Microwave Systems Corp. v. Apple Computer, Inc.
| Decision Date | 15 March 2000 |
| Docket Number | No. 4-99-CV-90496.,4-99-CV-90496. |
| Citation | 126 F.Supp.2d 1207 |
| Parties | MICROWARE SYSTEMS CORP., Plaintiff, v. APPLE COMPUTER, INC., Defendant. |
| Court | U.S. District Court — Southern District of Iowa |
Kent A. Herink, David A. Tank, Davis Brown Koehn Shors & Roberts PC, Des Moines, IA, for plaintiff.
Jeffrey D. Harty, Edmund J. Sease, Zarley McKee Thomte Vorhees & Sease, Des Moines, IA, Patrick Lynch, O'Melveny & Myers LLP, Los Angeles, CA, George A. Riley, O'Melveny & Myers, LLP, San Francisco, CA, for defendant.
ORDER ON PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION AND DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Before the Court are (1) Plaintiff's Motion for Preliminary Injunction filed October 14, 1999 and (2) Defendant's Motion for Summary Judgment filed November 26, 1999. The parties timely resisted and replied to the respective motions. The Court conducted a fact-intensive hearing and heard witness testimony on the merits of these motions on February 9 10, 2000 at the United States Courthouse in Des Moines, Iowa. Plaintiff requested, and the Court granted, an extension until March 13, 2000 to file an additional brief and argument on evidentiary items. The Court has read and reviewed both parties' submissions. The matter is submitted. After carefully reviewing the facts and law in this case, the Court denies Plaintiff's Motion for Preliminary Injunction and grants Defendant's Motion for Summary Judgment.
This is a trademark infringement action brought by Plaintiff Microware Systems Corp. ("Microware") against Defendant Apple Computer, Inc. ("Apple") under provisions of the Lanham Act, 15 U.S.C. §§ 1051-1127. Microware's federal claim is in three counts: trademark infringement (Count I); unfair competition (Count II); and dilution (Count III). Microware also pleads state law infringement and unfair competition.
The crux of the Complaint alleges that Apple's launching of its most recent computer operating system, "MAC OS-9" for Apple's Macintosh personal computer, constitutes willful and intentional infringement of Microware's federally registered trademark "OS-9" — a mark which has been federally registered since September 19, 1989. See Count I of Compl. at para. 16. The Complaint further alleges that Apple's use of the name "MAC OS 9" has caused confusion to consumers and substantially and irreparably damaged Microware. Id. at para. 17. Pursuant to Rule 65 of the Federal Rules of Civil Procedure, Microware filed the present Motion for Preliminary Injunction seeking to enjoin Apple from describing, marketing, or otherwise designating the latest version of Apple's operating system under the name "MAC OS 9". Apple defends by denying that confusion exists in the marketplace or that Microware has been damaged in any way by Apple's release of Mac OS 9. Second, Apple argues that even if there is confusion and Microware has been damaged, Apple's fair and good faith use of "OS 9" in the name "MAC OS 9" operates as a complete defense to the trademark infringement claim. See 15 U.S.C. § 1115 (). The "fair use" defense is the subject of Apple's Motion for Summary Judgment.
Before turning to the merits, a brief description of the history of the software products at issue in this litigation will be helpful in resolving the legal contentions raised by the parties. To the extent the history bears on Apple's Motion for Summary Judgment, the Court will view such history in a light most favorable to Microware. See Harlston v. McDonnell Douglas Corp., 37 F.3d 379, 382 (8th Cir.1994).
As stated in its moving papers, Microware is an Iowa corporation and has been a developer of real time operating system (RTOS) software since at least 1980. RTOS computer software enables a full range of high-tech or "smart" devices from cellular telephones and wireless communication devices to anti-lock brakes to function properly. Collectively, the RTOS software and the sophisticated devices that are run by it are known in the computer industry as "embedded systems." Microware competes directly with other RTOS developers in the embedded systems market.
OS-9 was the trade name Microware gave to its first line of real time operating systems and related tools. Now trademarked, OS-9 is the name Microware still uses to call its RTOS products. Microware has developed a line of OS-9 products for use in a number of commercial areas: industrial automation, transportation, medical, and government/military systems; communications infrastructure devices and equipment; and consumer products such as digital television decoders, wireless telephones, and internet appliances.
