Inconclusive investigation isn’t enough to give knowledge for contributory TM infringement purposes

Spy Phone Labs LLC v. Google Inc., No. 15-cv-03756-PSG, 2016
BL 86393 (N.D. Cal. Mar. 21, 2016)
 
SPL registered Spy Phone as a mark (for something, I presume),
and submitted its Android app, SPY PHONE Phone Tracker, to Google.  It was downloaded over a million times, and
Google took down a number of competing apps with similar names when SPL requested
that it do so via Google’s online complaint form.  Whenever Google removed an app based on a
trademark complaint, it sent the app developer a notification containing the
complainant’s name and email address.
 
According to the complaint: The app stores information on
phone locations and use on a secure server, and it periodically displays an
icon to let users know the app is running; it’s free, but SPL generates revenue
by running ads via Google on spyphone.com. 
After one developer objected in May 2013, the relationship between
Google and SPL eroded.  SPL submitted a
trademark infringement complaint about another app, “Reptilicus.net Brutal Spy
Phone,” and this time Google said it couldn’t determine the merits of the claim
and refused to act.  Then in June, the
Google Play team removed SPL’s own app, citing violations of Google’s
anti-spyware policy, allegedly despite the fact that SPL’s app complied with
the policy.  Eventually, Google explained
that although none of the functions of SPL’s app violated the anti-spyware
policy, the name itself was unacceptable because it contained the word “spy.”  Though other apps used the same word, Google
promised that it intended to prohibit all developers from doing so in the
future.
 
Thus, SPL decided to drop its lawsuit and relaunch its app
under the name “Phone Tracker.”  In October
2013, Google reinstated SPL’s developer account, but it deleted all the
consumer reviews and records of downloads for SPL’s original app, and the new
app managed only 260,000 downloads in ten months, leading to a steep reduction
in SPL’s advertising revenue.29 Meanwhile, other apps continued to use “spy”  in their names with impunity.  So SPL resumed submitting complaints about
other apps that used “spy” or “SPY PHONE” in their names, but instead of using
the trademark infringement form—which would notify developers of SPL’s identity—SPL
claimed violations of the same anti-spyware policy of which it had fallen
afoul.  In July 2014, SPL made a
complaint about another app from the Reptilicus.net developer, and Google again
suspended SPL’s account without warning, this time for purportedly violating
Google’s spam policy. SPL alleged that its app complied with that policy, but
that the other developer had submitted a false complaint.  This other developer had multiple Play Store
parental monitoring apps—which in itself violates Google’s policies—and several
of these apps contained the word “spy,” or even the phrase “Spy Phone,” in
their names.  SPL allegedly received a
letter from a “concerned” member of the Google Play team “confirming SPL’s
suspicions.”  After this second takedown,
Google searches for the phrase “spy phone” started to list competing apps
before SPL’s website, and the top-listed result is now an app that allegedly
infringes SPL’s trademark.
 
SPL sued the developer, who has not yet been served, and
Google, alleging contributory trademark infringement against Google and
tortious interference against all the defendants. The court first found that
SPL didn’t allege facts sufficient to state a claim for contributory trademark
infringement by Google. With an online marketplace, “a service provider must
have more than a general knowledge or reason to know that its service is being
used to sell counterfeit goods. Some contemporary knowledge of which particular
listings are infringing or will infringe . . . is necessary.”  SPL didn’t allege that Google had notice for
most of the apps; SPL intentionally made spyware complaints instead of
trademark complaints in order to remain anonymous.  “But spyware complaints are not the same as
trademark complaints, and Google could not be expected to respond to a
complaint about one offense by investigating another.”
 
Google also didn’t ignore the initial Reptilicus.net app; it
investigated and responded that it could not assess the merits of the claim.  The app might have used the words “Spy Phone”
simply as a descriptor, as opposed to the distinctive prefix “Reptilicus.net
Brutal,” and that fact would constitute a defense to infringement.  Uncertainty over the existence of
infringement is relevant to an alleged contributory infringer’s knowledge.  That uncertainty, combined with Google’s
investigation and response, made the allegations of knowledge implausible.
 
Nor did tortious interference work, because there was no
allegation that Google committed any act wrongful apart from the interference
itself.

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