Thursday, February 24, 2011

Motorola Xoom tablet hit with trademark lawsuit right before launch

Well-funded online payment company Xoom Corporation doesn't want Motorola to use its name for the Android-based tablet computer slated to launch today.

Yesterday the law firm of Morgan, Lewis & Bockius filed a trademark suit with the US District Court for the Northern District of California (where Xoom Corporation is based) against Motorola Mobility and affiliated legal entities, asking the court on Xoom Corporation's behalf not only for a permanent injunction but also for a "temporary restraining order and/or preliminary injunction". Should that interim relief be granted to Xoom Corporation, it would disrupt the launch of Motorola's iPad competitor, which runs on Honeycomb, the latest (and tablet-optimized) version of Google's Android mobile operating system.

Motorola's alleged trademark infringement is described as "willful and intentional conduct" for which Xoom Corporation believes to be entitled to "treble damages".

Being served a complaint like this on the eve of the launch party looks like a spoiler. But Motorola must have known about this trademark holder for a long time, given that Xoom Corporation owns the Internet domain, has been operating under that name "since at least as early as 2003" according to the complaint, and filed a couple of US trademark registrations, the earliest one of them in 2004 (Federal Registration Number 2,909,931). So Motorola decided to go ahead with its tablet launch regardless of not having worked things out with the Xoom e-payment company. The court will now have to decide whether Motorola made the right decision.

Motorola presumably believes that the asserted trademark is protected only in other markets than the ones that are relevant to tablet computers. In October 2010, Motorola filed its own Xoom trademark registration. I still wouldn't view Xoom's action as just a ridiculous "troll" suit.

Facts that lend a certain degree of credibility to the complaint

According to Wikipedia, Xoom Corporation was founded in 2001. In its two most recent rounds of financing, which took place in 2007 and 2010, it received a total of $53 million of venture capital from three world-class venture funds (Sequoia Capital, which invested in Apple in the 1970s -- what an irony -- and more recently in Internet businesses like AdMob and LinkedIn; New Enterprise Associates; and Fidelity Ventures).

A company of that nature and stature is less likely than a smaller one to file a suit against a major player like Motorola only to make a quick buck in exchange for dropping a pointless complaint. It's possible that Xoom Corporation really wants Motorola to rename its tablet computer and wouldn't settle even for a check over several million dollars. Xoom Corporation may want to defend its exclusive use of that brand.

It may not be easy to prove that a tablet computer creates confusion about the identity of an e-payment company, but I've seen trademark suits in which the relevant markets had much less of a connection. After all, it's likely that many consumers will use the Xoom tablet for online transactions. By contrast, there's another Xoom trademark belonging to a Texas company and relating to office supplies. That one would really be difficult to assert against a tablet computer. It would probably have to be about as famous as BMW or Coke to have a case.

If you remember a web hosting company named from the late 1990's (its shares traded on NASDAQ before being acquired by NBC), Xoom Corporation bought the Internet domain that previously belonged to that one.

Another consideration about the strength or weakness of the case: while I've seen major law firms represent dubious cases, the statistical likelihood of a complaint being at least somewhat serious is increased by the involvement of a large and reputable law firm. Morgan Lewis has nearly 1,300 lawyers (plus approximately 1,700 other professionals) in 23 offices on three continents. On its website, it lists "rankings and accolades" that are reasonably recent and significant.

Trademarks and Android

We'll see whether Motorola will be forced to rename the Xoom tablet. Android's intellectual property issues are primarily about patents and copyrights. But it's worth noting that Android device makers also have to be careful about how Google leverages its related trademarks.

Theoretically, parts of the Android codebase are available under diffferent open source licenses and could be used without entering into a contractual relationship with Google. But in practice, device makers want to be able to use the Android trademark (and in some contexts also the Google brand) for their products, and they need access to the official Android app market. At that point, Google severely restricts open source freedoms and imposes a number of terms and conditions.

The official reasoning is that those rules are needed for compatibility's sake. To some extent that's true, but it's also true that Google uses those terms and conditions and leverages trademarks for the commercial exploitation of Android.

At least one company has already taken legal action because it believes that Google unfairly uses that leverage in order to unfairly restrict choice and foreclose competition. That company is Skyhook, a developer and operator of a geolocation/geotagging solution. It filed two simultaneous lawsuits against Google a few months ago: one related to Google's commercial conduct (and the way it leverages the Android trademark) and another one for patent infringement. I blogged about those two suits last week after I saw an infringement disclosure document that specifically mentioned Android.

If you're more interested in how Google leverages the Android trademark to effectively close important parts of a supposedly open source platform, you can also click right through to the section of the post covering that part of the story.

Third-party trademark assertions against Android-based products, like the Xoom complaint, will usually affect only one vendor at a time. But the issues raised in the Skyhook vs. Google dispute relate to restrictions imposed upon the entire Android ecosystem, limit choice for all Android users, and make mockery of the concept of open source (let alone free software).

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents.

Share with other professionals via LinkedIn: