The popular cloud storage system Dropbox recently won summary judgment against Thru, Inc.’s claim of trademark infringement.
Thru operates a secure file sharing system called Thru Dropbox. See the screenshot from their website below.
Dropbox filed a trademark application to register the DROPBOX mark in 2009, but was hit with a flurry of oppositions by other companies such as Officeware, the owner of the FilesAnywhere service, Yousendit, Inc. (which has changed its name to Hightail), and others. Dropbox was ultimately successful on those oppositions and obtained its trademark registration for DROPBOX in 2014. Thru did not file an opposition to Dropbox’s 2009 trademark application.
Last year, Dropbox filed a lawsuit against Thru, seeking declaratory relief that its use and registration of the DROPBOX trademark does not infringe upon Thru’s purported trademark rights. Thru counterclaimed for trademark infringement, alleging that it had priority to the DROPBOX mark based on use as early as May 2004, and that Dropbox did not start using its DROPBOX mark until 2008. Later in proceedings, Dropbox moved for summary judgment on Thru’s counterclaim. Dropbox argued that Thru’s claim was barred by the doctrine of laches because Thru unreasonably delayed in making its claim and this delay prejudiced Dropbox.
The summary judgment decision, issued on Tuesday by Judge Edward Chen of the Northern District of California, agreed that Thru’s trademark infringement claim was barred by the doctrine of laches. More specifically, the court held that Thru’s delay was unreasonable and prejudiced Dropbox because:
Thru purposefully delayed bringing suit in an attempt to increase its leverage over Dropbox and thus the value of its claims. . . . If a trial resulted in a determination that Thru owned superior rights to the “dropbox” trademark, the costs to Dropbox would be massively greater today than they would have been years ago, because of Dropbox’s continued investment in its brand.
The court further explained that:
[A] delay of this sort is precisely what laches is designed to guard against; Thru cannot simply “sleep on [its] rights,” allowing multiple other parties to expend significant resources litigating over rights that Thru believes it owns, only to belatedly pursue the victorious party.
In response to Dropbox’s laches defense, Thru argued that its delay was not unreasonable because Thru wasn’t aware of the Dropbox business in 2009; rather, Thru contended it had not heard of Dropbox until the summer of 2011 (at which point Dropbox had 40 million users). The court disagreed, finding that Thru’s limitations period began in June 2009, at which point Dropbox had 1 million users and had been widely covered by the media. The court concluded that Thru’s contention that it wasn’t aware of Dropbox in 2009 was “simply not credible,” based in part on emails among high-ranking Thru officers in June 2009 discussing Dropbox and deposition testimony regarding those emails.
Back in 2009, while I was still in school, I recall the growing popularity and name recognition of the Dropbox program among friends and other students, to backup documents and share files with each other. What do you think? Had you heard of Dropbox back in 2009?