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Appleā€™s goods come to grief at TTAB

Scott J. Slavick

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What is a good in trade? It sounds straightforward, but based on the Trademark Trial and Appeal Board's November ruling in In re Apple, Inc., Serial No. 78/521,891, it can be anything but.

In the ruling, which is non-precedential, the Board affirmed a refusal to register Apple's iPod trademark for use in connection with printed materials and publications "sold or distributed in connection with handheld mobile digital media devices," on the ground that Apple's specimens of use did not show the iPod trademark in use as a trademark for "goods in trade." The specimens of use offered by the computer giant were its user manuals.

The Lanham Act defines a trademark as something being used "to identify and distinguish his or her goods" and "to indicate the source of the goods." These definitions "carry the necessary implication that a prerequisite to obtaining a trademark is that the subject matter to which it applies must be goods." According to past precedent, before rights in a term as a trademark can be established, the subject matter to which the term is applied must be “goods in trade.”

The question before the court then became whether Apple's printed materials qualified as goods in trade. In its appeal, Apple argued that its printed materials constituted such goods in trade because they bear Apple's iPod mark, are sold in commerce, and have utility to consumers of Apple's products in that they explain how to use the iPod.

The USPTO disagreed. It argued that the user manuals were provided only incidentally with the iPod, are not sold or distributed independently of the iPod, and have no viable existence apart from the iPod.

Apple faced a high bar at the TTAB as well. The Board has consistently held that items incidental to the conduct of a business, such as letterhead, invoices, and business forms which bear an entity's trademark, do not generally qualify. The test for determining whether an item is merely incidental to a primary product or an actual good in trade considers three factors.

The first factor is whether the item in question is simply a conduit or whether it is a necessary tool useful only in connection with the primary goods. The second is whether the item in question is so inextricably tied to and associated with the primary goods that it has no viable existence apart from the goods. Third is whether the item is neither sold separately from nor has any independent value apart from the primary goods or services.

In its ruling, the Board explained that the general question in such matters is always the same: "What is being offered for sale?" It concluded that all three of these factors supported the USPTO's refusal to register iPod for the applied-for goods. The materials are paper inserts, provided in the same boxes as the goods, that provide nothing more than elementary guidance to iPod purchasers but not to other consumers. There was no evidence that the materials were sold independently. There was no evidence that consumers go to Apple stores seeking these manuals. So the Board affirmed the USPTO's refusal.

The Board's decision does leaves a couple of loose ends, however. According to the USPTO's Acceptable Identification of Goods and Services Manual, an acceptable listing of goods can be "Computers and instructional manuals sold as a unit.” At the same time, when a company sells user manuals together as a unit with its computers, it is allowed to ignore the manuals in its identification of goods and just list "computers". Would it not logically follow, then, that one should also be able to sell computers and user manuals together but identify the goods only as "user manuals"?

Put another way, is it logically inconsistent to say that "Computers and instructional manuals sold as a unit" is an acceptable identification of goods in trade, but "Computers, wires, a keyboard, cardboard boxes, plastic bags, and packaging materials sold as a unit" is not? At first blush, this question may seem suspect, but on such fine points of description often turn important decisions about the essence of a product sold, important peripherals and ancillary materials, and the goods' utility.

In addition, while the Trademark Trial and Appeal Board noted that an iPod's user manual is of no practical use without the iPod, for many users, the computer is of no practical use without the user manual. Both items are costly to make, and both are of real and separate monetary value to the consumer. Used electronic goods sold online ordinarily sell for more money if the listing states that the user manual is included, a tangible demonstration of value that could have been cited in Apple's argument. In addition, many user manuals are sold separately on eBay, as replacements for lost user manuals.

Accordingly, the Board's evaluation of the third factor—that is, that the manuals have no "independent value"—appears incorrect, or to have improperly discounted this aspect of Apple's claims, at least with respect to user manuals in general. Not good—and Apple gets bruised by it.


Reprinted with permission from the January 27, 2016 edition of Inside Counsel© 2016 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.

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