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Meeting of the Minds

Applifying Your Brand Protection Strategy

Karl M. Braun and Maddalena R. Zefferino

©2014. Published in Landslide, Vol. 7, No. 1, September/October 2014, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

Welcome to the Great “Appscape.”

Brand owners are constantly seeking more ways to directly engage consumers with new products. With the rise in popularity of smartphones and tablets, brand owners now interact directly with consumers through social media, particularly with applications, or “apps.”

Capitalizing on the “app explosion,” rogue apps—unlicensed, counterfeit, or infringing—are available for the unwary consumer to download and use. Logos, brand names, trademarks, or imagery may be on a rogue app without the intellectual property (IP) owner’s consent. This may lead not only to claims of trademark and copyright infringement, but also to criminal liability and safety issues.

Although legal concerns plague the “appsphere,” this article focuses on the importance of incorporating app review in brand protection strategies.

Apps for Sale!

An app is software that runs on mobile devices, like smartphones and tablets. Apps may work like a web browser by communicating over the Internet or may run on a mobile device without the need for an Internet connection. Apps, usually sold for a nominal fee, enable mobile devices to operate and access everything from music to e-mail and messaging. By 2017, apps are predicted to have been downloaded more than 268 billion times, generating revenue of more than $77 billion.1

Apps can be purchased at online marketplaces, like Apple’s App Store, Google Play, Amazon.com, Windows Store, and BlackBerry World. Apps will function on a supported device. For example, an iPhone runs apps from Apple’s App Store, and a mobile device with the Android operating system runs apps from Google Play.

Rogue Apps: Are Brand Owners Watching?

Consumers may have difficulty discerning if apps are officially associated with a brand due to the quantity of available apps in a marketplace. This concept of app brandjacking may occur in three ways: first, the app uses actual images, logos, or trademarks from a brand without permission; second, the app is counterfeit, or created by an imposter disguising itself as the brand; or third, the app is infringing on the trademark of a brand and, as a result, creates a likelihood of confusion for the consumer.

According to a study completed earlier this year, one luxury jewelry brand had 53 unlicensed apps compared to four official apps on the Google Play marketplace. Another luxury fashion brand had no official apps compared with nine unlicensed apps.2

To raise the stakes for brand owners, some of these unlicensed apps are likely to be faulty. A poorly designed app may have a dead link to a brand holder’s website. As a result, users who download the app can form a less than favorable opinion about the brand. For instance, when an unwary consumer downloaded what was believed to be a PayPal app, the user wrote in a review of the app, “Bad app Won’t open or log in after update. I use PayPal often . . . well at least I did.”3

Why aren’t some brand owners being more proactive? The app marketplaces are difficult to navigate and not as transparent as searching the Internet for rogue domains.4 Also, many brands devote more resources to online and “on-the-ground” policing efforts and overlook apps because they are such a new arena. However, brand owners are not totally inactive when it comes to apps. According to a 2011 Chilling Effects Clearinghouse Report, more than 59 percent of app complaints were about trademark infringement or misleading use of a mark or logo, and 82 percent were about copyright infringement.5 For 2011, Facebook took the lead with filing the most complaints on the Android market, which resulted in 31 app takedowns.6

Monitor the App Marketplaces

Finding rogue apps can be and is challenging. Brand owners should set up an internal team to review the various app marketplaces using keywords and brand names. This can be done quarterly or on a monthly basis depending on the brand’s activity. Outside services monitor on a daily basis the presence of potentially problematic apps. These services provide electronic reports in which identified apps are prioritized by relevance. Sorting is available and can help track repeat offenders. Screenshots and visual images of the app may be taken and used as evidence. The reports generated from these services will list how many rogue apps were found, how many takedown notices were sent, and, ultimately, how many were taken down in a given period.

Communicate with App Marketplaces and Developers

Every company employs a different legal strategy when it comes to brand enforcement. Once a rogue app is identified, some practitioners recommend that the IP rights holder send cease and desist letters as well as takedown notices to the app marketplace and app developer if its contact information is known. This way, the brand is attacking on both fronts, by addressing the marketplace and the app developer simultaneously.

For copyright infringement claims, both Google Play and the Apple App Store allow rights holder to submit takedown notices. The Digital Millennium Copyright Act (DMCA) requires online service providers, like app marketplaces, to take action when presented with evidence of copyright infringement as opposed to trademark or related claims under the Lanham Act or state law. The DMCA exempts host websites from liability if within the DMCA’s safe harbors, which provide that the service provider must: (1) have no actual or constructive knowledge of the infringing behavior; (2) have no financial gain directly related to the infringing activity; and (3) when given proper notice of the infringing material hosted, respond expeditiously to remove or disable access to the material that is claimed to be infringed.7 Generally, these service providers will respond promptly to such notice to ensure that the safe harbors will be available to them.

