration in the case, saying he received Ricaurte?s packages of products from the Apple Story store, and confirmed they were not Apple merchandise.
A third declaration was filed from Thomas R. La Perle, an intellectural property attorney working for Apple. He provided much of the background material on Apple?s brand, its logos and trademarks, and the legal protections to which they?re entitled. Le Perle included pages of trademarks documents, screen grabs from the Internet to support the company?s claims of trademark violation.
Defendant?s Position
Perhaps the most interesting material among the 400 of legal documents is the response of the defendants, who invoked the recent stories of counterfeit Apple stores in China and automotive tychoon Henry Ford. They also complained several times that Apple?s investigators had seized products with no Apple logo, only because the instruction papers inside the product box had an Apple logo printed on it.
Attorney Samuel Chuang began his response to the lawsuit by saying the defendants, ?are not saying to its customers that it is selling Plaintiff?s or Plaintiff?s sponsored or endorsed products.? And then oddly, Chuang said that Apple doesn?t even make its own product cases, but has other companies make them for Apple.
He claimed that Apple had been marketing products using Henry Ford?s principal of, ?Any customer can have a car painted any colour (sic) that he wants so long as it is black.? Chuang claimed, ?The vacuum of diversity and protection spawned the market of personalized, protective cases for the Apple devices, a market Plaintiff has not entered.?
As for the name of the store, Chuang had a thin explanation. The name ?Apple Story? began ?in thought? as ?Your @pple Story,? he said, ?Where the customer can tell his or her ?story? by customizing the expensive and much prized iPhone with decorations including studs, pictures, and color, as well as protect the iPhone??
While searching for business partners, the defendants contemplated using the name ?Lucky Leaf @pple Story, Chuang said. But the partnership didn?t work out.
?When it came time for the Defendants to actually form a company, create a logo, and make a sign? Chuang wrote in the filing, ?the ?@? was replaced with ?A? because the logo ?@S? was too confusing, and the ?AS? logo was created.?
Chuang admitted Apple?s trademark on ?Apple Store,? but said, ?None of Plaintiff?s brick and mortar retail storefronts, which themselves have become attractions, use the service mark ?APPLE STORE.? Instead, Apple?s stores are identified ?only and simply? by a silver apple with a bite on the right side. The defendants? lawsuit filing included photos of several Apple retail stores bearing a white, back-lit Apple logo, but without the trademarked words, ?Apple Store.?
?None of Defendants? businesses are in high-traffic locations in quality shopping districts; none are designed to simplify and enhance the presentation and market for Plaintiff?s products and related solutions?? ? Defendants
Chuang concluded that Apple?s ?Apple Store? trademark doesn?t merit trademark protection. ?While it is undisputed that the Apple logo is famous and widely known, the word ?APPLE? without context is less so, and the unadorned words ?APPLE STORE? much less so.? He pointed out, ?Somehow, Plaintiff thought it was enough to identify the establishment with a perfectly centered and suspected Apple logo and not need the surplusage ?APPLE STORE.??
He said that the words ?Apple Story? weren?t likely to cause consumer confusion. ?Plaintiff makes much ado about how ?Apple Story? and ?APPLE STORE? differ my (sic) only one letter,? Chaung wrote. ?However, one letter makes a difference; a store is a place where one goes to purchase merchandise, usually on a retail basis, howver, a story is an idea that is design to interest, amuse, or perhaps instruct the storyteller or listener.?
People visit an Apple store to purchase Apple products, Chuang explained. ?But at ?Apple Story? one goes to search for interesting or amusing accessories to express his or her story.? The addition of a graphic logo in front of the words also differentiates the defendants? store, he said.
Chuang also ripped off several more defenses, including that the ?APPLE STORE? trademark is not a ?strong mark,? that the two versions are ?not sufficiently similar,? that the two companies don?t compete, and that Apple had not provided any evidence of actual consumer confusion.
Chuang emphasized that last point by noting that Apple charges a ?premium price? for its devices and services, compared to competitors. ?This suggests that Plaintiff?s consumers have some degree of sophistication.?
He continued, ?When these consumers enter Defendant Apple Story?s store, there is no sense that they are in an ?Apple? store; when they see unsophisticated displays that would suggest to them they may not be in an ?Apple? store; when there is no blue-shirted employee with a name tag, or genius bar, and the prices of items have no ?Apple? premium attached to them (i.e., generic prices) such consumers are sophisticated enough to know that they are not in Plaintiff?s retail stores.
?For Plaintiff?s consumers, who are used to seeing Plaintiff?s stores in high-end malls, to even see the Defendants? store would cause them to do a double-take and review the name and logo more closely, and come to the conclusion that Defendants? store is not an Apple? store.?
Apple?s lawsuit is pending, and the company could return to court asking for damages from the defendants or other legal actions, based on what they determine from examining the products they seized.