IP Law Daily, TRADEMARK—D. Mass.: Nexsan establishes priority of use of UNITY for data storage products, (Apr 17, 2017)

By Robert Margolis, J.D.

Nexsan Technologies, Inc., has established priority of use of the trademark UNITY in connection with computer data storage and associated technologies, the federal district court in Boston has held. The court granted Nexsan summary judgment as to priority in its declaratory judgment action against EMC Corporation, which similarly launched a data storage product under the UNITY mark (Nexsan Technologies Incorporated v. EMC Corporation, April 14, 2017, Young, W.).

Nexsan manufactures computer data storage, backup, and management technologies. EMC, a Fortune 200 company now owned by Dell, also develops and manufactures data storage technologies. In 2016, Nexsan and EMC each independently launched new computer data storage systems under the "UNITY" mark. Nexsan filed two intent-to-use trademark applications with the United States Patent and Trademark Office on March 22, 2016, seeking to register the UNITY and NEXSAN UNITY marks for computer data storage hardware and software.

EMC contends that it publicly used the UNITY mark first, in connection with its "VNX" product line beginning in early 2014, citing beta testing and pre-sale presentations to customers and potential customers. On April 29, 2016, EMC sought registration of its UNITY marks in connection with computer goods and services. On May 2, 2016, EMC publicly launched its UNITY products at the company’s annual trade show.

Nexsan sued EMC, seeking a declaratory judgment of non-infringement and priority of its UNITY marks, as well as false designation of origin and unfair competition in violation of the Lanham Act. The parties filed cross-motions for summary judgment on the priority issue.

Burden. Given that Nexsan filed its intent-to-use applications for the UNITY mark prior to EMC, the court held it was EMC’s burden to prove its priority to the UNITY mark. This required a showing of "open and notorious" prior use that would suffice to create an association in the minds of the purchasing public between the UNITY mark and EMC. EMC failed to meet this burden, the court held.

Beta testing. EMC contended that its beta testing established priority. The court rejected this argument for three reasons. First, the beta testing group was too small to form a substantial segment of EMC’s customer base, the court held. Only 20 "select organizations" were involved in beta testing, which the court found to be an insufficient number. The testing had to "reach a sizable proportion of the relevant public, and the testing cohort must constitute more than a small, hand-picked group," the court noted. Twenty beta testers is too small a proportion of the market of "tens of thousands of customers" to whom EMC markets its product, the court held.

Second, the beta test was confidential, as each of the beta testers was required to execute a confidentiality agreement. This confidentiality requirement made it "unreasonable" to assume that EMC’s testing could meet the "open and notorious" use requirement for priority, the court held.

Finally, the evidence established that, during the beta testing period, EMC did not consistently use the UNITY name, but instead alternatively referred to the product as "Thunderbird," "Oberon," and "UNITY." This diminished any possible association of the name UNITY with the product, the court noted.

Pre-sale presentations. EMC also contended that 84 pre-sale presentations it conducted beginning in March 2015, with up to 100 attendees at each and more than 1,000 total, established priority. The court held otherwise. Again, given the market of more than 10,000 potential customers, the number of attendees was too small. The court noted that the record was imprecise as to the total number of attendees to the 84 presentations, but "presentations reaching only 84 to 1,000 out of more than 10,000 customers are insufficiently public," to create the requisite link between the UNITY mark and EMC’s product, the court held. The fact that attendees had to execute non-disclosure agreements only bolstered this conclusion.

Blog. The court also rejected EMC’s argument that reference to "unity" in a blog, as well as "word of mouth," support EMC’s priority of use. A party other than EMC wrote the blog, which was "ambiguous," according to the court. In addition, the confidentiality agreements of beta testers and presentation attendees necessarily defeated EMC’s word-of-mouth argument.

Nexsan’s knowledge. The court also rejected EMC’s argument that Nexsan’s knowledge of EMC’s unity product—obtained when a Nexsan employee overheard a single conversation, which led to an Internet search that uncovered the blog—evidenced the requisite public awareness linking UNITY to EMC.

The case is No. 1:16-cv-10847-WGY.

Attorneys: Lisa M. Tittemore (Sunstein, Kann, Murphy & Timbers LLP) for Nexsan Technologies Inc. Elizabeth E. Brenckman (Fish & Richardson PC) for EMC Corp.

Companies: Nexsan Technologies, Inc.; EMC Corp.

Cases: Trademark MassachusettsNews