When submitting such a claim, a rights holder must send notice to the alleged infringer: (1) indicating the claimant is the copyright holder or its agent; (2) identifying the type of work infringed; (3) identifying the offending material it wishes to remove; (4) providing the rights holder’s contact information; (5) indicating it has “a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law”; and (6) indicating “that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.”8 As many practitioners know, one must exercise due diligence, for there are hefty penalties if those alleging infringement materially misrepresent their allegations.9

It is important to note that the distribution agreement between the developer and the marketplace allows both parties to initiate takedowns themselves.10 For example, Google’s developer distribution agreement gives Google the right to take down apps for any reason and at Google’s sole discretion. Common reasons why Google takes down apps are that the app contains malware, violates IP rights, violates the distribution agreement, or otherwise creates liability for Google. In some cases, the developer must provide refunds to all consumers who downloaded the infringing app.11

Removing Content on an App

Both the Apple App Store and Google Play allow you to submit requests for other content on an app that could affect the brand holder’s rights. This includes not only copyright violations, but also trademark violations. According to Apple’s Content Dispute Policy, once a rights holder describes the alleged infringement, Apple will put the brand owner directly in touch with the app developer so the dispute may be resolved.12 Similarly, Google provides a trademark infringement form to submit should an app infringe on a brand owner’s mark.13 Further, Google encourages consumers to report malicious or inappropriate apps found on the Google Play store to Google.

Make Sure the App Is Not Authorized

This seems logical and obvious, right? However, brand enforcers may not always be aware of licensees or authorized brand users. This can be a byproduct of the public relations or licensing team not communicating with the legal department, or vice versa. Brands should have a “white list” or some cataloging system to keep track of their licensees. If the app is from a licensee, check the licensing agreement to see if use of the company logo, product name, or trademark is permitted on an app. If an outside service is used to monitor apps, provide a copy of this list to the company so authorized apps can be filtered from the search results.

Create a Depository

Although copyright registration is not required for copyright protection, create a depository or database of what images were developed for the brand and what is registered with the U.S. Copyright Office. Are there certain works that will be targets for infringement? Identify which IP rights the company wants to protect before submitting takedown notices or cease and desist letters, or even commencing lawsuits. In the authors’ experience, some companies for public relations reasons will decide not to pursue a violation of certain images, product names, or marketing texts (e.g., a fan site).

Police Your Mark

Policing the brand’s trademark is critical to prevent weakening of the mark. For example, Zynga, developer of popular app games, not only filed successful trademark oppositions with the U.S. Patent and Trademark Office against others that used the WITH FRIENDS brand from the title of its games “Words With Friends” and “Scramble With Friends,” but also filed lawsuits for trademark infringement against app developers using the “With Friends” term. Notably, the defendant in one of Zynga’s suits used the phrase “Bang With Friends” to promote the creation of a risqué app unrelated to the brand.14 Zynga argued, among other things, that using the phrase “With Friends” would create a likelihood of confusion with its apps and games as well as dilute the mark.

Commence Litigation

When one commonly thinks of trademark violations, a mark displayed on a good that is likely to cause confusion immediately comes to mind. Although apps are nontangible products, or even “goods,” the Lanham Act is not limited to only physical goods. Some companies decide to file lawsuits to ensure that a rogue app does not creep up on an app store again even if one rogue version was taken down.

A recent case in the Northern District of California involved an offshore company, NanJing oooo3D Information Technology Co. (NanJing), which not only marketed a counterfeit app, but also wrongfully appropriated and sold the app via the same channels as the legitimate app, thus creating consumer confusion, among other egregious acts.15 The plaintiff, Out Fit 7 Ltd. (Outfit7), is the creator of a popular computer app for use on mobile devices based around a family of animated animal characters, TALKING TOM AND FRIENDS.16 Two of the most popular characters of this group are Talking Tom Cat and Talking Tom Cat 2.17 NanJing took advantage of the animation’s popularity by creating a carbon copy of the app and using the very same name, “Talking Tom Cat” and adding numbers at the end, for example “Talking Tom Cat 3.” This gave users the impression that the defendant came out with a new version of the Talking Tom Cat. The complaint alleges that NanJing offered a “substandard” version of the app, with superficially and substantially similar layouts as the genuine app.18 Outfit7 brought Lanham Act violations and federal trademark dilution claims. Ultimately, it won a default judgment, but was also awarded damages for copyright and trademark violations.19

Accountability for Rogue Apps

As discussed earlier, online service providers may be eligible for the safe harbors provided in the DMCA to avoid liability.20 What about other scenarios outside copyright?

