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Ninth Circuit:
Dropbox May Be Liable for ‘Reverse Confusion’ Infringing
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals, in a 2-1 decision, yesterday upended a summary judgment in favor of the well-known company, Dropbox, in a trademark infringement action by the relatively obscure Ironhawk Technologies, Inc., holding that under the theory of “reverse confusion,” a purchaser might confuse Ironhawk’s SmartSync, registered as a trademark in 2007, with Dropbox’’s “Smart Sync,” inaugurated in 2017.
“[R]everse confusion occurs when a person who knows only of the well-known junior user comes into contact with the lesser-known senior user, and because of the similarity of the marks, mistakenly thinks that the senior user is the same as or is affiliated with the junior user,” Judge Milan D. Smith Jr. explained in the majority opinion in which Judge Mary H. Murguia joined.
Senior Judge A. Wallace Tashima dissented.
“Affiliation with a popular well-known brand may seem beneficial, but reverse confusion carries consequences,” Smith noted. “Reverse confusion can foreclose the senior user from expanding into related fields and could place the senior company’s goodwill in the hands of the junior user.”
He declared that a “reasonable jury” could associate Ironhawk’s SmartSync, which compresses data for transfer in “bandwidth-challenged environments,” with Dropbox’s “Smart Sync”—a feature of its software suite that enables users to see their files on a cloud. Such a jury could determine, Smith said, that Dropbox’s use of the mark “aggravates the likelihood of reverse confusion” and that there was culpability in creating that risk.
Pregerson’s Ruling
Yesterday’s opinion reverses an Oct. 24, 2019 order by District Court Judge Dean D. Pregerson of the Central District of California granting summary judgment. He declared:
“The term ‘SmartSync,’ ” he declared, “…appears to describe at least some of the characteristics of Ironhawk’s product, namely synchronization and ‘intelligent’ transport, compression, and synchronization.”
As a “descriptive” mark, he said, it “is entitled to no protection.”
He continued:
“Even if Ironhawk’s Smartsync mark were suggestive rather than descriptive, the mark would still be weak. A suggestive mark is presumptively weak.”
Pregerson also found that the products were mot so similar as to generate confusion, setting forth:
“Dropbox has produced evidence that its Smart Sync product is designed to help users conserve computer hard drive space by allowing files to be stored solely online. Dropbox markets its product to individuals and businesses. Ironhawk’s SmartSync, in contrast, ‘allow[s] for efficient data transfer by using compression and replication’ in ‘limited bandwidth environments.’…It is undisputed that the United States Navy is the only user of Ironhawk’s product. Nevertheless, Ironhawk argues that the parties’ products are similar because ‘both Dropbox’s and Ironhawk’s data management software facilitate access to files by multiple users in multiple locations.’…Ironhawk cannot establish meaningful similarity at such a high level of abstraction.”
Smith’s Opinion
In his opinion reversing Pregerson’s decision, Smith said “the line between descriptive and suggestive marks is elusive.” Given that, along with “the presumption of distinctiveness established by SmartSync’s federal registration,” he wrote, “a reasonable jury could conclude the mark is suggestive,” and the call must therefore be made by a jury.
Whether Ironhawk’s product and the feature of Dropbox’s software can be confused is also a jury question, the jurist said.
He recited that Ironhawk contends the products both relate to the same function in that “both products provide a solution to the same problem: how to make files accessible to multiple remote users,” and in particular, the sharing of large files. Smith noted that Ironhawk maintains the companies must have products that are related since Dropbox had considered buying Ironhawk.
The judge summarized Dropbox’s position as being that its product utilizes cloud storage to free up the user’s disk space while Ironhawk’s product does relate to cloud storage, but to compressing files to enable the transfer of them in limited bandwidth environments—stressing that it sells to businesses and consumers while Ironwork’s only customer is the Navy.
“Based on this competing evidence, a reasonable jury could find that Smart Sync and SmartSync are related, sold to the same class of purchasers, or similar in use and function,” Smith said.
He also said that a reasonable jury could find that “Ironhawk’s potential consumers include commercial customers” and that Dropbox’s strength is such that it “is able to swamp Ironhawk’s reputation with a much larger advertising campaign.” While he expressed doubt that a jury would find that actual confusion has occurred, he said the question should go to it.
Tashima said in his dissent:
“There is…no evidence that the relevant consumer class includes ordinary consumers.”
He asserted:
“The majority errs…by failing to consider the type of commercial customers Ironhawk is targeting and the kind of sales it is proposing. These customers are large, sophisticated commercial enterprises. They are purchasing a highly technical and expensive product. And any sale would be subject to a prolonged sales effort and careful customer decision making.
“These circumstances, disclosed by the record and uncontroverted, simply do not support a finding of probable consumer confusion, given the sophistication of the customer class.”
The case is Ironhawk Technologies, Inc. v. Dropbox, Inc., 19-56347.
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