Case: 20-17196, 12/04/2020, ID: 11916043, DktEntry: 10, Page 1 of 96
20-17196
United States Court of Appeals For the Ninth Circuit
FREELANCER INTERNATIONAL PTY LIMITED, ET AL., Plaintiffs-Appellants, v.
UPWORK GLOBAL, INC., ET AL., Defendants-Appellees.
Appeal from the United States District Court for the Northern District of California No. 3:20-cv-01632-SI, The Honorable Susan Illston
APPELLANTS’ OPENING BRIEF
Andrew T. Oliver AMIN TUROCY & WATSON LLP 160 W. Santa Clara Street, Suite 975 San Jose, CA 95113 (650) 393-0634
December 4, 2020 Attorneys for Plaintiffs-Appellants Freelancer International Pty Limited and Freelancer Technology Pty Limited
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Corporate Disclosure Statement
Pursuant to Federal Rule of Appellate Procedure 26.1, Appellants state that
Freelancer Limited is their parent corporation and is a publicly held corporation
owning 10% or more of their stock.
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Table of Contents
Table of Abbreviations...... 8
Introduction ...... 9
Statement of Jurisdiction ...... 25
Statement of Issues ...... 26
Statute ...... 27
Statement of the Case ...... 29
A. The District Court Proceedings ...... 30
Summary of the Argument ...... 31
Standard of Review ...... 33
Argument...... 35
II. The Court Erred as to Both Law and Facts in Finding that Upwork Engaged in Fair Use of the Incontestable “Freelancer” Mark ...... 35
A. The Court Erroneously Applied The Wrong Standard In Finding Fair Use ...... 36
B. The Incontestable “Freelancer” Mark is Not Fairly Used By Upwork ...... 38
C. Upwork’s Use of “Freelancer” to Name Its Software Application is “As A Mark,” Further Removing the Fair Use Defense ...... 42
D. Upwork’s Use of “Freelancer” to Send Notifications to Users of Upwork’s Software is also “As A Mark,” Further Removing the Fair Use Defense ...... 45
E. Upwork Did Not Establish Good Faith And, Hence, Did Not Establish Fair Use ...... 53
F. The Court Further Erred In Failing to Consider the Degree of Confusion in Evaluating Fair Use ...... 57
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G. The Court Erred In Considering Upwork’s Secondary Logo ...... 57
III. The Court Erred in Finding Absence of Likelihood of Irreparable Harm ...... 59
A. The Court Applied the Wrong Legal Standard in Requiring “Actual” Harm ...... 59
B. Regardless of the Standard Adopted, the Court Abused Discretion Through a Clearly Erroneous Assessment of the Evidence ...... 62
1. The Court Erred In Making an Incomplete Finding Regarding Irreparable Harm ...... 62
2. Evidence Shows the Likelihood of Irreparable Harm Through Loss of Control of Business Reputation and Damage to Good Will ...... 63
3. Evidence Shows the Likelihood of Irreparable Harm Through Loss of Prospective / Diverted Customers ...... 67
4. Evidence Shows the Likelihood of Irreparable Harm Through The Loss of Rankings and Reputation ...... 72
IV. The Court Erred In Holding That Freelancer Is Unlikely To Succeed on Its Counterfeiting Cause of Action ...... 74
A. Upwork Uses a Spurious / Non-Genuine Mark Identical to the Freelancer Mark ...... 75
B. Freelancer Registered the Freelancer Mark for Use on the Same Goods to Which Upwork Applied the Freelancer Mark ...... 77
C. There is a Likelihood of Confusion ...... 80
1. The Court Inherently Found Confusion ...... 80
2. The Court Erred in its Failure to Consider the Likelihood of Confusion Evidence Submitted by Freelancer ...... 80
3. Factor 1: Strength of the Mark ...... 82
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4. Factor 2: Proximity of the Goods ...... 84
5. Factor 3: Similarity of the Marks ...... 86
6. Factor 4: Evidence of Actual Confusion ...... 87
7. Factor 5: Marketing Channels Used ...... 89
8. Factor 6: Type of Goods and the Degree of Care Likely to be Exercised by the Purchaser ...... 89
9. Factor 7: Intent ...... 90
10. Factor 8: Likelihood of Expansion ...... 91
D. It Was Clear Error to Apply the Wrong Legal Standard and to Ignore Evidence of Likelihood of Confusion...... 92
Conclusion ...... 93
Statement of Related Cases ...... 94
Certificate of Compliance
Certificate of Service
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Table of Authorities
Cases Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747 (9th Cir. 2018) ...... 82, 84, 86 Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) ...... 33 AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979)...... 81, 87, 91 Amica Mut. Ins. Co. v. R. H. Cosmetics Corp., 1979 TTAB LEXIS 67 (Trademark Trial & App. Bd. September 27, 1979) ...... 58 Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531 (1987)...... 60 Anhing Corp. v. Thuan Phong Co., No. CV 13-05167 BRO (MANx), 2015 U.S. Dist. LEXIS 97019 (C.D. Cal. July 24, 2015) ...... 54 Arcona, Inc. v. Farmacy Beauty, Ltd. Liab. Co., 976 F.3d 1074 (9th Cir. 2020) ..81, 92 Blue Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260 (5th Cir. 1975) ...... 58 Boardman v. Pac. Seafood Grp., 822 F.3d 1011 (9th Cir. 2016) ...... 61 Brookfield Communs., Inc. v. W. Coast Entm't Corp., 174 F.3d 1036 (9th Cir. 1999) ...... passim Cairns v. Franklin Mint Co., 292 F.3d 1139 (9th Cir. 2002) ...... 38 Canfield v. Health Communs., Inc., No. CV 08-890 SVW (JTLx), 2008 U.S. Dist. LEXIS 28662 (C.D. Cal. Apr. 1, 2008) ...... 42 Carter-Wallace, Inc. v. P&G Co., 434 F.2d 794 (9th Cir. 1970) ...... 57 Cohn v. Petsmart, Inc., 281 F.3d 837 (9th Cir. 2002) ...... 87 Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) ...... 60 Dayton Progress Corp. v. Lane Punch Corp., 917 F.2d 836 (4th Cir. 1990) .. 54, 56 Entrepreneur Media v. Smith, 279 F.3d 1135 (9th Cir. 2002) ...... passim Filipino Yellow Pages, Inc. v. Asian Journal Publ'ns, Inc., 198 F.3d 1143 (9th Cir. 1999) ...... 69 Flynt Distrib. Co. v. Harvey, 734 F.2d 1389 (9th Cir. 1984) ...... 88 Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., 618 F.3d 1025 (9th Cir. 2010) ...... passim Grotrian, Helfferich, Schulz, Th. Steinweg Nachf. v. Steinway & Sons, 523 F.2d 1331 (2d Cir. 1975) ...... 44 Harper & Row, Publishers Inc. v. Nation Enterprises, 471 U.S. 539 (1985) ...... 34 Herb Reed Enters., LLC v. Fla. Entm’t Mgmt., 736 F.3d 1239 (9th Cir. 2013) ....60, 61, 62, 63 Horphag Research Ltd. v. Pellegrini, 337 F.3d 1036 (9th Cir. 2003) ...... 35, 39 Kingsford Prods. Co. v. Kingsfords, Inc., 674 F. Supp. 1428 (D. Kan. 1987) ...... 58
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KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596 (9th Cir. 2005) ...... 56, 57, 63, 80 KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004) . 37 Lands Council v. McNair, 537 F.3d 981 (9th Cir. 2008) ...... 33 Lindy Pen Co. v. Bic Pen Corp., 725 F.2d 1240 (9th Cir. 1984) ...... 38 Marketquest Grp., Inc. v. BIC Corp., 862 F.3d 927 (9th Cir. 2017) ...... 53, 56 Miss World (UK), Ltd. v. Mrs. Am. Pageants, Inc., 856 F.2d 1445 (9th Cir. 1988) ...... 82, 83 Old Dutch Foods, Inc. v. Dan Dee Pretzel & Potato Chip Co., 477 F.2d 150 (6th Cir. 1973) ...... 42, 57 QBAS Co. v. C Walters Intercoastal Corp., No. SACV 10-406 AG, 2010 U.S. Dist. LEXIS 143945 (C.D. Cal. Dec. 16, 2010) ...... 71 Republic of Philippines v. Marcos, 862 F.2d 1355 (9th Cir. 1988) ...... 88 Rodeo Collection, Ltd. v. W. Seventh, 812 F.2d 1215 (9th Cir. 1987) ...... 33 Sierra Club v. Trump, 929 F.3d 670 (9th Cir. 2019)...... 61 Sierra On-Line, Inc. v. Phx. Software, Inc., 739 F.2d 1415 (9th Cir. 1984) ...... 37 Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d 426 (9th Cir. 2017) ....83, 87 Stuhlbarg Int'l Sales Co. v. John D. Brush & Co., 240 F.3d 832 (9th Cir. 2001) .62, 67 United States v. Hinkson, 585 F.3d 1247 (9th Cir. 2009) (en banc) ...... 60 Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) ...... 33, 60, 62
Statutes 15 U.S.C. §1115 ...... passim 15 U.S.C. §1116 ...... 27
Rules Fed. R. Evid. 803 ...... 88
Treatises Restatement 3d of Unfair Competition § 28 ...... 35
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Table of Abbreviations
Freelancer Appellants Freelancer International Pty Limited and Freelancer Technology Pty Limited
“Freelancer” mark Freelancer’s incontestable FREELANCER mark, Registered as Reg. No. 4,284,314 (see 4-ER-644-647)
Upwork Appellees Upwork Global Inc. and Upwork Inc.
X-ER-YYY As used herein, this type of abbreviation refers to the Excerpts of Record, where X-ER-YYY refers to Volume X of the Excerpts of Record at page YYY.
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Introduction
Freelancer appeals the court’s denial of Freelancer’s motion for a preliminary injunction based on trademark infringement and counterfeiting by
Upwork, related to software for use on smart phones and other handheld devices.
This appeal challenges the court’s erroneous rulings (i) that Upwork’s use of the incontestable “Freelancer” trademark is a fair use, (ii) that Freelancer didn’t show likelihood of irreparable harm, and (iii) that Freelancer didn’t establish a likelihood of success on the merits of Freelancer’s counterfeiting claim.
* * *
Freelancer “is the world’s largest freelancing and crowdsourcing marketplace.” 4-ER-655. Freelancer has over 41 million registered users. Id.
Freelancer provides opportunity and income for people in the United States and throughout the world. Id. Freelancer regularly works together with prominent companies and organizations, including NASA:
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4-ER-649 (altered to magnify text), 4-ER-663-664. Freelancer provides a platform on the internet, accessible by mobile phones that allows customers to hire, communicate with, and pay workers through the internet, either with or without using a mobile phone. 4-ER-669.
Freelancer has been using its FREELANCER mark for over a decade as a trademark, including use on its mobile software application. 4-ER-645. During
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this eleven years of use, Freelancer’s software and services have repeatedly been recognized as among the top in the industry. Freelancer won awards, including awards dubbed “the ‘internet’s highest honor.’” 4-ER-687, 2-ER-183-184 at ¶¶
53-56. Rating sites and third-party articles have given accolades to Freelancer.
See, e.g., 2-ER-82 (2018 USA TODAY article stating “Here are some of my favorite sites: Freelancer …”), 3-ER-506 (2013 scholarly journal article: “The most popular freelance marketplaces are … Freelancer…”)
Upwork is a direct competitor of Freelancer with a somewhat less impressive record. 3-ER-318. As indicated by annual reports, not every company can be equally successful, for example:
Upwork: Freelancer:
(3-ER-307)
(4-ER-667)
“… approximately 3 million users that “41.7 [million] Total Registered Users” have already downloaded” Upwork’s mobile application software (4-ER-653) (2-ER-242)
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Perhaps recognizing that they were falling behind, Upwork’s predecessors –
Freelancer’s longtime competitors – rebranded from “oDesk” to “Upwork” in
2015. 2-ER-230 ¶7. Upwork admits, “The Upwork brand did not exist before
2015.” 3-ER-326. Yet, even this rebranding did not allow Upwork to catch up to
Freelancer.