Because apps are a relatively new area, analogous cases for physical goods provide some guidance. In Tiffany v. eBay, Tiffany sought to hold eBay liable for the sale of counterfeit goods by users of the auction site.21 The court found that Tiffany failed to meet its burden of showing that eBay “knew or had reason to know of specific instances of actual infringement” and subsequently failed to act.22 To be liable, eBay needed to have specific knowledge of a specific seller of counterfeit Tiffany products and then continue to supply services to that seller to be liable for contributory trademark infringement.23 In contrast, in Chloe v. Sawabeh, TradeKey, an e-commerce platform, was found to knowingly allow the sale of fake products by third-party vendors.24 Evidence showed that TradeKey had an active role in editing and revising listings to shield the nature of the counterfeit products being sold.

Although the Tiffany and Chloe cases are factually diverse, it may be that app marketplaces with knowledge, or those that are not as quick to respond to a brand owner’s complaints, regarding rogue apps could lead to liability for the app marketplace. For one thing, the app approval process may help target these apps before they are on the marketplace. Apple’s “walled garden approach” makes it very difficult for any app to be available on the app store. This is unlike Google Play’s “open ecosystem” where apps are more liberally approved.25

Counterfeit Apps Are Criminal

In a case of first impression, the U.S. Department of Justice (DOJ) seized several domains that were selling counterfeit apps on Google Play.26 In United States v. Dye, the defendants were charged with criminal conspiracy and violating the Copyright Act.27 According to the criminal information, “[t]hrough the Appbucket website, the conspirators could distribute copies of the pirated apps from Appbucket’s computer servers directly to Appbucket’s subscribers’ Android mobile devices.”28 The defendants distributed over one million copies of copyrighted apps with a total retail value of over $700,000.29 The defendants also realized over $80,000 in ill-gotten proceeds from Appbucket subscriptions.30 Two conspirators entered guilty pleas in March 2014.31

In 2012, similar domains like Snappzmarket.com and Applanet.net were seized. The latter was the largest website for free apps. Unlike the defendants in Dye, the creator of Applanet has not pleaded guilty. He contends that he intended to distribute free legal apps that others downloaded on the Internet and that he did not knowingly or willfully commit criminal copyright infringement.32

The rise of federal activity in the “appsphere” has received criticism. Many say that this conduct, especially in the Applanet case, could have been resolved with a cease and desist letter, or a civil lawsuit against the creator of Applanet.33 However, officials respond that criminal prosecutions help protect legitimate app developers and that these cases involve the “large-scale violation of intellectual property rights in a relatively new and rapidly growing market.”34 Even if brand owners decide not to take civil action with an imposter app, the government may still bring forth criminal charges.35

Keith Harrison, professor of intellectual property crimes at the University of New Hampshire School of Law, agrees and stated in a brief interview, “Many in the lay public may not fully appreciate that intellectual property is in fact property just as much as tangible personal property. However, the allegations contained in these charging documents [referring to the Dye case] show that the criminal community fully appreciates the gain to be had by taking the property created by, or licensed to, others. If society wants to encourage creativity, and commerce in the products of creative minds, we must be prepared to protect IP rights in the same manner that we protect the rights of owners of real and tangible property.”

Mobile Security: Crimes Behind the App

What happens after the rogue app is downloaded on your mobile device? Often the user will be required to accept a user agreement that the user commonly does not read or grant the app certain permissions to access other data on the mobile device.36 The potential dangers include data stealing, such as bank account numbers and e-mail contacts, and unknowingly being signed up for various services. Often malware disguised as an antivirus app, as in the case of the app “Safe Virus Scan,” can steal personal data from those who have downloaded the app.37

A 2013 tech survey revealed that high-risk apps targeting the Android platform reached one million, and 80 percent of these apps were malicious in nature; 55 percent consisted of premium subscriber abuse, and 22 percent represented data stealing.38

Conclusion

To be safe, consumers should look for apps with reviews, read the permissions before downloading apps, and finally, although not foolproof, try to buy apps from a reputable marketplace.

Endnotes

1. Press Release, Gartner, Gartner Says by 2017, Mobile Users Will Provide Personalized Data Streams to More than 100 Apps and Services Every Day (Jan. 22, 2014), http://www.gartner.com/newsroom/id/2654115.

2. Reggie Pierce & Fenn Hoffman, Technology Watch: Mobile Apps Explode, Imitators Follow, World Trademark Rev., Feb./Mar. 2014, at 99, 101, Article no longer available.

3. Id.

4. The New Wild West: Apps and Infringement, World Intell. Prop. Rev. (Dec. 19, 2013), http://www.worldipreview.com/article/the-new-wild-west-apps-and-infringement.

