Pre-Sale Use of Data Storage Trademark Not Enough to Secure Priority Rights

by Proskauer - New England IP Blog
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In 2016, Nexsan and EMC each independently launched computer data storage systems branded with the UNITY mark. Nexsan subsequently brought an action against EMC in Massachusetts, seeking declaratory judgment of priority of the UNITY name and non-infringement of its marks, among other remedies. Nexsan based its action on two previously filed intent-to-use trademark applications, which it claimed conferred a priority date in March 2016. Since EMC filed its trademark applications in April of that year, the burden fell on EMC to establish use in commerce before the March 2016 date.

To satisfy the “use in commerce” requirement of the Lanham Act, a party must demonstrate that the mark was affixed to goods, and those marked goods “[were] sold or transported in commerce.” 15 U.S.C. 1127(1)(B). A party can claim priority when the prior use is an “analogous use,” i.e., when there is “evidence showing, first, adoption, and, second, use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.” New England Duplicating Co. v. Mendes, 190 F.2d 415, 418 (1st Cir. 1951). The party must demonstrate that its use “was sufficiently clear, widespread, and repetitive to create the required association in the minds of potential purchasers between the mark as the indicator of a particular source and the service to become available later.” T.A.B. Sys. v. PacTel Teletrac, 77 F.3d 1372, 1376 (Fed. Cir. 1996).

EMC claimed to fulfill the required burden by publicly using the UNITY mark as early as 2014 in connection with its VNX product line. Specifically, EMC asserted that beta testing and pre-market presentations established priority. However, the court held that neither was sufficient to confer priority.

With respect to the beta tests, Judge Young found the evidence insufficient for three reasons. First, the group of participants was too small to form a substantial segment of EMC’s customer base (it included 20 participating organizations, where the product market was tens of thousands of customers). Second, the beta test was confidential (undermining the requirement of open and notorious publicity). Third, EMC did not consistently use the UNITY name, often identifying the goods with numerous monikers (undermining the public’s ability to associate any one mark with the goods).

With respect to the pre-sale presentations, the Court held that they were not sufficiently extensive (they reached 84-1,000 out of more than 10,000 potential customers), and that EMC’s requiring that presentation attendees sign non-disclosure agreements undermined the argument that they were sufficiently public to qualify for use in commerce. The Court also held that references to the UNITY mark on a private blog of one of EMC’s employees was not attributable to EMC, as the blog was clearly personal to the employee and not authorized by EMC.

Judge Young’s ruling in this case highlights the power of ITU trademark applications to establish a presumption of priority in trademark disputes–which can be difficult to rebut. As soon as the owner of an U.S. ITU application uses a mark in commerce, the owner is retroactively entitled to the ITU filing date in a priority dispute. This U.S. rule is a rare exception to the international norm, which is to confer trademark rights based on filing date rather than first use date.

The case is Nexsan Technologies Inc. v. EMC Corp., 16-cv-10847-WGY, before Hon. William G. Young. A copy of the Court’s Order can be found here.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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