Microware licenses its OS-9 RTOS not to general consumers but to "original equipment manufacturers" (OEMSs) such as Motorola, Philips Electronics, Fujitsu, IBM, Avnet Electronics Marketing, and Rockwell Collins. Licenses range from $4,000 for a base industrial OS-9 license to $150,000 for a standard Digital Audio Video Interactive Decoder system. Microware has enjoyed considerable financial success. For example, over its lifetime, Microware has posted revenues of over $184 million, with substantially all of that coming from sales of its OS-9 operating system.
Unlike Microware, whose main business is in the sophisticated, RTOS market, Apple makes and sells an operating system that only runs on Apple personal computers. Since at least 1991, Apple has utilized a sequential numbering system to denominate new releases of its operating system for use in its Macintosh personal computer. For instance, in 1991 Apple released "System 7" operating system. Periodically, successive updates of the operating system were released with corresponding changes in the decimal number: System 7.1, 7.1.2, 7.1.3, 7.5, etc. In 1994, Apple announced "Mac OS" as the new name for its operating software — a name for which Apple eventually received a trademark. In January 1997, Apple released Mac OS 7.6; major and minor upgrades to the operating system were denominated by upward changes in the whole number and decimal number, respectively. Thus, from January 1997 to May 1999, Apple issued versions of its operating software under the following naming scheme:
1/97 — Mac OS 7.6
7/97 — Mac OS 8
1/98 — Mac OS 8.1
10/98 — Mac OS 8.5
Thus, version numbers increased, which is typical software industry practice, with each new major or minor release.
On July 21, 1999, Apple announced that its upcoming version of the Mac OS would be called "Mac OS 9."1 Around this time, Microware learned of discussions on the internet and in newspapers and magazines regarding the introduction of Apple's Mac OS 9 operating system. "Many of the discussions," Microware claimed, "have focused on the confusion created by [Apple's] selection of a product name identical to that of [Microware]." See Compl. at para. 15.2 Given the publicity surrounding the announcement of Mac OS 9 and the apparent fear that consumers would be confused with two software products with "OS 9" in their name, Microware filed the present action.
The Court first will address Plaintiff's Motion for Preliminary Injunction and then decide Defendant's Motion for Summary Judgment.
In deciding whether to issue a preliminary injunction, the district court must weigh (1) the probability that the moving party will succeed on the merits; (2) the threat of irreparable harm to the moving party; (3) the balance of hardships should the injunction issue; and (4) the public interest. See United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1178-79 (8th Cir. 1998); Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir.1981) (en banc). All of the Dataphase factors, as they have come to be called, must be considered and balanced to determine whether to grant this "extraordinary remedy." See Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 503 (8th Cir. 1987).
To prevail under the Lanham Act, Microware must prove that Apple's use of the name Mac OS 9 "creates a likelihood of confusion, deception, or mistake among an appreciable number of ordinary buyers as to the source of or association" between the two companies. Duluth News-Tribune v. Mesabi Publ'g Co., 84 F.3d 1093, 1096 (8th Cir.1996) (citing 15 U.S.C. § 1114(1) and General Mills, Inc. v. Kellogg Co., 824 F.2d 622, 626 (8th Cir. 1987)). The ultimate inquiry in a trademark infringement claim "always is whether, considering all the circumstances, a likelihood exists that consumers will be confused about the source of the allegedly infringing product." Hubbard Feeds, Inc., v. Animal Feed Supplement, Inc., 182 F.3d 598, 602 (8th Cir.1999) (Eighth Circuit citations omitted). The "circumstances" relevant to this analysis include: "(1) the strength of the owner's mark; (2) the similarity of the owner's mark to the alleged infringer's mark; (3) the degree to which the products compete with each other; (4) the alleged infringer's intent to `pass off' its goods as those of the trademark owner; (5) incidents of actual confusion; and (6) whether the degree of care exercised by the consumer can eliminate a likelihood of confusion that otherwise would exist." Id.
After weighing the considerations as they apply to this record and reviewing the case law in this area, the Court concludes that Microware has not met its burden of showing a likelihood of success on the merits.
Microware argues that OS-9 is a strong mark because the mark has received "incontestable" status3 and because Microware has expended considerable financial resources to market and advertise its OS-9 product. Generally speaking, "strong" marks are afforded broad protection; "weak" ones get limited protection. This principle applies not only to registered trademarks, General Mills, 824 F.2d at 626 (citing Abercrombie & Fitch Co. v....
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