This is a guest Post from Margaret Theranger, student at the Earle Mack School of Law at Drexel
University, based on her experience at Startup Weekend Philadelphia law clinic last fall.
Recently, I attended Startup Weekend Philadelphia, a 54-hour startup event for entrepreneurs to meet and form the basis of a credible business over the course of a weekend. The bases of the majority of these businesses were mobile applications. And it makes sense. A recent study by ABI Research shows that the total global mobile application revenues will reach $46 billion by 2016.
Mobile apps are easy to make and everyone wants them, so entrepreneurs shouldn’t hesitate to create them, right? This isn’t necessarily the case. While mobile apps can be created in 54 hours, the simple choice of an app’s name and design can cause years of legal trouble.
Mobile apps can raise a number of trademark issues. A simple search of the iTunes App Store can often show dozens of applications with similar names, logos and developer information. Such confusing naming schemes can help less popular apps gain popularity, but can also create consumer confusion as to the creator of an app and its services. Often, these applications are of lower quality than the products whose name they are adapting. Poor quality apps that use another’s mark may tarnish consumers’ opinions of the brand associated with that mark.
While in the short term, use of another’s mark may result in a few extra downloads, committing trademark infringement is often damaging for an entrepreneur’s business in the long run. A company with a trademarked name or logo can stop an infringing app creator from using the name and design of an app, even where that app is successful. For example, in February 2010, Jeff Peiffer, a mobile banking entrepreneur, released an application that let smartphone users check balances at banks that were lacking their own Android apps, including JPMorgan Chase & Co. JP Morgan later released their own similar app and filed a trademark claim again Peiffer. Peiffer responded by changing the name of his app in a way that avoided the likelihood of consumer confusion. He reported that he had about 20,000 downloads and about 1,400 ratings with his initial app. Since releasing the revised version of the app, he had 400 downloads and about 10 ratings.
There are ways for entrepreneurs to lower the risk of trademark infringement when creating an app. Entrepreneurs should not use a known trademarked name or logo without permission of the trademark owner. Entrepreneurs should also do research before naming and designing their app. While talking with an IP attorney is recommended, the Startup Weekend format does not provide for a proper analysis to be performed. However, even in a hectic environment such as Startup Weekend, a simple search in the app store can be helpful to lowering the risk of trademark infringement. Of course, should the team continue working on the idea after the weekend is over, there is no excuse not to reflect on these questions.
About Margaret: Margaret is a 3L concentrating in Intellectual Property. She is currently the trademarks chair of Earle Mack’s IP Society and is the recipient of the Woodcock Washburn IP Award for her school. Margaret participated in Drexel’s first Entrepreneurial Law Clinic as one of two intellectual property clinicians and spent the summer after her 2L year as the legal intern for ABC Studios in Los Angeles, CA.
Editor’s Note: My colleagues Michael Leonard and John Sullivan co-authored an article on trademark enforcement strategies in App stores that provides some interesting insights into this area of law.