Upwork seemingly recognizes the fame of Freelancer’s brand, stating,
“Many of our current … competitors, …enjoy substantial competitive advantages, such as greater name recognition and more prominent brand reputation …” 3-ER-
328. Upwork explicitly recognized Freelancer, twice, in its annual report as a
“main” competitor, “Our main competitors [include] … online freelancer platforms
… such as Fiverr and Freelancer.com…” 3-ER-318, 3-ER-327.
* * *
After competing for more than a decade without approaching Freelancer’s user base or market penetration, Upwork explicitly adopted Freelancer’s branding to trade on Freelancer’s goodwill and reputation associated with the
FREELANCER trademark. In September 2019, Upwork announced that it was adopting the “Freelancer” mark for its mobile phone software, “[T]he app name changed and will display as just ‘Freelancer’ on iOS devices and ‘Freelancer-
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Upwork’1 on Android devices.” 2-ER-175. That is, Upwork changed its mobile device software name from “Upwork” to “Freelancer.” Id.
* * *
To put Upwork’s misappropriation of the “Freelancer” mark for mobile device software into context, both Freelancer and Upwork offer competing software applications that can be installed on mobile phones. 2-ER-231, 3-ER-
428, 3-ER-433. Both companies offer their competing mobile device software through the Apple App Store for Apple phones using the iOS operating system and through the Google Play Store for many other companies’ phones that use the
Android operating system. Id. Millions of users use this mobile device software.
See 2-ER-242. When either party’s mobile device software is installed on a mobile phone, it may be accessed through an “App Icon” that includes an image and an
“app name.” 2-ER-263. The goal of an App Icon is to “stand[] out on the Home screen” and to “appear[] throughout the system, such as in Settings and search results.” 2-ER-263. As Upwork admitted, the App Icon is how users identify
“which app is which.” 2-ER-30 lines 9-12.
Freelancer installed both the Freelancer mobile device software and the
Upwork “Freelancer” mobile device software on Apple-iOS and Android phones,
1 Upwork’s assertion is not entirely true, as will be demonstrated further below. On many Android devices, the name of Upwork’s software displays as “Freelancer.” 3-ER-474.
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so that the App Icons appear side-by-side. The following screenshots show what users will see with both App Icons installed side-by-side (users may have additional software installed as well – 1-ER-30 lines 9-10).
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Apple-iOS phone
(3-ER-472)
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Android phone
(3-ER-474)
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A user can launch either the infringing Upwork “Freelancer” software or the
authentic Freelancer software by tapping on the App Icon with a finger. Each of the software applications has similar functions but is connected to the respective parties’ internet platforms.
Tapping on the Upwork “Freelancer” App Icon allows a user to connect to
Upwork’s platform and use Upwork’s functionality. Conversely, launching
Freelancer’s software allows a user to connect to Freelancer’s platform and use
Freelancer’s functionality. Freelancer’s software has been available for years and has been called “Freelancer” the entire time. Upwork’s software was not called
“Freelancer” until September 2019. 2-ER-175.
Now, because Upwork is infringing Freelancer’s trademark, anyone tapping on either App Icon will believe that they are connecting to Freelancer’s platform.
A logged in user who taps on Upwork’s “Freelancer” App Icon will see the following screen (or something very similar):
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3-ER-461. Notably, there is no indication on this screen that the software is related in any way to Upwork. As can be seen, a user can finger-tap multiple options, including “My feed”, “Saved”, “Search”, “Jobs”, “Proposals”, “Contracts”,
“Messages”, “Alerts”, or tap on the profile photo for several other options. If the
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user taps on the profile photo, the “Freelancer” name is again displayed, along with approximately ten additional options. 3-ER-470. Another tap on the “Settings” option of 3-ER-470 reveals many further options. 3-ER-443. Tapping the “My teams” option of 3-ER-443 opens a screen that says, “This is a Freelancer account.” 3-ER-457 (emphasis in original); see also 2-ER-240. Finger-tapping on the various options (shown above), including “Proposals”, “Contracts”, etc. causes the software to operate in a way that allows the users to interact with Upwork’s platform (not Freelancer’s platform). See, e.g., 3-ER-438 (proposals screen), 3-
ER-448 (contracts screen).
Upwork argued that users of this software would not be confused, because they see the “Upwork” name when initially installing the software and again when initially opening the software. However, upon installation, the software informs the user that “Freelancer” (not Upwork) wants to send notifications:
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3-ER-484. Most users of this software will choose to “Allow” messages, as they
are people seeking independent contractor work, who will want to receive updates
and messages from the software.
After choosing to “Allow” notifications, users of the software will begin to
receive regular notifications from Upwork; problematically, those notifications all state that they originate from “Freelancer”, as shown below:
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2-ER-72, 4-ER-771. While Upwork has not provided evidence of notification frequency, Freelancer estimated from its own data that an average user receives
between 1 and 4 notifications EACH DAY. 4-ER-642 ¶37. Each of these notifications can be used to launch the software. When the notification appears, a
user can finger-tap on the notification and the Upwork “Freelancer” software will
launch. 2-ER-73 ¶¶55-56. When launched, the Upwork “Freelancer” software
will not include any notification that it is related to Upwork. 1-ER-50 lines 12-22.
In addition to these confusing notifications, Upwork’s adoption of
“Freelancer” to name the Upwork software does not even allow Freelancer’s users
to locate Freelancer’s software on phones without confusion as to which software
to use or whether Freelancer is affiliated with or working jointly with Upwork. A
user searching their phone for the “Freelancer” software would be presented with
the following search results when both applications are installed:
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(Apple phone)
(3-ER-480)
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(Android phone)
3-ER-482. And the settings screens for the phones similarly show both applications. 3-ER-476, 3-ER-478.
Upwork’s adoption of the “Freelancer” mark directly results in users being constantly sent notifications from Upwork saying they are from “Freelancer.” It
isn’t contested that when a user initially installs Upwork’s software, the user is
presented with Upwork’s name. But after logging in, for the days, weeks, months,
or years that the user keeps the Upwork software on a phone, the user will be
constantly sent “Freelancer” notifications from Upwork without any indication that
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the notifications or software relates to Upwork and without any way to distinguish
them from legitimate notifications sent by authentic Freelancer software.
* * *
When Upwork changed the “name” of its mobile and tablet software
applications, in September 2019, to “Freelancer,” the same name as a main
competitor’s software, it was no accident. Upwork intentionally copied
Freelancer’s trademark to make inroads into Freelancer’s customer base. Upwork
is now using Freelancer’s registered trademark to identify Upwork’s software and
to send millions (or billions) of messages to consumers (i.e., an average of 1 to 4
messages per day to millions of users).
Upwork indisputably uses Freelancer’s registered trademark as a source
identifier for its software and platform, as seen above. Upwork’s use of
Freelancer’s mark has not been limited to use of “freelancer” to describe the
software users, who are independent contractors.
Freelancer holds an incontestable registered trademark in “Freelancer” with
respect to various goods and services, including “computer software for accessing,
browsing and searching online databases.” 1-ER-3-4; 4-ER-644-647.
Stated succinctly, a direct competitor (i.e., Upwork) that is well aware of
Freelancer’s branding adopted the “Freelancer” brand to identify directly competing software. This is trademark infringement and counterfeiting.
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Freelancer requests that this Court reverse the district court and remand with
instructions to enter a preliminary injunction against Upwork’s use of the incontestable “Freelancer” trademark.
Statement of Jurisdiction
The district court had jurisdiction under 28 U.S.C. §§ 1331, 1332(a),
1338(a), and 1367 and 15 U.S.C. §1121(a).
The court entered its order denying preliminary injunction on October 23,
2020. 1-ER-2-14. Appellants timely filed a notice of appeal on November 6,
2020. 4-ER-791-810. This Court has jurisdiction under 28 U.S.C. § 1292(a).
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Statement of Issues
The district court denied Freelancer’s motion for a preliminary injunction
against Upwork’s trademark infringement and counterfeiting of the “Freelancer”
mark. The issues presented are whether the district court should be reversed and a
preliminary injunction entered because the court:
1) erred as a matter of law in concluding the Upwork’s use of the
“Freelancer” mark was a “fair use” under 15 U.S.C. §1115(b)(4), even though the
Court erred in applying the wrong legal standard and Upwork uses Freelancer’s
mark “as a mark”, Upwork does not use Freelancer’s mark “only” to describe the
goods or services, Upwork did not establish good faith, and the Court failed to
consider the degree of confusion despite inherently finding confusion;
2) erred as a matter of law by finding that Freelancer could not show
“actual” harm and by failing to consider strong evidence of likelihood of irreparable harm and confusion, when the precedent requires only a showing of
“likelihood” of irreparable harm to obtain preliminary injunctive relief; and
3) erred as a matter of law by finding that Freelancer did not show likelihood of success on Freelancer’s counterfeiting claim, by ignoring the statutory test for counterfeiting, ignoring strong evidence of likelihood of confusion, and employing a “specific level of similarity” test that is the wrong legal standard for counterfeiting.
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Statute
The relevant portion of 15 U.S.C. §1115(b) is set forth below:
(b)Incontestability; defenses
To the extent that the right to use the registered mark has become incontestable under section 1065 of this title, the registration shall be conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark in commerce. Such conclusive evidence shall relate to the exclusive right to use the mark on or in connection with the goods or services specified in the affidavit filed under the provisions of section 1065 of this title, or in the renewal application filed under the provisions of section 1059 of this title if the goods or services specified in the renewal are fewer in number, subject to any conditions or limitations in the registration or in such affidavit or renewal application. Such conclusive evidence of the right to use the registered mark shall be subject to proof of infringement as defined in section 1114 of this title, and shall be subject to the following defenses or defects:
…
(4)That the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, of the party’s individual name in his own business, or of the individual name of anyone in privity with such party, or of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin; or …
The relevant portion of 15 U.S.C. §1116(d) is set forth below:
(d) Civil actions arising out of use of counterfeit marks
(1)
(A) In the case of a civil action arising under section 1114(1)(a) of this title or section 220506 of title 36 with respect to a violation that consists of using a counterfeit mark in connection with the sale, offering for sale, or
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distribution of goods or services, the court may, upon ex parte application, grant an order under subsection (a) of this section pursuant to this subsection providing for the seizure of goods and counterfeit marks involved in such violation and the means of making such marks, and records documenting the manufacture, sale, or receipt of things involved in such violation.
(B) As used in this subsection the term “counterfeit mark” means—
(i) a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered; or
(ii) a spurious designation that is identical with, or substantially indistinguishable from, a designation as to which the remedies of this chapter are made available by reason of section 220506 of title 36;
but such term does not include any mark or designation used on or in connection with goods or services of which the manufacture [1] or producer was, at the time of the manufacture or production in question authorized to use the mark or designation for the type of goods or services so manufactured or produced, by the holder of the right to use such mark or designation.
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Statement of the Case
Freelancer and Upwork have been directly competing for several years.
Throughout this time, and dating back eleven years, Freelancer used the trademark
FREELANCER with respect to Freelancer’s goods and services, including software.
Freelancer applied to register its “Freelancer” mark in 2010. 1-ER-3 footnote
2. In 2013, a registration issued, confirming that the “Freelancer” mark is on the primary trademark register for goods and services, including “computer software for accessing, browsing, and searching online databases”, “computer software for personal information management”, “electronic funds transfer services”, “dispute resolution service”, and others. 1-ER-3.
In 2018, the “Freelancer” mark received incontestable status. 1-ER-4.
Incontestable status provides conclusive evidence of the validity and ownership of the mark and of the registrant’s exclusive right to use the registered mark in commerce. And the law significantly limits defenses applicable to an incontestable trademark.
Upwork recognizes Freelancer as a “main” competitor. 3-ER-318, 3-ER-
327. Despite this, in September 2019, Upwork announced that it was adopting the
“Freelancer” mark as the name of its mobile phone software. 2-ER-175.
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In late March 2020, Freelancer became aware of Upwork’s unauthorized use
of the “Freelancer” mark. 4-ER-639 at ¶16. Freelancer’s CEO immediately sent
multiple notices to Upwork’s CEO, inquiring about the trademark infringement. 4-
ER-639 at ¶¶17-19. Upwork ignored the notices, so Freelancer’s outside counsel sent a cease-and-desist letter on April 28, 2020. 2-ER-296.
After waiting for Upwork to respond and receiving no substantive response,
Freelancer filed suit against Upwork in August, as described further below.
A. The District Court Proceedings
Freelancer filed a complaint against Upwork for multiple causes of action, including trademark infringement and counterfeiting. 1-ER-2. Concurrently,
Freelancer moved for a temporary restraining order (TRO) and a preliminary injunction (PI). 4-ER-813.
The court denied Freelancer’s motion for TRO and entered a briefing and hearing schedule regarding Freelancer’s request for a PI. 4-ER-816. The court conducted a hearing. 1-ER-2.
The court denied Freelancer’s request for a PI. 1-ER-2-14. Freelancer filed its notice of appeal on November 6. 4-ER-791-792.
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Summary of the Argument
The district court erred as a matter of law and erred in its factual findings
when the court denied Freelancer’s motion for preliminary injunction based on (a)
the fair use defense, (b) failure to show “actual” irreparable harm, and (c) failure to
show likelihood of success on the counterfeiting cause of action. This Court
should reverse the district court and remand with instructions to enter a preliminary
injunction against Upwork’s trademark infringement and counterfeiting.
Fair Use. Fair use is limited to use “otherwise than as a mark.” But
Upwork uses the “Freelancer” mark “as a mark.” Fair use is limited to use “only to describe the goods or services” and only when the mark is used in its primary descriptive sense. But the court found that Upwork also uses the mark to describe
its users. And, regardless of that, Upwork uses the “Freelancer” mark as a source
identifier rather than to describe its goods or services.
A defendant asserting “fair use” must prove “good faith.” However, the
evidence demonstrates bad faith in Upwork’s adoption of the “Freelancer” mark.
Finally, the likelihood of confusion is key to a fair use determination.
Despite this, the court ignored the evidence of confusion.
Irreparable Harm. For a preliminary injunction, Freelancer needs only to show likelihood of harm, not actual harm. Actual harm is only required for a permanent injunction. Despite this, the court erroneously found a failure to show
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likelihood of harm based on the absence of evidence of “actual” harm. The court
erroneously adopted an improper legal standard in reaching its conclusion. This
caused the court to end its analysis without considering the evidence fully.
Freelancer presented significant evidence of three different types of likely
irreparable harm that the court erred in ignoring. Freelancer demonstrated likely
irreparable harm through the loss of control over its business reputation due to
Upwork sending millions or billions of messages using the Freelancer mark.
Freelancer also demonstrated likely irreparable harm through the diversion of tens
of thousands of potential customers per month. Finally, Freelancer demonstrated
likely irreparable harm through the loss of rankings and reputation.
Counterfeiting. The test for counterfeiting in this Circuit is straight- forward and statutory. It involves comparison of the marks, consideration of the goods and services on the registration certificate versus the infringing good, and consideration of likelihood of confusion. Despite this, the court adopted an erroneous “specific level of similarity” test and ignored the likelihood of confusion evidence.
The evidence shows that the marks are identical, that Upwork’s goods and services fall within the goods and services for which Freelancer registered the
“Freelancer” mark, and that consumers are likely to be confused under the
Sleekcraft factors.
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Standard of Review
This Court reviews a denial of a preliminary injunction for abuse of discretion.2 This Court will find an abuse of discretion if the court based its
decision “on an erroneous legal standard or clearly erroneous findings of fact.”3
This Court will review legal conclusion conclusions de novo, and factual findings for clear error.4
This Court reverses denial of a preliminary injunction when such a denial was “an abuse of discretion, was based on an erroneous legal standard, or was based on clearly erroneous findings of fact.”5 In considering abuse of discretion,
this Court applies the familiar preliminary injunction standard: “A plaintiff … must
establish that he is likely to succeed on the merits, that he is likely to suffer
irreparable harm in the absence of preliminary relief, that the balance of equities
tips in his favor, and that an injunction is in the public interest.” Winter v. Nat. Res.
Def. Council, Inc., 555 U.S. 7, 20 (2008).
2 Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). 3 Lands Council v. McNair, 537 F.3d 981, 986 (9th Cir. 2008). 4 Alliance, 632 F.3d at 1131. 5 Rodeo Collection, Ltd. v. W. Seventh, 812 F.2d 1215, 1217-18 (9th Cir. 1987).
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The doctrine of fair use is in essence “an equitable rule of reason.”6 Fair use
is a mixed question of law and fact.7 “Where the district court has found facts
sufficient to evaluate each of the statutory factors,” an appellate court may resolve
the fair use question as a matter of law.8
6 Harper & Row, Publishers Inc. v. Nation Enterprises, 471 U.S. 539, 560 (1985). 7 Id. 8 Id.
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Argument
II. The Court Erred as to Both Law and Facts in Finding that Upwork Engaged in Fair Use of the Incontestable “Freelancer” Mark
The court erred in finding Upwork’s use of the “Freelancer” mark was fair use. The ruling should be reversed.
The fair use defense under 15 U.S.C. § 1115(b)(4) is limited to uses where
“the use of the . . . term, or device charged to be an infringement is a use, otherwise than as a mark, . . . or of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, .
. .” Id. (emphasis added). The classic fair use defense, codified in 15 U.S.C.
§1115(b)(4), “applies only to marks that possess both a primary meaning and a secondary meaning—and only when the mark is used in its primary descriptive
sense rather than its secondary trademark sense.” Horphag Research Ltd. v.
Pellegrini, 337 F.3d 1036, 1041 (9th Cir. 2003) (citation omitted). Freelancer’s
trademarks rights extend “to the source significance that has been acquired by” its
“Freelancer” mark. See Restatement 3d of Unfair Competition § 28. Thus,
Upwork’s defense lies only in Upwork’s use, if any, of the term “freelancer” in its
original descriptive meaning. See id.
Upwork, however, has been using the “Freelancer” mark as a source
identifier and not merely to describe users of its software that are independent
contractors, as shown below.
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2-ER-175, 3-ER-484.
As can be seen, Upwork uses Freelancer’s mark to identify its software,
including identifying the software as the source for notices sent to users, rather
than identifying the users themselves.
The court applied the wrong standard, leading to an erroneous decision that
should be reversed.
A. The Court Erroneously Applied The Wrong Standard In Finding Fair Use
The court erred in finding “fair use” under 15 U.S.C. §1115(b)(4) based on
the court’s finding that “defendants do not use ‘freelancer’ as a mark, rather,
defendants use the word in good faith to describe its users.”9 1-ER-12, lines 4-5.
This is not the correct legal standard. The “fair use” defense requires that the
“term” be used “only to describe the goods or services of [Upwork].” 15 U.S.C.
9 This follows Upwork’s admissions. See 1-ER-10, lines 6-8 (“[D]efendants argue they use the plain meaning of the word ‘freelancer’ on their app display names and elsewhere to describe the appropriate users: freelancers.”); 1-ER-10, lines 19-20 (“[D]efendants submitted evidence showing (1) defendants use the word ‘freelancer’ to describe their users…”); 1-ER-11 fn. 8 (“[D]efendants argue Upwork’s apps use the word ‘freelancer’ to describe defendants’ users… The Court agrees with defendants.”).
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§1115(b)(4) (emphasis added).10 Describing the intended consumer does not meet the standard of providing “only” a description of “the goods or services.”11
Rather, this Court requires,
To establish a classic fair use defense, a defendant must prove the following three elements: “1. Defendant's use of the term is not as a trademark or service mark; 2. Defendant uses the term ‘fairly and in good faith’; and 3. [Defendant uses the term] ‘[o]nly to describe’ its goods or services.” In our Circuit, the classic fair use defense is not available if there is a likelihood of customer confusion as to the origin of the product.12 The classic fair use analysis, therefore, only complements the likelihood of customer confusion analysis set forth in Sleekcraft.
10 See also Sierra On-Line, Inc. v. Phx. Software, Inc., 739 F.2d 1415, 1423 (9th Cir. 1984) (“It is not obvious that Phoenix’s use was a non-trademark use, that is, that the term was used only to describe the product rather than to associate it with a manufacturer.”). 11 See Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., 618 F.3d 1025, 1041 (9th Cir. 2010) (“Victoria's Secret's executives testified that they wanted ‘Delicious’ to serve as a ‘playful self-descriptor,’ as if the wearer of the pink tank top is saying, ‘I’m delicious.’ These examples suggest that a jury could reasonably decide that Victoria's Secret did not use ‘Delicious’ ‘only to describe its goods.’”). 12 The Supreme Court clarified that the defendant is not required to negate confusion, but in so doing, the Supreme Court did not disturb this Court’s determination that the fair use defense is not available if there is a likelihood of customer confusion. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 114 (2004) (“We hold [that a party raising the statutory affirmative defense of fair use] does not [have a burden to negate any likelihood of confusion].”).
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Cairns v. Franklin Mint Co., 292 F.3d 1139, 1151 (9th Cir. 2002) (citations
omitted).
Here, it is uncontested that the goods and services at issue are the software.
So, the court’s finding that Upwork describes a “user” does not meet the statutory
requirements of “only to describe the goods or services.”13 It cannot be fair use
under the plain statutory text. The finding is erroneous as a matter of law and should be reversed.
B. The Incontestable “Freelancer” Mark is Not Fairly Used By Upwork
The question of fair use is the most important issue raised in this appeal, as it
could affect the case going forward, regardless of whether preliminary relief is
granted. The court erroneously held that Upwork’s use of Freelancer’s trademark
as (1) a name for its software, (2) a product identifier for customer notifications,
and (3) a name for accounts is, instead, (4) a use to “describe [Upwork’s] users.”
1-ER-12 line 5. However, Upwork’s infringing uses of the “Freelancer” mark are
not uses intended to describe Upwork’s users. They are also not descriptive of
13 The court also found that Upwork used “Freelancer” for “distinguishing Upwork’s freelancer app from its client app…” 1-ER-11 lines 17-18. However, use of a term to distinguish one product from another is not “fair use” when the term is used as a trademark. See Lindy Pen Co. v. Bic Pen Corp., 725 F.2d 1240, 1248 (9th Cir. 1984) (finding that use of mark was not “merely to describe” the product where the term was used to distinguish between two similar products; see footnote 9: defendant’s concession that mark used to distinguish between products).
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Upwork’s goods or services. And they are certainly not “only to describe the
goods or services.” 15 U.S.C. §1115(b)(4). Rather, Upwork uses “Freelancer” as a trademark to identify the infringing software to the public. These uses cannot be classified as uses of the mark only “in its primary descriptive sense rather than its secondary trademark sense.” Horphag, 337 F.3d at 1041.
Upwork’s use of the incontestable “Freelancer” mark is analogous to
Defendant Smith’s infringing and enjoined use of the incontestable “Entrepreneur” mark in Entrepreneur Media v. Smith, 279 F.3d 1135 (9th Cir. 2002). In
Entrepreneur, this Court affirmed an injunction against using “Entrepreneur
Illustrated” as the name of a printed publication. Id. at 1153. This holding was entered in view of an explicit statement that “both parties’ goods relate generally to entrepreneurs or entrepreneurship.” Id. at 1147. This Court noted, “The word
‘entrepreneur’ describes both the subject matter and the intended audience of the magazine and [computer] programs; an entirely unimaginative, literal-minded person would understand the significance of the reference.” Id. at 1142 (emphasis added). This Court held, “[T]he incontestable status of EMI’s trademark
‘ENTREPRENEUR’ gives EMI the exclusive right to use its trademark in [the registered class of goods and services]…” Id. at 1143. This Court noted “‘the word ENTREPRENEUR is the most prominent visual feature of both publications’
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covers,’ and consumers are likely to notice only the word ‘Entrepreneur’ on the cover …” Id. at 1144-1145.
Notably, this Court did not mention “fair use” because the term
“entrepreneur” was used by the defendant “as a mark” on the cover of a magazine and not used “only to describe the goods or services of [defendant]”, even though the mark described the intended audience of the goods and services.
Analogizing the instant facts to Entrepreneur, the court held that both
Upwork’s and Freelancer’s goods and services relate generally to freelancing or freelancers. 1-ER-3, lines 1-2. The word ‘freelancer’ can be used to describe an intended audience of the computer programs. The word “Freelancer” is the most prominent visual feature on the “cover” of both parties’ software:
(1-ER-6)
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3-ER-474. And, analogous to the Entrepreneur case, the word “Freelancer” is the only word that consumers are likely to notice on the cover. Applying these facts to
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the ruling, “the incontestable status of [Freelancer]’s trademark ‘[FREELANCER]’
gives [Freelancer] the exclusive right to use its trademark in [the registered class of
goods and services]…” Id. at 1143. This is trademark infringement, not “fair use”
under Entrepreneur.14
The court’s “fair use” ruling is directly opposite to the Entrepreneur precedent of this Court and should be reversed.
C. Upwork’s Use of “Freelancer” to Name Its Software Application is “As A Mark,” Further Removing the Fair Use Defense
The court erred by overlooking Upwork’s imprint of the “Freelancer” mark on its software to identify the software to the customer, not to describe it. As the
Sixth Circuit explained, “It is inconceivable that a merchant would … imprint a
term on its products continuously for over thirty years without any intention that
the term would help identify the product to the consumer.” Old Dutch Foods, Inc.
v. Dan Dee Pretzel & Potato Chip Co., 477 F.2d 150, 154 (6th Cir. 1973). Here,
Upwork plainly imprints the “Freelancer” mark on its software (for about one year)
with intent to identify the product to the consumer. Upwork’s renaming of its
software to copy Freelancer must have been intentional; Upwork has twice
14 While the Canfield reasoning is not clear to Freelancer, because Entrepreneur does not use the term “fair use”, Canfield stated that Entrepreneur found “fair use”, yet still affirmed the preliminary injunction as to the goods and services listed in the trademark registration certificate. See Canfield v. Health Communs., Inc., No. CV 08-890 SVW (JTLx), 2008 U.S. Dist. LEXIS 28662, at *12 (C.D. Cal. Apr. 1, 2008) (citing Entrepreneur and mentioning fair use).
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identified Freelancer in its annual report as a main competitor and Freelancer is one of the top-rated service providers in the industry. 3-ER-318, 327, 2-ER-687-
688, 2-ER-82-83, 2-ER-89, 2-ER-103, 2-ER-110, 2-ER-114, 2-ER-119-120, 2-ER-
140, 2-ER-162-163.
Upwork’s use of “Freelancer” “as a mark” for its software eliminates “fair use” as a defense for that use. As demonstrated in the preceding section of this brief and images below, in most instances, the term “Freelancer” is the only name of Upwork’s software that appears to consumers using their phones:
1-ER-6 (note: one example includes “Freelancer – Upwork” and another truncated by phone);
3-ER-474. While the “Freelancer” mark appears prominently alongside a green- squiggly-line logo, unless a user had memorized the meaning of that logo, the user
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would not associate the logo with Upwork. And even if the user did associate a green-squiggly-line with Upwork, that does not negate the fact that Upwork previously used its own name “Upwork” adjacent to the squiggly-line logo (2-ER-
175) and now prominently employs the “Freelancer” mark as the sole textual source identifier. See Fortune Dynamic, 618 F.3d at 1040 (“Indications of trademark use include whether the term is used as a ‘symbol to attract public attention,’ … , which can be demonstrated by ‘the … visual placement and prominence of the challenged words,’…”). If anything, this combined use increased the likelihood of confusion. See, e.g, Grotrian, Helfferich, Schulz, Th.
Steinweg Nachf. v. Steinway & Sons, 523 F.2d 1331, 1342 (2d Cir. 1975)
(“…potential [] purchasers will think that there is some connection between
[plaintiff and defendant]”).
Importantly, Upwork admitted, with respect to its previous application name, that the application name is an identifier, not a descriptor. See, e.g., Fortune
Dynamic, 618 F.3d at 1040 (“Perhaps most important, Victoria's Secret’s used
‘Delicious’ in a remarkably similar way to how it uses two of its own trademarks…”). Upwork admitted, “[T]he app was identified by an icon showing
Upwork’s UP logo over the display name ‘Upwork.’” 2-ER-232 at ¶17. In adopting this name, Upwork again admitted, “[T]he app was identified by an icon
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showing the UP Logo over the display name ‘Upwork.’” 2-ER-233 at ¶22. A comparison of old and new shows:
2-ER-175. This is use as a “name”, i.e., “as a mark,” not a use “only to describe the goods or services” of Upwork. 15 U.S.C. §1115(b)(4). This is consistent with the Apple App Store Human Interface Guidelines, which clarify that the text under the icon is the “name” and not a description of “what to do with your app”, i.e.,
“An app’s name appears below its icon on the Home screen.” 2-ER-263. As in
Entrepreneur, the name on the cover of the item is a mark, regardless of whether the item is intended for use by users that can be described using the term. The name “Freelancer” does not describe the product, i.e., software, and thus is not used “only to describe the goods or services.”
D. Upwork’s Use of “Freelancer” to Send Notifications to Users of Upwork’s Software is also “As A Mark,” Further Removing the Fair Use Defense
Upwork’s use of the “Freelancer” mark to send notifications should also be considered in reversing the court’s fair use ruling. Brookfield is instructive.
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Brookfield Communs., Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1064 (9th
Cir. 1999). Brookfield noted that difference “by only a single space” can be
“pivotal” in determining whether a term is descriptive or not. Id. at 1066. While
“‘Movie Buff’ is a descriptive term … ‘MovieBuff’ is not.” Id. Use of
“[Plaintiff’s] trademark not to reference [Plaintiff’s] products, but instead to describe its own product … and to attract people to its web site … is not fair use.”
Id. Applied here, Upwork configures its software to provide the following notification:
3-ER-484. This is not a use that is “only to describe the goods or services” of
Upwork, as required by §1115(b)(4). It is not a notification that “a freelancer” (in the sense of an independent contract worker) would like to send a notification. Nor is it a notification that plural “freelancers” (e.g., multiple contract workers) would like to send notifications. Rather, it is an indication that software named
“Freelancer” would like to send notifications. Upwork admitted as much in its own pre-litigation publication:
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[O]nce downloaded to your device the app name changed and will display as just “Freelancer” on iOS devices and “Freelancer-Upwork” on Android devices.
2-ER-175. This is use “as a mark” under 15 U.S.C. §1115(b)(4); it is not a use that is “only to describe the goods or services” of Upwork. There is nothing descriptive about “Freelancer” or “Freelancer-Upwork” that would lead a consumer to see those terms as describing software.
Similarly, the actual, frequent notifications provided by the software follow the same pattern, using “Freelancer” as a mark, not a descriptor:
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2-ER-72, 4-ER-771. The FREELANCER mark appears prominently as a source designator. The source designator is followed by further information. But Upwork
does not use the source designator “FREELANCER” or the variation “Freelancer –
Upwork” “only to describe the goods or services” because it doesn’t describe the
software in the primary sense of its meaning and it isn’t being used to indicate that
the message is coming from an independent worker. Rather, Upwork uses
“FREELANCER” or “Freelancer – Upwork” as a source identifier for the software
sending the notification. In the final example (above), the text clarifies, “You’ve
been invited! Upwork Talent Innovation has invited you …” 2-ER-72. This
demonstrates that the message is coming from Upwork itself; thus, Upwork
identifies itself using the “Freelancer” source identifier. This cannot be “fair use”
of the “Freelancer” mark. Rather, it is a use “as a mark” that removes this use
from the fair use defense.
These daily (or more frequent) notifications sent by Upwork to consumers
using the “Freelancer” mark are analogous to those in Brookfield. In Brookfield, a
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trademark was used in a “metatag.” Brookfield, 174 F.3d at 1064. The Court hypothesized:
Suppose West Coast's competitor (let's call it "Blockbuster") puts up a billboard on a highway reading - "West Coast Video: 2 miles ahead at Exit 7" - where West Coast is really located at Exit 8 but Blockbuster is located at Exit 7. Customers looking for West Coast's store will pull off at Exit 7 and drive around looking for it. Unable to locate West Coast, but seeing the Blockbuster store right by the highway entrance, they may simply rent there. Even consumers who prefer West Coast may find it not worth the trouble to continue searching for West Coast since there is a Blockbuster right there. Customers are not confused in the narrow sense: they are fully aware that they are purchasing from Blockbuster and they have no reason to believe that Blockbuster is related to, or in any way sponsored by, West Coast. Nevertheless, the fact that there is only initial consumer confusion does not alter the fact that Blockbuster would be misappropriating West Coast's acquired goodwill.
Brookfield, 174 F.3d at 1064. The same occurs here. Upwork sends a notification purportedly from “Freelancer,” e.g.:
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2-ER-72, 4-ER-771. As with the Blockbuster/West Coast example above, a consumer hoping to interact with authentic “Freelancer” software will click or finger-tap on the notification and be directed to Upwork’s infringing “Freelancer” software (2-ER-66 at lines 10-11, 2-ER-73 at ¶¶55-56), just as the hypothetical
West Coast customer would pull off the freeway seeking West Coast but finding
Blockbuster. And upon landing within Upwork’s “Freelancer” software, the user
“may not find it worth the trouble to continue searching for [Freelancer’s software] since there is [Upwork software] right there.” Brookfield, 174 F.3d at 1064. First, users may not even be aware that they are using Upwork’s software, because after initial login, Upwork does not display its name or logo to indicate source, except deep within the application settings or in an infrequent notification. 4-ER-765, 3-
ER-437-470, 3-ER-485-491, 3-ER-296-299 at ¶¶9-23, 31-32. A user may go
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months without knowing that the user is interacting with Upwork (rather than
Freelancer) through Upwork’s “Freelancer” software. Second, even if the user is
“fully aware that they are [interacting with Upwork] and they have no reason to believe that [Upwork] is related to, or in any way sponsored by, [Freelancer]…
[this] does not alter the fact that [Upwork] would be misappropriating
[Freelancer’s] acquired goodwill.” Brookfield, 174 F.3d at 1064.
Brookfield further considered two Playboy cases where the “Playboy” and/or
“Playmate” marks were used in software code. Brookfield, 174 F.3d at 1064-1065.
In one, “[Defendant] intentionally misled viewers into believing that its Web site was connected with, or sponsored by, Playboy.” Id. In the other, “[Defendant’s use of] the PLAYBOY trademark was accessible to individuals or Internet search engines…” Id. at 1065. This is analogous to Upwork’s software appearing as
“Freelancer”:
(1-ER-6)
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3-ER-474. And it is analogous to search engines, because searching “Freelancer” on an Apple or Android phone will retrieve Upwork’s software:
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3-ER-479-482, 2-ER-298-299 at ¶¶28-29.
Brookfield noted that the same analysis applies where only “initial interest confusion” was present, citing the Niton case. Brookfield, 174 F.3d at 1065. In
Niton, while the term “initial interest” was not used, preliminary injunctive relief was based on “purposefully diverting people looking for [Plaintiff] to its web site.”
Id. Here, Upwork’s use of “Freelancer” purposefully diverts people looking for authentic Freelancer software to Upwork’s infringing software.
The erroneous “fair use” ruling should be reversed.
E. Upwork Did Not Establish Good Faith And, Hence, Did Not Establish Fair Use
The court erred in finding “good faith.” Upwork copied the registered mark of a direct competitor significant enough to appear in Upwork’s annual report. 3-
ER-318, 3-ER-327. Freelancer has used the mark for over a decade and marks its
Freelancer trademark with ®. 2-ER-293, 4-ER-645 (“FIRST USE 12-4-2009”).
