IP Law Daily, TRADEMARK—N.D. Cal.: Order canceling software company’s ‘PERPLEXITY’ registration vacated; court questions its jurisdiction, (Jan 28, 2026)

By Thomas Long, J.D.

Noting Ninth Circuit precedent that Lanham Act Sec. 37 does not provide an independent basis for jurisdiction, court orders Perplexity AI to show why sufficient Article III case or controversy exists, given dismissal of trademark claims against it.

Just days after it granted a request by Perplexity AI to render a default judgment ordering cancellation of a trademark registration owned by software company Perplexity Solved Solutions, Inc., the federal district court in San Francisco has vacated the order. Noting that cancellation of a trademark is not an independent cause of action in the Ninth Circuit, the court questioned whether it had Article III jurisdiction over Perplexity AI’s cancellation counterclaims, given that the software company’s infringement claims had been dismissed. Perplexity AI was given until February 3 to show the court why there was a live case or controversy that gave the court Article III jurisdiction to grant default judgment (Perplexity Solved Solutions, Inc. v. Perplexity AI, Inc., No. 3:25-cv-00989-JSC (N.D. Cal. Jan. 26, 2026)).

Perplexity Solved Solutions, Inc. (PSSI)—a technology-focused business that claimed to provide software-as-a-service—filed a trademark infringement suit against artificial intelligence developer Perplexity AI, Inc., based on PSSI’s U.S. Trademark Registration No. 6,906,290, which covered a leaf logo mark featuring the word “Perplexity.” PSSI had filed a use-based application to register the mark in October 2021, identifying the underlying services as “software as a service (SAAS) services featuring software for data analytics and UI testing.” PSSI asserted that Perplexity AI’s use of the term “Perplexity” created a likelihood of confusion. Perplexity AI denied infringement and counterclaimed for cancellation of the ’290 registration on the grounds of fraud on the USPTO and abandonment.

During litigation, PSSI’s counsel withdrew from the action, with the court’s approval. Despite multiple extensions and warnings that as a corporation it could not proceed without representation, PSSI failed to retain substitute counsel. Perplexity AI moved for default judgment, and in an order dated January 23, the court entered default judgment against PSSI. The court ordered the cancellation of the ’290 registration pursuant to Lanham Act Section 37, 15 U.S.C. § 1119. The court stated that it had federal subject matter jurisdiction “because Perplexity [filed] counterclaims under the federal Lanham Act.”

However, on January 26, the court issued an order vacating the default judgment. The court noted that the Ninth Circuit had held in Airs Aromatics, LLC v. Victoria’s Secret Stores Brand Management, Inc., 744 F.3d 595 (9th Cir. 2014) that Section 37 “does not provide an independent basis for federal jurisdiction.” That section of the Lanham Act states, in relevant part, “In any action involving a registered mark the court may … order the cancelation of registrations.” In Airs Aromatics, the Ninth Circuit explained that each circuit to directly address the language of Section 37 has held that it creates a remedy for trademark infringement rather than an independent basis for federal jurisdiction.

Perplexity’s counterclaims remain pending, but since Section 37 does not provide a basis for federal jurisdiction in the absence of an action involving a registered mark, there may not be a live case or controversy conferring jurisdiction under Article III, the court explained. And a court cannot enter default judgment without ensuring that it has jurisdiction.

The court therefore vacated its January 23 default order. It ordered Perplexity AI to show cause, by February 3, why the court has jurisdiction to enter default judgment on its counterclaims. “If Perplexity does not respond or if its response fails to establish a basis for subject matter jurisdiction, the Court will dismiss Perplexity’s counterclaims for lack of jurisdiction and enter final judgment in favor of Perplexity and against PSSI on PSSI’s trademark infringement claims,” the court said.

The case is No. 3:25-cv-00989-JSC.

Judge: Corley, J.

Attorneys: Jennifer L. Barry (Latham & Watkins LLP) for Perplexity AI, Inc.

Companies: Perplexity Solved Solutions, Inc.; Perplexity AI, Inc.

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