In a recent decision Apple Inc.  ATMO 13, the Australian Trade Marks Office (ATMO) held that Apple Inc. trade mark APP STORE for retail services, telecommunication services and web-based services is not entitled to trade mark protection in Australia and should not be registered.
In 2008, seven days after the launch of its App Store in Australia, Apple applied for a word trade mark APP STORE for retail services (class 35), telecommunication services (class 38) and web-based services (class 42). Eventually, the ATMO objected to this trade mark for retail services only (so the other two classes were free to proceed to registration), inasmuch APP STORE was somewhat descriptive of retail services and the evidence of use of this trade mark in Australia provided by Apple was insufficient to overcome the objection.
Apple requested to be heard and argued that APP STORE was distinctive when it was first applied for in 2008 and, in any case, became distinctive through extensive use.
Apple initially faced the same problem before the United States Patents and Trademarks Office, but its evidence managed to persuade the US examiner that APP STORE did indeed become distinctive through use. That said, Apple’s US trade mark for APP STORE remains unregistered, as it was opposed by Microsoft Corporation for being generic (i.e., descriptive of the services they were applied for).
Whether a trade mark is distinctive (and, therefore, capable of being registered) or descriptive (and, therefore, not registrable) is a general question of whether other traders are likely in the ordinary course of their business and without any improper motive, to desire to use it upon or in connection with their goods and/or services.
Apple lead evidence from a linguistics professor that APP STORE did not have a commonly understood or used meaning in 2008. It was submitted that the term APP STORE could not be fully understood by simply combining the meanings of its component parts. The ATMO rejected this argument, holding that the expression APP STORE was “straight forward, easily defined and well understood by modern digital-savvy consumers.” Notably, nothing was said by the ATMO about the state of the market in 2008, or the fact that when the App Store launched it was indeed a revolutionary concept never utilized before. The ATMO held that Apple’s own evidence went against it as the described uses of the APP STORE clearly demonstrated it was sometimes referred to in a descriptive manner.
Given the above, the ATMO also expanded the scope of the initial objection to now cover all three classes of services applied for under the trade mark and re-qualified the objection from “somewhat descriptive” to “purely descriptive.” Any trade mark lawyer will tell you that such an objection is nearly fatal to the trade mark – they are virtually impossible to overcome (either by evidence or otherwise).
Apple pointed to another existing Australian trade mark registration APPSTORE (No. 1156967) (which it acquired from a third party) and claimed that this trade mark was registered without the ATMO objecting to it as being descriptive. However, after implying that the APPSTORE trade mark may had been wrongly registered, the ATMO still held that this merely evidenced the fact that other traders may be interested in using the expression App Store in relation to the same services. Under the Trade Marks Act 1995 (Cth), the Registrar of Trade Marks has a right to apply to Court to have a trade mark cancelled for loss of distinctiveness either prior or post registration.
Very significant evidence of use of the term APP STORE was provided by Apple. And, while most of this evidence was in relation to the use of the trade mark in the United States or globally and no separate indication in relation to the exposure to the Australian market was demonstrated, the ATMO accepted that the APP STORE services are widely used throughout Australia.
However, the ATMO adopted the position of the UK High Court Justice that “use equals distinctiveness” is an illogical assumption and that “no matter how much use a manufacturer made of the word “Soap” as a purported trade mark for soap… [it] would not turn the word into a trade mark.”
It was pointed out that Apple’s own evidence was littered with descriptive uses of the expression App Store, which went against any submissions as to distinctiveness. Lastly, APP STORE was a “limping mark” – it was always used in conjunction with or in close proximity to Apple’s primary brands APPLE, iTUNES, iPHONE, iPAD or iMAC. While brand architecture is often employed by various traders, it may have the effect of weakening secondary brands and their distinctiveness and the ability to function as trade marks independently.
Thus, the ATMO found that APP STORE was entirely descriptive of retail services, telecommunication services and web-based services and rejected it. This, however, is not the end of the story – it appears that on 12 March 2013 Apple appealed against this decision to the Federal Court of Australia.
This decision raises more questions than answers, especially given that the Delegate failed to properly consider the state of the market and the distinctiveness of the trade mark in 2008, when the App Store was indeed a novel concept.
Trade mark lawyers will also be reminded of how important it is to only fight the problematic issues and to save the non-contentious parts of a trade mark by divorcing them into a divisional application and progressing it to registration, as could have been done with classes 38 and 42 of this trade mark before the ATMO expanded the scope of its objection.
Lastly, Apple has in any case acquired the trade mark APPSTORE (No. 1156967) for retail and web-based services. It is perfectly enforceable and any trader, who is not careful and uses APP STORE for similar services, would, most likely, infringe this trade mark. Yet, the brewing fight in the Federal Court of Australia about APP STORE will hopefully address some important trade mark issues, including the evidentiary threshold required for somewhat descriptive trade marks and trade mark use in brand architecture.
For any trade mark related queries, please contact trade mark lawyer Mindaugas Skavronskas.