This is unmistakable, targeted copying, not good faith.
The evidence shows bad faith; Upwork did not meet its burden to show good faith. “A defendant asserting fair use must also show that it used the mark in good faith.” Marketquest Grp., Inc. v. BIC Corp., 862 F.3d 927, 937 (9th Cir. 2017).
“[T]he good faith element of the fair use defense is essentially identical to the intent factor of the likelihood of confusion analysis.” Anhing Corp. v. Thuan
Phong Co., No. CV 13-05167 BRO (MANx), 2015 U.S. Dist. LEXIS 97019, at
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*48 (C.D. Cal. July 24, 2015). While the court correctly identified that §1115
requires use “in good faith” for fair use (1-ER-10, line 1), the court erred in
considering the purported good faith and erred in ignoring relevant evidence of bad
faith. The purported evidence of alleged good faith is:
Defendants further argue they use the word “freelancer” in good faith because they trade on Upwork’s “own considerable goodwill” and have not sought to trademark the words “Freelance” or “Freelancers.”
1-ER-10, lines 8-10. However, Upwork’s allegation that it trades in part on its
own goodwill is irrelevant to whether Upwork adopted Freelancer’s incontestable
“Freelancer” mark in good faith.15 And Upwork’s allegation that it didn’t seek a
trademark registration of “Freelancer” is not relevant to good faith. (Registering a
trademark is an optional process, not a mandatory process.)
The evidence demonstrates lack of good faith. The court recognized,
“Plaintiffs and defendants are competitors ….” 1-ER-3. Upwork admits
“‘Freelancer.com’ is one of its ‘main competitors.’” 4-ER-769, 3-ER-318, 3-ER-
325. The evidence shows direct competition for many years. 4-ER-639 at ¶¶21-
22, 4-ER-769, line 15; 3-ER-326.
15 See, e.g., Dayton Progress Corp. v. Lane Punch Corp., 917 F.2d 836, 840 (4th Cir. 1990) (“Lane further argues that since it includes its corporate logo on its products, its use of [plaintiff’s] designators is fair use. However the mere inclusion of its logo on the product is not sufficient to establish the defense of fair use.”).
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Undoubtedly, Upwork was aware of the “Freelancer” mark. In fact, Upwork
provided the court with Freelancer’s website dating back more than 7 years,
showing “Freelancer ® is a registered Trademark of Freelancer …” 2-ER-293.
Improper intent can be inferred from adoption of marks similar to another: “Where
an alleged infringer chooses a mark he knows to be similar to another, one can
infer an intent to confuse.” Entrepreneur, 279 F.3d at 1148. Moreover, “failure to
investigate whether someone held a [particular] trademark” can support finding
“carelessness” and “[un]fair” use. Fortune Dynamic, 618 F.3d at 1043; see
Marketquest, 862 F.3d at 937 (factors include “remain[ing] ignorant of the plaintiff’s mark when it reasonably should have known of the mark”). Even if
Upwork didn’t know of its direct competitor’s trademark, Upwork’s non- investigation shows carelessness and unfair use. The “intent” in adopting a mark
“favors the plaintiff where the alleged infringer adopted his mark with knowledge, actual or constructive, that it was another’s trademark.” Brookfield, 174 F.3d at
1059.
The evidence further demonstrated availability of multiple alternative terms,
supporting an inference of bad faith. “[I]f there are other terms equally suited to
the legitimate commercial needs of the subsequent user, the prominent use of any
form of the particular term in which trademark rights exist may in some
circumstances support an inference of bad faith.” Restatement 3d of Unfair
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Competition, § 28 Comment d; see also Marketquest, 862 F.3d at 937 (availability of “alternative words [or phrases]” limits scope of fair use defense); KP Permanent
Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596, 608-09 (9th Cir. 2005)
(“Among the relevant factors for consideration by the jury in determining the fairness of the use are … the availability of alternate descriptive terms …”).
Here, Freelancer identified many alternative terms:
[T]erms used in the industry include: worker, independent contractor, gig-worker, temp, free agent, jobber, helpmate, helper, teleworker, self-employed, associate, affiliate, crowdworker, cloudworker, collaborator, remote worker, remote collaborator, cloud support worker, irregular worker, third-party, home-worker, wireless worker, casual, self-contained, independent worker, independent professional, standalone worker, anywhere worker, independent collaborator, accessory worker, auxiliary, auxiliary worker, temporary worker, stand-in, stand-in worker, relief, relief worker, sub, reserve worker, backup, cover, stopgap worker, ancillary, ancillary worker, adjutant, out-of-house, and other less common words including sellsword, locum, subbie.
2-ER-213 footnote 1. Bad faith can be inferred based on adoption of a competitor’s identical mark, when many alternative terms are available.
The ruling of good faith in view of such inferences and absence of evidence of Upwork’s good faith is erroneous and should be reversed. A Defendant is required to affirmatively prove the elements of this affirmative defense. See
Dayton, 917 F.2d at 840 (“To establish a fair use defense for these designators,
[defendant] must prove that the designators are used ‘fairly and in good faith’…”);
Marketquest, 862 F.3d at 937 (stating defendant must show good faith).
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F. The Court Further Erred In Failing to Consider the Degree of Confusion in Evaluating Fair Use
The court erred in not considering the likelihood of confusion evidence
submitted by Freelancer while finding “fair use.” This Court stated, “We hold …
that the degree of customer confusion remains a factor in evaluating fair use.” KP
Permanent, 408 F.3d at 608-09. But the appealed ruling lacks any consideration of
the significant evidence of likely confusion. See generally 1-ER-9-12 (fair use
analysis). Freelancer’s evidence is discussed below in Sections IV.C and IV.D of
this brief.
Failure to consider such evidence further demonstrates the error in the
court’s ruling.
G. The Court Erred In Considering Upwork’s Secondary Logo
The court erred in finding that Upwork’s own “lime green logo or coloring []
placed directly alongside”16 the “Freelancer” mark renders Upwork’s use of the
“Freelancer” mark a non-mark. Rather, “A product can bear more than one
trademark…” Carter-Wallace, Inc. v. P&G Co., 434 F.2d 794, 800 (9th Cir.
1970). The Sixth Circuit noted, “not infrequently products have more than one trademark imprinted thereon.” Old Dutch Foods, 477 F.2d at 154 (noting that
16 1-ER-11, lines 20-21.
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bearing two marks “does not mean that each can not be a valid trademark”).17 It was error to rely on the adjacent placement of two marks (i.e., the Upwork logo and the “Freelancer” mark) to find fair use. The court should have considered
Upwork’s use of the “Freelancer” mark independently of whether Upwork also applies another mark. See Fortune Dynamic, 618 F.3d at 1040 (discounting significance of co-branding with “beauty rush” mark on product prominently marked with infringing mark).
In Brookfield,18 this Court favorably considered the Second Circuit’s
Grotrian analysis. 523 F.2d 1331. Grotrian considered whether appending
“Grotrian” to “Steinweg” (i.e., “Grotrian-Steinweg”) on a piano would infringe the
“Steinway” mark. Id. at 1340-1342. Grotrian noted, “The harm to Steinway,
rather, is the likelihood that a consumer, hearing the ‘Grotrian-Steinweg’ name and
17 See also Amica Mut. Ins. Co. v. R. H. Cosmetics Corp., 1979 TTAB LEXIS 67, *17 (Trademark Trial & App. Bd. September 27, 1979) (“It is well established that a product can bear more than one trademark, that each trademark may perform a different function for consumers and recipients of the product, and that each can be registered providing the mark as used, creates a separate and distinct impression in and of itself and serves to identify and distinguish the product as it is encountered by consumers in the normal marketing milieu for such goods.”); Blue Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260, 1267 (5th Cir. 1975) (“While goods may be identified by more than one trademark, the use of each mark must be bona fide.”); Kingsford Prods. Co. v. Kingsfords, Inc., 674 F. Supp. 1428, 1430 (D. Kan. 1987) (“It is equally clear that the fact that a product bears more than one trademark does not mean that each cannot be a valid trademark. In fact, frequently, products have more than one trademark imprinted thereon.”). 18 Brookfield, 174 F.3d at 1063.
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thinking it had some connection with ‘Steinway’, would consider it on that basis.”
Id. at 1342. Here, a consumer seeing the “Freelancer” mark and Upwork logo
together, and possibly recognizing the Upwork logo, is likely to think that Upwork
has some connection with Freelancer. The user may consider using Upwork
software based on goodwill towards Freelancer.
III. The Court Erred in Finding Absence of Likelihood of Irreparable Harm
The ruling finding the absence of a likelihood of irreparable harm should be
reversed because it is based on errors of law and a failure to consider evidence.
A. The Court Applied the Wrong Legal Standard in Requiring “Actual” Harm
The court erred by requiring “actual” irreparable harm for a preliminary
injunction:
While loss of goodwill and loss of prospective customers may support a finding of the possibility of irreparable harm, plaintiffs have presented no evidence of actual losses.
1-ER-12, lines 20-22 (emphasis added). The court acknowledged that Freelancer
presented evidence showing “likely” loss of goodwill and “likely” loss of prospective customers but held Freelancer to the “actual harm” legal standard applicable only to permanent injunctions.
The Supreme Court distinguishes (a) between preliminary and permanent relief and (b) between likely and actual harm. “The standard for a preliminary
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injunction is essentially the same as for a permanent injunction with the exception that the plaintiff must show a likelihood of success on the merits rather than actual success.” Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 546 n.12 (1987).
This Court applies this logic to irreparable harm: “[W]e held that likely irreparable harm must be demonstrated to obtain a preliminary injunction … and that actual irreparable harm must be demonstrated to obtain a permanent injunction…” Herb
Reed Enters., LLC v. Fla. Entm't Mgmt., 736 F.3d 1239, 1249 (9th Cir. 2013); see also Winter, 555 U.S. at 22 (“Our frequently reiterated standard requires plaintiffs seeking preliminary relief to demonstrate that irreparable injury is likely ...”).
Because the court erred by requiring “actual” harm, it abused discretion.
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990) (“A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.”); United States v.
Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc) (“[T]he first step of our abuse of discretion test is to determine de novo whether the trial court identified the correct legal rule to apply to the relief requested. If the trial court failed to do so, we must conclude it abused its discretion.”). The court recited the proper
“likely” standard, but erroneously required “actual” harm. Compare 1-ER-7, 1-
ER-12 (“…likely to suffer irreparable harm…” and “likelihood of irreparable injury”) to 1-ER-12 (“…no evidence of actual losses…”).
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The court was likely led to erroneously adopt the “actual harm” standard by
relying on the erroneous arguments of Upwork:
Herb Reed, however, confirms the more stringent standard is required. Herb Reed Enterprises, LLC v. Fla. Entm't Mgmt., Inc., 736 F.3d 1239, 1249 (9th Cir. 2013) (internal citations omitted) (“actual irreparable harm must be demonstrated to obtain a permanent injunction … [and] the irreparable harm requirement for a permanent injunction in a trademark case applies with equal force in the preliminary injunction context.”).
2-ER-64. Freelancer disputed this. 2-ER-222. Herb Reed clarifies that
irreparable harm would not be presumed after eBay and Winter; Herb Reed does
not hold that a party must show “actual” harm for a preliminary injunction. 736
F.3d at 1249-50.
“Actual” harm cannot be required for a preliminary injunction. Injunctions
may issue where no harm has occurred but is “threatened.” See Boardman v. Pac.
Seafood Grp., 822 F.3d 1011, 1023 (9th Cir. 2016) (“A threat of irreparable harm is sufficiently immediate to warrant preliminary injunctive relief…”). Boardman considered that movant “would suffer irreparable harm before a trial...” Id.
Boardman affirmed that “Plaintiffs sufficiently demonstrated a threat of irreparable harm.” Id.
