IP Law Daily, TRADEMARK—N.D. Tex.: Owner of cellular performance-analysis software could not pursue infringement claims against former licensee, (Jun 18, 2014)

By Mark Engstrom, J.D.

The owner and developer of HASATI—a proprietary software product that wireless companies used to test the strength and quality of cellular signals—failed to properly plead a claim for trademark infringement under §32 of the Lanham Act, the federal district court in Dallas has ruled (AutoOpt Networks, Inc. v. GTL USA, Inc., June 16, 2014, Fitzwater, S.). The trademark claim was therefore dismissed.

Background. Plaintiff AutoOpt Networks developed a software product that collected, analyzed, and reported on performance data related to telecommunications networks. Wireless companies used that product—named HASATI—to test the quality and strength of cellular signals that were generated by cell towers throughout the United States. Testing was performed by “drive teams” that drove designated routes in vehicles that were equipped with data-collection devices that used the HASATI software.

In 2011, defendant GTL USA signed a licensing agreement with AutoOpt. The agreement allowed GTL to use the HASATI software to perform data-collection services for cellular service providers such as AT&T. Because GTL breached that agreement by failing to pay the required licensing fees, Opt-Out cancelled GTL’s license to use the HASATI software and sued GTL (and various individuals and entities that were associated with GTL) for trademark infringement and other unlawful conduct. GTL sought dismissal of the trademark claims.

Trademark infringement. AutoOpt alleged that the defendants had violated §32 of the Lanham Act (15 U.S.C. §1114) by using AutoOpt’s “proprietary, copyrighted HASATI Software, without compensation,” and by publicly representing themselves as “having control of the Software and the right to alter and modify it” (emphasis added).

Although AutoOpt’s claim was asserted under §32 of the Lanham Act, its allegations regarding the unauthorized use and attempted piracy of its copyrighted software did not allege trademark infringement, according to the court. Significantly, AutoOpt’s proprietary software did not constitute a “registered mark” under §32, the court explained. In fact, the only registered mark that AutoOpt had identified was HASATI, and that mark was owned by an AutoOpt affiliate.

In addition, AutoOpt failed to plausibly allege that the defendants’ unauthorized use of its software, or their posting of an Internet ad that solicited a software engineer with the ability to “customize HASATI applications per consumer requirement,” was likely to cause consumer confusion about the source of the HASATI mark.

Because AutoOpt failed to allege the §32 requirement that the defendants “use[d] in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services,” or that such use was likely to cause confusion, the court dismissed the §32 trademark claim. AutoOpt was given 28 days to file and amended complaint that cured the identified defects.

The case is Civil Action No. 3:14-CV-1252-D.

Attorneys: David H. Harper (Haynes & Boone LLP) for AutoOpt Networks, Inc. Steven A. Fleckman (Fleckman & McGlynn) for GTL USA Inc., GTL International, Ltd., and GTL Ltd.

Companies: AutoOpt Networks, Inc.; GTL USA, Inc.; GTL International, Ltd.; GTL Ltd.

Cases: Trademark TexasNews