Uber seems to be in the news daily. Today, we hear they are being investigated by Chinese antitrust authorities about their proposed combination with Chinese company DiDi in that nation’s ridesharing market. Other reports tell of an $11.4 million fine imposed by the Pennsylvania Public Utility Commission just reinstated for operating illegally in 2014, which Uber is appealing.
So it is not really news when Uber also finds itself in the thick of a trademark dilemma. In August, Uber acquired the company Ottomotto, LLC, the self-driving truck company. Ottomotto filed an application for trademark registration on March 6, 2016 for “Otto” for cars and trucks that have limited or fully automated driving capabilities. They also sought protection for control units for automating the driving of cars and trucks, comprised of writing software, hardware and sensors, and to protect the service of free transportation and related logistics and SaaS services of providing fully or partially automated trucks.
In this application, Ottomotto claimed to have intent to use the mark, but had not alleged any actual use of “Otto.” The application barreled down the Trademark Office highway fairly unscathed, addressing mostly technical issues about how they worded their products and services. These types of technical issues are commonplace, as anyone who has been through the trademark application process knows. They were also asked to explain whether “Otto” had any particular meaning or significance to the industry, another common question, which they answered in the negative.
Meanwhile, up in Ontario (you had to know there was a meanwhile coming), the company Clearpath Robotics had adopted “Otto” for their autonomous mobile robots and fleets which they hoped to use “for land, air, and water purposes,” autonomous mobile robots, referring to academic, military, mining, agriculture, retail, first responder, and a range of other applications.
Clearpath filed its trademark application in the United States on February 19, 2016. The Trademark Office examined the application and, not unlike the situation with Ottomotto’s application, raised a number of formal issues regarding the manner in which the goods and services were described. The Trademark Office also asked for more information about what exactly those services and goods were. This is not unusual when a trademark application is filed for state-of-the-art technology which may not otherwise be easily understood.
On August 24, 2016, Clearpath filed a lawsuit in the United States District Court for the Northern District of California for infringement of the “Otto” trademark, as well as for unfair competition under federal and state law.
On its face, Clearpath would win the question of “who used first.” When no one is claiming to have used their mark yet, the party which filed its application first will typically have superior rights. Clearpath filed a trademark application 15 days before Ottomotto. Now it gets interesting. Did Ottomotto know of Clearpath’s trademark application prior to the time it filed its own? There is no doubt that the Trademark Office records would have reflected the Clearpath trademark application on the date that Ottomotto filed its own application.
(Disclaimer: how the companies actually found themselves in this situation is all speculation for illustrative purposes. The dates are what they are. The reasons behind those dates are not public at this time.)
Companies typically perform a trademark search prior to filing a trademark application. But in the normal course of events, it is not unusual for a search to be conducted several weeks before an application may finally be filed. Trademark owners need to discuss the findings of a search internally within the business unit, and then with their lawyers. It may well be that such a search was performed before the February 19 date.
So, even if you perform a search, keep in mind that time may be of the essence. The clock is always ticking; there can always be someone filing their own application in the intervening time between when you conducted your search and when you decide to file an application.
It turns out that Clearpath also had filed a trademark application in its home country of Canada on September 18, 2015. (Under an international treaty that governs trademark applications, Clearpath qualifies to consider the September 18, 2015 date their date of first application in the United States, since they filed here in the United States within six months of the Canadian application.) Did Ottomotto learn of the use in Canada before it filed in the USA?
The pleadings in the court case make clear that the plaintiff says it not only filed its trademark application before Ottomoto, but is claiming that it actually used the mark continuously, without interruption, since it first introduced the “Otto” product at the RoboBusiness 2015 conference in San Jose, California. According to Clearpath, Ottomotto is now using its trademarks in the United States in a similar manner, and claims that the press and potential customers have already been confused. They asked the court to stop Ottomotto’s use of this trademark. How Ottomotto is currently using the trademark is not explained the complaint, but they must be, since you cannot ordinarily be sued simply for filing an intent to use trademark application if you do not also have actual use. (Intention to use is not against the law.)
For entrepreneurs, this situation provides a number of things to think about.
First, are you searching trademarks before you use them? If you don’t search, you may unpleasantly discover that someone has prior rights to your own. A worst-case scenario finds you discussing those prior rights before a United States District Court Judge.
Secondly, even if you go through the searching mechanism, you should always keep in mind whether your search results are “fresh.”
On the other hand, trademark rights do not exist in words alone. They exist in words or symbols only as they are used to identify particular products and services. One defense which Ottomotto will undoubtedly raise in this case is that relevant consumers of those two companies are different, and are highly unlikely to (they will argue) be confused. The fact that the complaint says some people already have been confused may or may not be relevant; that will be up to court to decide.
It is highly possible — maybe even likely — Ottomotto and its lawyers knew everything there was to learn about the Clearpath products and decided to move forward because they concluded that there was no legal conflict. These types of decisions are made every day, along with the associated decision to assume the risk — whatever that may be. The proposed mark could be important enough to fight for. The applicant may have confidence that it can win such a fight if it emerges. That calculated risk is one which is much easier to take if you have the financial backing of Uber and can absorb an ongoing stream of six-figure hits for legal fees while you battle it out in the federal courts.
If your enterprise is unable or unwilling to fund this type of dispute then the legal question of whether you believe you can win the fight is less important than the practical question of whether you can afford to find yourself in a fight. You must ask yourself whether any potential new mark is so critical to your company’s success that you are prepared to fight for the right to use a trademark your customers do not yet even know exists. Sometimes, it is better to get away from your lawyers, and go back to the drawing board.
This post originally appeared on Forbes.