“Threatened” harm is regularly deemed sufficient. In Sierra Club v. Trump, a preliminary injunction was appropriate where plaintiffs “would be irreparably harmed if Defendants proceeded with their threatened construction.” 929 F.3d
670, 683 (9th Cir. 2019). In Stuhlbarg, a trademark dispute, “Evidence of
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threatened loss of prospective customers or goodwill certainly supports a finding of
the possibility19 of irreparable harm.” Stuhlbarg Int'l Sales Co. v. John D. Brush &
Co., 240 F.3d 832, 841 (9th Cir. 2001) (affirming preliminary injunctive relief).
Showing “evidence of actual losses” is not required. The court abused
discretion by adopting an incorrect legal standard.
B. Regardless of the Standard Adopted, the Court Abused Discretion Through a Clearly Erroneous Assessment of the Evidence
1. The Court Erred In Making an Incomplete Finding Regarding Irreparable Harm
The court held that Freelancer’s “loss of goodwill and loss of prospective
customers may support a finding of the possibility of irreparable harm.” 1-ER-12,
lines 20-22. The court didn’t weigh “likelihood” after finding “possibility.”
Instead, the court applied an incorrect “actual” harm standard.
Winter rejected the “possibility” of harm test. Winter, 555 U.S. at 22
(“[T]he Ninth Circuit’s ‘possibility’ standard is too lenient.”). Instead, the “likely”
harm standard applies to preliminary injunctions. Herb Reed, 736 F.3d at 1249;
see Winter, 555 U.S. at 22.
19 The Supreme Court explicitly overruled the “possibility” of harm test. Winter, 555 U.S. at 22 (“[T]he Ninth Circuit’s ‘possibility’ standard is too lenient.”). However, in Winter, the Supreme Court did not disturb a party’s ability to rely on “threatened” harm to support likelihood of irreparable harm. Nor did the Supreme Court require “actual” harm for a preliminary injunction.
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While the court properly found possibility of harm, the court erred by requiring “actual” harm. This Court should reverse the error based on the three types of likely, irreparable harm shown by Freelancer: loss of control of business reputation and damage to good will; loss of prospective / diverted customers; and loss of rankings and reputation.
2. Evidence Shows the Likelihood of Irreparable Harm Through Loss of Control of Business Reputation and Damage to Good Will
The court erred in ignoring the evidence of loss of control of business reputation and damage to good will. “Evidence of loss of control over business reputation and damage to good will [can] constitute irreparable harm.” Herb Reed,
736 F.3d at 1250; see Stuhlbarg, 240 F.3d at 841 (same re: good will). Rather than considering such evidence, the court stated that it is unpersuaded by the evidence because “It is unlikely these users are confused …” 1-ER-13. However, as demonstrated both above (Section II.F) and below (Section IV.C-D), the court erred by ignoring evidence of confusion.
Moreover, by finding fair use, the court inherently found that Freelancer had established confusion. KP Permanent, 408 F.3d at 608-09 (“The fair use defense only comes into play once the party alleging infringement has shown by a preponderance of the evidence that confusion is likely.”). Thus, the finding that it
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is “unlikely these users are confused” is internally inconsistent with the “fair use” ruling.
The court erred through opposed findings regarding confusion and failure to undertake the confusion analysis set forth in Sleekcraft.
Evidence of irreparable harm should be reviewed by this Court in view of the confusion established both inherently and by the Sleekcraft factors analyzed below (Section IV.C). The unrefuted evidence demonstrates that Upwork sends what is likely MILLIONS of daily notifications and BILLIONS of yearly notifications using the “Freelancer” mark. These notifications purport to be from
Freelancer, for example:
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2-ER-72, 4-ER-771. Yet, despite appearing to originate from Freelancer, they are from Upwork. Id. Upwork’s notifications use the “Freelancer” mark to prompt
users to interact not with Freelancer, but with Upwork’s infringing software and
services. 2-ER-73 at ¶¶55, 56.
Upwork confirmed that its infringing application has been downloaded by
seven million users, including three million recent user downloads. 2-ER-231 at
¶14, 2-ER-233 at ¶21. Freelancer conservatively estimated only one million to two
million downloads. 4-ER-642 at ¶¶35-41. The unrefuted evidence is that millions
of users have downloaded Upwork’s “Freelancer” software.
Upwork confirmed that these millions of users receive the types of
notifications illustrated above, that include prominent use of the “Freelancer”
mark. 2-ER-72 at ¶52, 2-ER-73 at ¶55. Freelancer conservatively estimated,
based on Freelancer’s own internal data, that each of the millions of Upwork users
receives and reads between 1 and 4 notifications PER DAY from Upwork under
the “Freelancer” mark. 4-ER-642 at ¶¶37-39. At minimum, Upwork sends
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MILLIONS of notifications prominently using the “Freelancer” mark. Id. Finger-
tapping on these notifications (appearing to be from Freelancer) directs users into
Upwork’s software. 2-ER-73 at ¶¶ 55-56.
Without engaging in any hyperbole, if each user receives one notification,
Upwork will have used Freelancer’s mark MILLIONS of times. If each user
receives one daily notification, Upwork will have used Freelancer’s mark over one
BILLION times per year (i.e., [3 million recent user downloads] X [one
notification per user per day] X [365 days per year] = 1.095 BILLION notifications
per year using the “Freelancer” mark). Using the less conservative numbers in the evidence could put the number at several billion per year.
This epitomizes loss of control over business reputation.20 Irreparable harm is not only likely, it is inevitable. Freelancer does not control the content of any
notifications that Upwork sends using the “Freelancer” mark. And there is no adequate remedy at law for this loss of control over business reputation; the harm is irreparable.
20 Upwork’s marketing director estimates that Upwork realizes an average of 1.1 billion total impressions per year through all of its advertising. 2-ER-273 at ¶4. Thus, the billion(s) of false impressions of the “Freelancer” mark that Upwork produces appear to outstrip Upwork’s own advertising of its own brand.
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The court erred in failing to consider this evidence of likely irreparable
harm. This Court should reverse the ruling of absence of likelihood of irreparable
harm.
3. Evidence Shows the Likelihood of Irreparable Harm Through Loss of Prospective / Diverted Customers
The court further erred in finding no likelihood of irreparable harm based on loss of prospective (and diverted) customers, because the court required “actual losses,” despite finding that “loss of prospective customers may support a finding of the possibility of irreparable harm.” 1-ER-12. “Evidence of threatened loss of prospective customers … certainly supports a finding of the possibility of irreparable harm.” Stuhlbarg, 240 F.3d at 841. This Court’s precedent does not require “actual” losses, but rather, “threatened” losses of the prospective customers. The evidence of the threatened losses of Freelancer’s customers is unrefuted; the court confirmed “Plaintiffs estimate that up to as many as 1,800 users per day21 or 56,000 users per month are diverted into defendants’ business and away from plaintiffs’ business.” 1-ER-12, lines 18-20. These are losses that can’t be fully recovered and cannot be adequately compensated with money. Yet the court declined to find likelihood of irreparable harm.
21 Upwork identified “nearly three million total downloads of the Upwork for Freelancers app since January 2019…” 2-ER-233 at ¶21. Three million downloads over 21 months is approximately 140,000 users per month (almost 5,000 per day), much higher than Freelancer’s estimate.
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Instead, the court applied an erroneous “actual losses” requirement coupled
with two further findings based on erroneous legal standards.
First, the court ignored the evidence of likelihood of confusion (which it
never analyzed) in concluding: “The Court is unpersuaded that losses are likely to
occur simply because the apps’ display names – ‘Freelancer’ on iOS devices and as
‘Freelancer – Upwork’22 on Android devices – include the word ‘Freelancer.’” 1-
ER-12-13. Such was never Freelancer’s contention. Freelancer contended that the users would be diverted based on confusion due to Upwork’s trademark infringement / counterfeiting. The court ignored the clear evidence of likely confusion (see Sections IV.C-D) and its own inherent finding of confusion (see
Section IV.C.1).
Second, the court erred in ascribing improper value to the logos that accompany Upwork’s “Freelancer” software and the millions of daily notifications under the “Freelancer” mark. 1-ER-13 (stating “This is especially true where the apps have such distinctively different logos.”). Upwork did little-to-nothing to establish that its logo achieved any distinction, outside of providing an unsupported, self-serving declaration of its marketing director. See generally 2-
ER-272-274. This declaration is not accompanied by any exhibits or evidence.
22 Notably, the court ignored the evidence that on at least some Android devices, Upwork’s software is named “Freelancer.” See 3-ER-474.
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And discovery (e.g., a deposition) to challenge the declaration was not permitted before this appeal was taken. Such self-serving declarations intended to establish secondary meaning of purported trademarks are given little weight. Filipino
Yellow Pages, Inc. v. Asian Journal Publ'ns, Inc., 198 F.3d 1143, 1152 (9th Cir.
1999) (“Evidence of secondary meaning from a partial source possesses very limited probative value.”). Nothing establishes the purported “distinctive” nature of the Upwork logo on which the court relies. Without such evidence, that logo is merely a green-squiggly line next to the famous “Freelancer” mark.
The most prominent feature of the notifications is the “Freelancer” mark, with Upwork’s green-squiggly-line minimized, e.g.:
2-ER-72, 4-ER-771. While there is ample evidence that consumers are likely to be confused by Upwork’s use of the “Freelancer” mark (see Sections IV.C-D),
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nothing suggests that a consumer would attribute meaning to the green-squiggly-
line or attribute more meaning to that squiggle than to the “Freelancer” mark.
Even if consumers recognized the green squiggle, it would only increase the
irreparable damage by confusing consumers into believing that “Freelancer” is an
Upwork mark. As discussed further herein (see Sections II.G), one does not avoid trademark infringement merely by pairing two marks.
The court erred in failing to consider the evidence of likely confusion when it assessed the likelihood of irreparable harm. Rather, millions of confused users confronted with millions or billions of uses of the “Freelancer” mark by Upwork are likely to be diverted in droves to Upwork’s business through Upwork’s use of the “Freelancer” mark.
Having diverted these consumers from Freelancer to its business, Upwork is likely to retain these consumers as ongoing users / customers. It is not possible to determine a remedy at law for such losses, making the harm irreparable.
The evidence shows that such diverted consumers are unlikely to be recovered. See, e.g., 4-ER-782-786, 4-ER-640-641 at ¶¶23-26, 29,30, 3-ER-314,
3-ER-316, 3-ER-502-575, 4-ER-577-636. When a consumer performs work and
receives a review on a platform, it becomes difficult to dislodge that user from that
platform. 4-ER-782 at line 21 to 4-ER-783 at line 13. Upwork’s own documents
and Freelancer’s CEO confirm this. 4-ER-782 at line 23 to 4-ER-783 at line 5.
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Upwork ascribes “principal” importance to a users’ online reputation obtained
through reviews. Id.; 3-ER-318. The likelihood of users “sticking” with Upwork
after being confused and improperly diverted is confirmed not only by the parties,
but by numerous scholarly articles that analyze data from Freelancer, Upwork, and their predecessors. 4-ER-783 at line 20 to 4-ER-785 at line 21; 3-ER-504-575, 4-
ER-577-636. The court ignored a detailed discussion of these articles at 4-ER-783 at line 20 TO 4-ER-785 at line 21. Included was consideration of Upwork’s
predecessors in five scholarly articles (see 4-ER-783 at lines 22-24) and
consideration Freelancer and its predecessors in three scholarly articles. 4-ER-783
at lines 25-27. Discussion of these scholarly articles (3-ER-504-575, 4-ER-577-
636) was presented at 4-ER-784-785.
