Software as a Good versus Software as Service

The recent NetJets Inc. v. IntelliJet Group, LLC federal decision has been making waves in trademark law as it has trademark practioners rethinking whether to file their trademark applications for software as goods, services, or both. Generally, one can file their trademark application for software as a good or as a service, or as both. The decision is clearly up to the client, and the U.S. Trademark Office’s sticking point is often over whether the software is downloadable or nondownloadable.

In NetJets, however, a federal district court cancelled an eighteen-year old and incontestable trademark registration for the mark, “INTELLIJET.” The court cancelled it as void ab initio and as abandoned, despite the owner, NetJets, using the mark since 1995, spending over $20 million on the mark, and third parties having extensively mentioned the mark in articles and publications.

A key factor in the court’s determination that NetJets failed to have enforceable rights in the mark was that NetJets did not demonstrate “use in commerce’ as defined by the Lanham Act. In holding that NetJets did not meet the standard of “use,” the court stated that NetJets was not in the business of selling software, the software was simply a conduit through which it provided a service to its consumers, the software was not a separate product marketed or promoted to customers.

As such, the court cancelled the registration, concluding that the NetJets' use did not rise to the level of use as required by the Lanham Act. The federal district court cites the 2012 Lens.com v. 1-800 Contacts Federal Circuit decision as precedent for its holding. In Lens, the Federal Circuit affirmed a Trademark Trial and Appeal Board (TTAB) decision that granted summary judgment to 1-800-Contacts on a cancellation claim for the mark “LENS.”

Overall, trademark practioners should consider filing separate applications to cover software as a good and software as a service. This would provide registrations and protection for the mark for both the software as a good and the underlying services in case one or the other is challenged or successfully cancelled.

Source: NetJets Inc. v. IntelliJet Group, LLC, No. 2:12-CV-0059 (S.D. Ohio Dec. 19, 2013)

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