5. Wendy Seltzer, Takedown Complaints in the Android Marketplace, Chilling Effects Clearinghouse (Mar. 3, 2011), https://www.chillingeffects.org/weather.cgi?WeatherID=648.

6. Id.

7. Digital Millennium Copyright Act, 17 U.S.C. § 512(c)(1).

8. Id. § 512(c)(1), (3).

9. Id. § 512(f).

10. See, e.g., Developer Distribution Agreement, Google Play, §§ 7.1–.2, https://play.google.com/about/developer-distribution-agreement.html (last visited July 10, 2014).

11. See, e.g., id. § 7.1.

12. iTunes Content Dispute, Apple App Store, http://www.apple.com/legal/internet-services/itunes/appstorenotices/ (last visited July 10, 2014).

13. Removing Content from Google, Google, https://support.google.com/legal/troubleshooter/1114905?rd=1 (last visited July 10, 2014).

14. Complaint, Zynga Inc. v. Bang With Friends, Inc., No. 13-cv-3517 (N.D. Cal. July 30, 2013).

15. Complaint, Out Fit 7 Ltd. v. NanJing oooo3D Info. Tech. Co., No. 3:13-cv-000050 (N.D. Cal. Jan. 4, 2013).

16. Id. ¶ 2.

17. Id. ¶ 3.

18. Id. ¶ 5.

19. Bill Donahue, Mobile Apps the New Frontier for Counterfeiting, Law360 (Mar. 5, 2014), http://www.law360.com/articles/515464/mobile-apps-the-new-frontier-for-counterfeiting.

20. 17 U.S.C. § 512(c)(1); see also Miller v. Facebook, Inc., No. 3:10-cv-00264 (N.D. Cal. Jan. 22, 2010) (finding the social networking site contributorily liable for copyright infringement and thus not liable for DMCA safe harbors).

21. Tiffany (NJ) Inc. v. eBay, Inc., 576 F. Supp. 2d 463, 510 (S.D.N.Y. 2008).

22. Id.

23. Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 103–06 (2d Cir. 2010).

24. Order Re: Plaintiffs’ Motion for Partial Summary Judgment, Chloe SAS v. Sawabeh Info. Servs. Co., No. 2:11-cv-04147 (C.D. Cal. Oct. 8, 2013).

25. Rich Trenholm, Google Failing to Protect You from Bad BBM Apps, Experts Say, CNET (Oct. 21, 2013), http://www.cnet.com/news/google-failing-to-protect-you-from-bad-bbm-apps-experts-say/.

26. Press Release 14-078, U.S. Dep’t of Justice, Four Alleged Members of Android Mobile Device App Piracy Groups Charged (Jan. 24, 2014), http://www.justice.gov/opa/pr/2014/January/14-crm-078.html.

27. Criminal Information, United States v. Dye, No. 1:14-CR-026 (N.D. Ga. Jan. 24, 2014).

28. Id. ¶ 3(e).

29. Id. ¶ 3(g).

30. Id. ¶ 3(f).

31. Guilty Plea and Plea Agreement, Dye, No. 1:14-CR-026 (N.D. Ga. Mar. 10, 2014).

32. Rory Fleming, Permitted Third Party Distributors Turned Criminal Infringers?: Applanet Defendant Plays Hardball with the Government, N.C. J.L. & Tech. (Apr. 1, 2014), Article no longer available. 

33. Four Face Criminal Charges over App Piracy, World Intell. Prop. Rev. (Jan. 28, 2014), http://www.worldipreview.com/news/four-face-criminal-charges-over-app-piracy (citing statement by Mythili Raman, acting head of DOJ’s criminal division).

34. Id.

35. Nancy Sims, Library Licensing and Criminal Law, 72 C. & Res. Libr. News 534, 534–37 (2011).

36. Ohad Bobrov, Fake Applications: Why Mobile Users Can’t Judge a Book by Its Cover, Lacoon Security (Apr. 22, 2014), http://www.lacoon.com/blog/2014/04/fake-applications-mobile-users-cant-judge-book-cover/.

37. Joji Hamada, Fake Antivirus App Steals Contact Data on Mobile Devices, Symantec (Sept. 25, 2012), http://www.symantec.com/connect/blogs/fake-antivirus-app-steals-contact-data-mobile-devices.

38. Trend Micro, The Invisible Web Unmasked: TrendLabs 3Q 2013 Security Roundup 6 (2013), available at http://www.trendmicro.com/cloud-content/us/pdfs/security-intelligence/reports/rpt-trendlabs-3q-2013-security-roundup.pdf.