This evidence is not speculative. The articles analyze real consumers of the
parties’ goods and services. Once diverted to a competitor, such consumers are
unlikely to be recovered. This likely diversion of users causes multiple types of
harm that cannot be measured and, thus, is irreparable. See QBAS Co. v. C Walters
Intercoastal Corp., No. SACV 10-406 AG, 2010 U.S. Dist. LEXIS 143945, at *34-
35 (C.D. Cal. Dec. 16, 2010) (“[T]he irreparable harm does not end simply with
current losses of profits, market share, and bargaining power… In today's modern
retail world, …, a customer is likely to stick with a brand that the customer knows
...”). Upwork enhances its reputation (through offering services from a wider and
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deeper range of independent contractors), detracting from Freelancer’s reputation
and ability to compete. See, e.g., 3-ER-327 (“We believe that the principal competitive factors in our market include: … verified freelancer work history and
client payment history; size and engagement of user base,… breadth of skill categories offered by a platform’s rated quality talent …”).
The court erred in failing to consider this harm (documented by scholarly research articles) alongside evidence of likely confusion. This Court should reverse the court’s finding of lack of irreparable harm.
4. Evidence Shows the Likelihood of Irreparable Harm Through The Loss of Rankings and Reputation
The court further erred by failing to consider the evidence of likely irreparable harm related to user ratings or rankings in concert with the evidence of likely confusion. The court ignored ongoing trademark infringement through notifications and the name of Upwork’s “Freelancer” software in finding harm unlikely “from users downloading or reviewing [Upwork’s]” software. 1-ER-13.
The court did not consider likelihood of confusion.
The court ignored that use of Upwork’s software results in pervasive pummeling of users with the “Freelancer” mark. A user is only initially presented with Upwork’s “Upwork for Freelancers” text. 2-ER-236. This initial impression of “Upwork” lasts for only as long as a single installation and login process. 1-ER-
54 (software demonstrated to judge). After that, the user rarely, if ever, sees an
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indication that the software is related to Upwork. Id. Instead, the user sees daily
notifications labeled “Freelancer.” 4-ER-642 ¶37, 2-ER-72, 4-ER-771. Each time
the user views the App Icon on the user’s phone, the user sees software named
“Freelancer”, not “Upwork for Freelancers.” 3-ER-472-474. After the brief initial reference to Upwork, the daily, weekly, monthly, and ongoing impression is of software branded with “Freelancer” without reference to Upwork. (Even in the
limited instances where Upwork appears, the reference is to “Freelancer-Upwork”
(2-ER-72), improperly suggesting an association called “Freelancer-Upwork”).
There was no basis for the court to find absence of irreparable harm without
even considering user confusion evidence. This Court should reverse and hold that
each download or review of Upwork’s “Freelancer” software affects the ranking in
the Apple App Store or Google Play Store. 4-ER-642-643 at ¶42. Each download
or positive rating for Upwork’s software improves Upwork’s position with respect
to Freelancer in a manner that cannot be measured in dollars. Id. There is no
adequate remedy at law (i.e., one cannot put a monetary value on being ranked 1st,
3rd, or 17th place).
As demonstrated in this section III, Freelancer submitted evidence of three
non-speculative types of likely irreparable harm. The court completely discounted
this likely harm because the court erroneously failed to consider confusion
evidence. And the court erroneously required “actual” harm rather than “likely”
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harm. This Court should reverse the ruling of absence of irreparable harm and remand for entry of an injunction.
IV. The Court Erred In Holding That Freelancer Is Unlikely To Succeed on Its Counterfeiting Cause of Action
The court erred in ruling that Freelancer is unlikely to prove counterfeiting.
The court didn’t undertake even the basic analysis of counterfeiting, including likelihood of confusion. The court erred in employing a standard unrelated to the statutory counterfeiting test. The court stated, “Without determining the specific level of similarity between the ‘Freelancer’ apps, the Court concludes that plaintiffs are unlikely to succeed on their counterfeiting cause of action upon viewing the apps in their entirety.” 1-ER-12 footnote 10. This is not the test for counterfeiting.
The court did recite the appropriate test for counterfeiting, stating,
As for counterfeiting, “[a] ‘counterfeit’ is a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” “Section 1116(d) requires that the mark . . . be (1) a non-genuine mark identical to the registered, genuine mark of another, where (2) the genuine mark was registered for use on the same goods to which the infringer applied the mark.”
1-ER-9 (citations omitted). However, the court erred by not considering these elements. The court considered “specific level of similarity” between the parties’ goods and services. “Specific level of similarity” is not the test for counterfeiting.
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A. Upwork Uses a Spurious / Non-Genuine Mark Identical to the Freelancer Mark
The first counterfeiting element is “a spurious mark” or “a non-genuine mark identical to the registered, genuine mark of another,” and is met here by undisputed evidence. Freelancer registered the word mark “Freelancer” that
“consists of standard characters without claim to any particular font, style, size, or color.” 1-ER-3-4. “[A] visual comparison of the post downloaded apps” shows that Upwork uses the word “Freelancer” as “the app’s display name … beneath
[the] company’s logo”:
1-ER-6; see 2-ER-71. The court ignored undisputed evidence that on some
Android devices, Upwork’s display name appears as “Freelancer…”:
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3-ER-474. The court did not mention the undisputed evidence that Upwork sends likely daily notifications to its users, identified by prominent use of the
“Freelancer” mark:
2-ER-72, 4-ER-771, 3-ER-484.
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Upwork’s “Freelancer” display name, notification source name, and account
name are identical to Freelancer’s registered “Freelancer” mark.
This meets the first element of counterfeiting, i.e., a spurious/non-genuine mark identical to the registered Freelancer mark.
B. Freelancer Registered the Freelancer Mark for Use on the Same Goods to Which Upwork Applied the Freelancer Mark
Upwork meets the second element of the counterfeiting test: “the genuine
mark was registered for use on the same goods to which the infringer applied the
mark.” 1-ER-9. The court erred in failing to apply this test.
Freelancer registered the “Freelancer” mark for use on several classes of
goods and services, including “computer software for accessing, browsing and
searching online databases” and “computer software for personal information
management” among others. See 1-ER-3, 1-ER-6 (listing goods and services), 4-
ER-645-646.
Upwork applied the “Freelancer” mark to “computer software” in the form of “mobile applications on Android and iOS phones and devices that Upwork makes available on the Google Play Store (‘Google Play’) and the Apple App
Store (‘App Store’).” 2-ER-231. And as demonstrated (above: Introduction),
Upwork’s software is used for both of the classes identified above, and many of the other classes. 4-ER-771 at line 18 to 4-ER-772 at line 24, 3-ER-437-470, 3-ER-
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484, 3-ER-487-491, 3-ER-499, 3-ER-314-315. The software allows accessing, browsing and searching online databases:
(3-ER-499)
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3-ER-462 (listing results of searching for “Infringement”), 2-ER-297 at ¶19.
Upwork uses the “Freelancer” mark for (i) the software App Icon / name, (ii) the source name of notifications, and (iii) the name of user accounts.
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C. There is a Likelihood of Confusion
Though the court erroneously did not explicitly analyze confusion, both the
court’s ruling and the evidence demonstrate a likelihood of confusion.
1. The Court Inherently Found Confusion
Inherent in the court’s erroneous ruling on fair use is an underlying
determination of likelihood of confusion. “The fair use defense only comes into
play once the party alleging infringement has shown by a preponderance of the
evidence that confusion is likely.” KP Permanent, 408 F.3d at 608-09. The court’s erroneous ruling that “defendants’ use of the word ‘freelancer’ satisfies the requirements of fair use under 15 U.S.C. §1115(b)(4)”23 includes an inherent ruling that Freelancer showed likelihood of confusion.
While the “fair use” holding should be reversed, this finding of likelihood of confusion should not be disturbed and should be applied to satisfy the likelihood of confusion inquiry. If this Court rejects the district court’s inherent finding of likelihood of confusion, the Sleekcraft factors are discussed immediately below.
2. The Court Erred in its Failure to Consider the Likelihood of Confusion Evidence Submitted by Freelancer
The court erred in its failure to consider likelihood of confusion before
“conclud[ing] that [Freelancer is] unlikely to succeed on their counterfeiting cause
23 1-ER-12 at lines 5-7.
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of action…” 1-ER-12 footnote 10. The court recognized the recent Arcona decision (1-ER-9), but in doing so, the court erred in failing to consider that the holding required consideration of confusion: “To sustain a trademark counterfeiting claim, a plaintiff must show a likelihood of confusion.” Arcona,
Inc. v. Farmacy Beauty, Ltd. Liab. Co., 976 F.3d 1074, 1081 (9th Cir. 2020). The court apparently focused solely on the statement in Arcona that:
[E]ven assuming the marks are identical, there may be no presumption of consumer confusion if the products themselves are not identical. Put another way, a court must review the product as a whole in determining whether an allegedly counterfeit product will likely cause confusion.
Id. at 1080 (emphasis added). Unlike Arcona, Freelancer submitted both (a) evidence of actual confusion, and (b) evidence to support the eight Sleekcraft factors. The court erred by failing to consider this evidence.
Freelancer showed that the Sleekcraft factors weigh in favor of likelihood of confusion:
[T]he following factors are relevant:
1. strength of the mark; 2. proximity of the goods; 3. similarity of the marks; 4. evidence of actual confusion; 5. marketing channels used; 6. type of goods and the degree of care likely to be exercised by the purchaser; 7. defendant's intent in selecting the mark; and 8. likelihood of expansion of the product lines.
AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979).
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Freelancer demonstrated that six factors are met; the remaining factors turn
on evidence likely to be solely in Upwork’s possession. This demonstrates
likelihood of confusion. Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747, 756
(9th Cir. 2018) (“[O]nly a subset of the Sleekcraft factors are needed to reach a
conclusion as to whether there is a likelihood of confusion.”).
3. Factor 1: Strength of the Mark
The “Freelancer” mark is strong. The court found that it is “federally
registered.” 1-ER-3. The mark “received incontestable status in 2018.” 1-ER-4.
However, “an incontestable status does not alone establish a strong mark.” Miss
World (UK), Ltd. v. Mrs. Am. Pageants, Inc., 856 F.2d 1445, 1449 (9th Cir. 1988).
This Court has “appl[ied] the ‘imagination test’ and the ‘need test’ to determine the
strength of a mark.” Id.
The “need test” demonstrates that the mark is strong. This test “asks to what extent a mark is actually needed by competitors to identify their goods or services.” Miss World, 856 F.2d at 1449; see also Entrepreneur, 279 F.3d at 1142
(“[I]f there are numerous synonyms for a common trademarked word, others will have less need to use the trademarked term.”). Freelancer demonstrated that
Upwork has no need to use the mark “Freelancer” to describe its products.
Freelancer identified dozens of terms that can be used to refer to independent contractors:
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[T]erms used in the industry include: worker, independent contractor, gig-worker, temp, free agent, jobber, helpmate, helper, teleworker, self-employed, associate, affiliate, crowdworker, cloudworker, collaborator, remote worker, [and over 30 others].
2-ER-213 footnote 1. Upwork did not rebut or challenge this.
The “imagination test” also demonstrates that the mark is strong. “The imagination test asks how much imagination a consumer must use to associate a given mark with the goods or services it identifies.” Miss World, 856 F.2d at 1449.
As noted above, the relevant goods and services include “computer software for personal information management”, “computer software for accessing, browsing and searching online databases”, “electronic funds transfer services”, “dispute resolution services”, and several others. 1-ER-3. One would need a great deal of imagination to hear the word “Freelancer” and think of “computer software” or
“electronic funds transfer” or “dispute resolution.” “The more imagination required, the stronger the mark is.” Miss World, 856 F.2d at 1449.
Stone Creek applies a further strength test, “the mark's recognition in the market (i.e., its commercial strength) and the mark's inherent distinctiveness (i.e., its conceptual strength).” Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d
426, 432 (9th Cir. 2017). The “Freelancer” mark is recognized widely in the market. 2-ER-82 (2018 USA TODAY article: “Here are some of my favorite sites:
Freelancer … Upwork: ... Like Freelancer, it is a bidding marketplace…”); ECF
No 44-1 p. 30 (July 2019 Forbes article: “Of course, some of the heavy hitters
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include Upwork, Fiverr, Guru, Freelancer, …”); 2-ER-162-163 (article about gig economy apps: “5. Freelancer Freelancer is very similar to Upwork…”); 2-ER-
192 and 2-ER-196 (Google and Bing search results showing Freelancer’s website as top unpaid/non-advertising search result for the term “freelancer”); 2-ER-183-
184 at ¶¶ 53-56 (Freelancer received Webby and Stevie Awards); 4-ER-687-688
(Webby and Stevie Awards); 3-ER-506 (2013 scholarly journal article stating that
“The most popular freelance marketplaces are Elance, … ODesk, and
Freelancer…”); 3-ER-560 (2017 scholarly journal article referring to “online outsourcing platforms, such as Freelancer, eLance, and oDesk…”).
All four factors (i.e., the “need test”, the “imagination test”, market recognition, and the incontestable status) demonstrate strength of the “Freelancer” mark. This factor weighs in favor of likelihood of confusion.
4. Factor 2: Proximity of the Goods
The goods are in immediate proximity. “Related goods are generally more likely than unrelated goods to confuse the public as to the producers of the goods.”
Adidas, 890 F.3d at 755. Freelancer and Upwork are direct competitors: “Plaintiffs and defendants are competitors – both offer software platforms matching freelancers with freelancing jobs.” 1-ER-3. A software search for “Freelancer” in application stores for both Apple-iOS and Android phones shows Freelancer’s software immediately proximate to Upwork’s software:
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2-ER-235.
And the functionality the parties’ software is directly proximate. Upwork advertises, “We’ll help you find top-jobs based on the information you provide on your profile. Or, simply search for a job on your own.” 3-ER-499; 2-ER-300 at
¶¶36-37; see also 3-ER-494. Freelancer advertises, “[F]ind work from anywhere in the world.” 3-ER-433; 2-ER-296 at ¶8; see also 3-ER-429.
Both parties provide the software for use on Apple-iOS and Android phones.
Both advertise the software for finding “work” or “jobs.” And the parties are direct competitors. 1-ER-3. Accordingly, the relevant goods are in direct proximity.
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This strongly weighs in favor of likelihood of confusion.
5. Factor 3: Similarity of the Marks
The “similarity” factor is the most important factor. Similarity “is of considerable importance to the likelihood of confusion analysis, given that ‘the greater the similarity between the two marks at issue, the greater the likelihood of confusion.’” Adidas, 890 F.3d at 755.
Here, the marks are not only similar, they are identical. Freelancer’s registered mark is “Freelancer.” 1-ER-3. And Upwork’s name for its software is
“Freelancer”:
(1-ER-6)
3-ER-474; see also 2-ER-175 (“name” of Upwork software is “Freelancer”).
Upwork uses the same “Freelancer” mark as an identifier when it sends software
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notifications and as an identifier for accounts within its software. See supra
discussion of spurious mark usage; see also 2-ER-72, 4-ER-771, 2-ER-240 ¶ c, 2-
ER-241, 3-ER-457, 3-ER-486.
There is no difference in pronunciation; the marks are identical. This
strongly weighs in favor of likelihood of confusion.
6. Factor 4: Evidence of Actual Confusion
While evidence of actual confusion is never needed24 and is unlikely at early
stages of a case where preliminary discovery has been denied,25 Freelancer was
able to present the court with instances of actual confusion tied to Upwork’s use of
the “Freelancer” mark. The court ignored this evidence.
Freelancer provided the court with a recorded log of a March 5, 2020
conversation between two Freelancer customers. 2-ER-220. Names have been
redacted for privacy. “C” and “D” are used as identifiers of the two users. Id. C
encourages D to “just download the freelancer app” and tells D to search on the
24 “Such evidence is not necessary for a finding of likelihood of confusion, but it bears on the inquiry and is particularly potent.” Stone Creek, 875 F.3d at 433. 25 “Because of the difficulty in garnering such evidence, the failure to prove instances of actual confusion is not dispositive.” Sleekcraft, 599 F.2d at 353. “Because evidence of actual confusion can be difficult to obtain, its absence is ‘generally unnoteworthy’ and is given little probative weight.” Cohn v. Petsmart, Inc., 281 F.3d 837, 842 (9th Cir. 2002)
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Google Play store “with freelancer.” Id. D then searches and only finds Upwork’s
“Freelancer – Upwork” software, and asks if that is Freelancer’s software:
2-ER-220, 2-ER-209, 2-ER-203 at ¶9. While evidence of actual confusion is not
expected, Freelancer presented this evidence of actual confusion as to the source of
“Freelancer Upwork” software.
This is not hearsay.26 Even if it was hearsay, “It [is] within the discretion of
the district court to accept this hearsay for purposes of deciding whether to issue
the preliminary injunction.”27
26 Freelancer is offering the statement not to show the truth of the statement, but to demonstrate confusion. The statements are also excluded from hearsay under Fed. R. Evid. 803(1). 27 Republic of Philippines v. Marcos, 862 F.2d 1355, 1363 (9th Cir. 1988); see Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984) (“The urgency of obtaining a preliminary injunction necessitates a prompt determination and makes
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Even though evidence of actual confusion is not expected at the preliminary
stage, Freelancer provided such evidence. The “actual confusion” weighs in favor
of likelihood of confusion.
7. Factor 5: Marketing Channels Used
Both parties market goods through the same channels: Apple App Store and
Google Play Store. The court confirmed that “[Upwork] provides two [] mobile
applications as shown below in both the Apple App Store (top) and the Google
Play Store (bottom)…” 1-ER-4, 2-ER-300 at ¶¶36-37, 3-ER-492-501. And
Freelancer provides its mobile application in the Apple App Store and the Google
Play Store. 4-ER-639 at ¶ 12, 3-ER-427-436, 2-ER-296 at ¶¶ 7-8.
The parties use identical marketing channels. This weighs in favor of
likelihood of confusion.
8. Factor 6: Type of Goods and the Degree of Care Likely to be Exercised by the Purchaser
The goods and services in this case vary between cheap (free initial
downloads) and expensive (money transfers in the thousands of dollars). The users
vary between sophisticated and very unsophisticated.
it difficult to obtain affidavits from persons who would be competent to testify at trial. The trial court may give even inadmissible evidence some weight, when to do so serves the purpose of preventing irreparable harm before trial.”).
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The evidence shows that the initial download and installation of both parties’ software is free. See, e.g., 3-ER-428 (“Free”); 3-ER-493 (“Free ● Offers In-App
Purchases”). After downloading, installing, and creating an account without paying (see 3-ER-457), a user of the software may be hired for sophisticated tasks such as “Legal Contract Writing and Pricing model SAAS.” See 3-ER-461. The user may “Get Paid” for work. See 3-ER-468. For some, the software is free. And for others, the software becomes expensive or the source of significant income.
The sophistication level of users varies. 2-ER-221, 2-ER-201-209. Some users request that Freelancer help with servicing their Upwork accounts. 2-ER-
204-205, 2-ER-201 at ¶¶6-7. Others believe that the companies work together. 2-
ER-206, 2-ER-203 at ¶8. And others are more sophisticated.
Upwork’s attorney argument that ‘users are sophisticated’ is not supported by evidence and is contradicted by Freelancer’s evidence.
Because some of the expected consumers of the parties’ goods and services are unsophisticated, this factor favors likelihood of confusion.
9. Factor 7: Intent
While direct evidence of intent is solely in the possession of Upwork, intent to deceive is to be presumed here. “When the alleged infringer knowingly adopts a mark similar to another’s, reviewing courts presume that the defendant can accomplish his purpose: that is, that the public will be deceived.” Sleekcraft, 599
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F.2d at 354. Freelancer and Upwork are direct competitors. 1-ER-3; see also 4-
ER-639 at ¶21. Freelancer and Upwork have been competing for many years. 4-
ER-639 at ¶22. Freelancer is one of the few competitors that Upwork lists by name in its annual report. 3-ER-318.
While Upwork has not yet acknowledged that it was aware of Freelancer’s
registered “Freelancer” mark, there can be little doubt that Upwork was aware that
it was adopting the branding and name of its direct competitor when it renamed its
software “Freelancer.” Moreover, “failure to investigate whether someone held a
[particular] trademark” can support a finding of “carelessness” and “[un]fair” use.
Fortune Dynamic, 618 F.3d at 1043. Here, under Sleekcraft, “reviewing courts presume that [Upwork] can accomplish [Upwork’s] purpose: that is, the public will be deceived.” 599 F.2d at 354. Upwork knew or should have know about the
“Freelancer” mark.
This factor weighs in favor of likelihood of confusion.
10. Factor 8: Likelihood of Expansion
The likelihood of expansion factor is fulfilled when the parties are already direct competitors, the goods are the same, and the marketing channels are the same. “When goods are closely related, any expansion is likely to result in direct competition.” Sleekcraft, 599 F.2d at 354.
This factor weighs in favor of likelihood of confusion.
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D. It Was Clear Error to Apply the Wrong Legal Standard and to Ignore Evidence of Likelihood of Confusion
The court erred by applying incorrect legal analysis to the question of
counterfeiting and further erred by failing to consider the evidence of confusion
when analyzing counterfeiting. Instead, the court ignored the relevant tests and
referred to “specific level of similarity between the ‘Freelancer’ apps.” This is not
part of either statutory or case law tests for counterfeiting.
Freelancer found no instance of another U.S. Court of Appeals applying a
“specific level of similarity” test. The Arcona statement regarding comparison of
products was related to the plaintiff not showing likelihood of confusion. Arcona,
976 F.3d at 1080 (“Here, the products at issue are not identical … So Brookfield’s dicta has no bearing on this case.”). This Court did not establish a new “level of similarity” test. Instead, this Court directed, “The question then becomes: Is there a factual dispute about the likelihood of confusion so that Arcona’s counterfeiting claim can survive summary judgment?” Id. Likelihood of confusion is, and has been, the proper test.
The court erred in failing to consider the evidence of confusion and instead applying a “specific level of similarity” test. The court’s ruling should be reversed and the case remanded with instructions to enter a preliminary injunction.
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Conclusion
Freelancer requests relief consistent with the foregoing, including (a) reversing the court’s finding of “fair use” under 15 U.S.C. §1115(b)(4); (b) reversing the court’s finding that Freelancer failed to show likelihood of irreparable harm; (c) reversing the court’s finding that Freelancer is unlikely to succeed on the counterfeiting cause of action; and (d) remanding with instructions to enter a preliminary injunction against Upwork’s trademark infringement and counterfeiting.
Dated: December 4, 2020 /s/Andrew T. Oliver Andrew T. Oliver Attorneys for Plaintiffs-Appellants Freelancer International Pty Limited and Freelancer Technology Pty Limited
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Statement of Related Cases
Pursuant to Circuit Rule 28-2.6, no other appeal in this action has been before any appellate court. Appellants are not aware of any pending court or agency case that will directly affect or be directly affected by the Court’s decision in this appeal.
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UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Form 8. Certificate of Compliance for Briefs Instructions for this form: http://www.ca9.uscourts.gov/forms/form08instructions.pdf
9th Cir. Case Number(s) 20-17196
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complies with the word limit of Cir. R. 32-1. is a cross-appeal brief and complies with the word limit of Cir. R. 28.1-1.
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complies with the longer length limit permitted by Cir. R. 32-2(b) because (select only one):
it is a joint brief submitted by separately represented parties; a party or parties are filing a single brief in response to multiple briefs; or a party or parties are filing a single brief in response to a longer joint brief.
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Signature /s/ Andrew T. OliverDate 12/4/2020 (use “s/[typed name]” to sign electronically-filed documents) Feedback or questions about this form? Email us at [email protected]
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Certificate of Service
I certify that, on December 4, 2020, I electronically filed the foregoing with the Clerk of the United States Court of Appeals for the Ninth Circuit using the
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Participants in the case who are registered CM/ECF users will be served by the appellate CM/ECF system.
Dated: December 4, 2020 /s/Andrew T. Oliver Andrew T. Oliver Attorneys for Plaintiffs-Appellants Freelancer International Pty Limited and Freelancer Technology Pty Limited
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