Publishers Caught in Smartbook Dispute

Last week, OSAlert received an interesting email from a German attorney. It informed us that a company called Smartbook AG has a trademark in several countries to the term “Smartbook” and admonished us (semi-threateningly) not to use the term for anything but his client’s company’s products. Our first reaction was, “huh?” But a quick search reminded us that several companies, most notably Qualcomm, have started referring to low-power mini-notebooks as smartbooks. It turns out that OSAlert, and many other news sources, have been caught in a trademark dispute between Smartbook AG and Qualcomm. This prompted me to do a little research on trademark law.

So what’s a smartbook?

Let me emphatically state that, thanks to Smartbook AG’s trademark of the term in much of Europe, Korea, Russia, Australia, and Singapore, and a German court injunction, in those places a Smartbook is currently an Atom-based mini-notebook sold in Germany by Smartbook AG and any other use of the term is trademark infringement. Mmmkay?

In common usage in the rest of the world, a smartbook is a small clamshell-form-factor computing device that’s smaller (and usually lower-powered) than a netbook, but larger than a smartphone or handheld. The term seems to be a “portmanteau” word created from the combination of the terms smartphone and notebook. The mobile computing world is putting out a lot of form factors these days, and they’re going to need names, and the media and the industry, like it or not, seems to have coalesced around the term smartbook for this particular slice of the market. The trade press in particular has adopted the term, and companies, such as Qualcomm and Dell, have used it to describe released or proposed devices.

A German company called ISSAM sold a laptop called “smartbook” in the 2003-2005 timeframe, and the company now called Smartbook AG bought the rights to the trademark in 2006. It’s a small company focused on the German market, but as the term smartbook started to get thrown around by Qualcomm and the technology trade press, they realized that their trademark had suddenly become valuable.

Now, the laws vary from region to region, but in general, a company must take steps to protect its trademark from becoming “diluted” and enter wide use as a generic term and therefore become an invalid trademark. Some common terms that you might be surprised to learn were once trademarked terms:

• aspirin (Bayer AG)
• escalator (Otis Elevator Company)
• thermos (Thermos GmbH)
• yo-yo (Duncan)
• zipper (B.F. Goodrich)

You may have noticed that clothing or equipment has been advertised over the past few years as using “hook and loop fasteners.” That’s because the Velcro trademark lies on the edge of becoming genericized, and the company has been making a last-ditch effort to prevent that from happening. There’s a fascinating Wikipedia page about the phenomenon of genericized trademarks.

I felt like I had a pretty good grounding in trademark law, but I neither wanted to simply parrot Smartbook AG’s claims nor spout off my own uneducated legal theories as fact, so I enlisted the help of Aaron Hendelman, an intellectual property partner at Wilson Sonsini Goodrich and Rosati, a prominent Silicon Valley law firm. I was curious as to whether the Smartbook trademark might have become a generic term (as Qualcomm claims) because it went unused for a number of years, or because the company and product bearing the trademark was obscure and unknown.

It turns out that, even though the laws vary around the world, it’s not that easy to lose a trademark due to abandonment or obscurity. For it to be considered abandoned, it needs to be unused, without an apparent intention to resume use, for three to five or more years. And even if people aren’t aware of your trademark claim, it still stands. That’s the point of registering a trademark in the first place. It’s putting the world on notice. So in the countries where Smartbook AG has a valid registered trademark, it’s virtually guaranteed to keep it, now that it’s begun to defend it so vigorously. The real issue is that it does not hold the trademark in many of the world’s largest technology markets, so smartbook is, for all intents and purposes, a legitimately generic term in most places, but not all. This is both a challenge and an opportunity for Smartbook AG.

The largest challenge for both Smartbook AG and anyone wanting to market a product they’ll call a smartbook is the international nature of the internet. Because of a court injunction in German forbidding Qualcomm from using the trademark in that country, Qualcomm has been forced to block access to certain web pages within Germany, and add an asterisk to their smartbook web site. Long-term, Qualcomm has three options: they can stop using the term worldwide, they can keep using it, while taking steps to avoid Germany and any other country where Smartbook AG can successfully pursue legal action, or they can come to an accommodation with Smartbook AG, by buying or licensing the trademark.

This is where the opportunity for Smartbook AG comes in. If they had already had a trademark in the United States, large deep-pocketed companies would never have started using the term, and they would remain an inconsequential company with a nifty product name. But now that the name has caught on, they just need to make enough of a nuisance of themselves and be reasonable enough about their payoff price, and they might just convince someone to pay them some money. That, I suspect, is what this is all about. On their trademark info site they say, “Why does a multi-billion-Dollar-Company choose our brand for own products instead of taking another name and leave us in peace?” That’s all very dramatic, but we won’t be fooled. Qualcomm and others starting to use their trademark will probably end up being the best thing that’s ever happend to them.

So, they’re at the “make a nuisance of themselves” phase, and that’s where the threatening letters to publishers comes in. Here’s an excerpt of the email that was sent to OSAlert:

Your usage of the trademark “SMARTBOOK” may lead to damages of the positions achieved by the trademark registration. The aforementioned reporting has the effect that the reader of the above mentioned article understands that a third party is permitted to use the trade name “SMARTBOOK” within the region, for which SMARTBOOK holds a trademark protection.

That the use of the trade name “SMARTBOOK” is not permitted by a third party ^aEUR“ decided in court in the case of the company Qualcomm Inc. ^aEUR“ within the trademark region of our client has been confirmed by the resolution of August 13, 2009 at the District Court Cologne (reference: 31 O 482/09 ^aEUR“ still to be legally established).

With the present letter, we ask you to cancel the use of the trademark “SMARTBOOK” for the purpose of reporting about products, which are not products of our client, and to remove already existing reports from the Internet.

. . . .

We kindly ask for your understanding that we have to ask you in the interest of our client’s trademark protection to stop immediately the incorrect use of the trademark “SMARTBOOK”. Finally, we would like to ask you to confirm to our hands that the adjustment requested will be implemented within two weeks after receipt of the present letter.

The email gave us permission to use the term to describe their products or to cover the trademark dispute as news. To illustrate this, it ironically contained this link to TechCrunch that largely mocks their trademark claim and criticizes other media outlets for knuckling under.

So Smartbook AG is using OSAlert and other publishers as pawns in its savvy attempts to make some money off of its trademark. Of course, I’ve already fallen right into part of their trap by writing this story, and bringing publicity onto their cause. But what about their enjoinder not to use smartbook as a generic term? Do I need to comply?

Aaron Hendelman says, “A brand owner would have an extremely tough time in the US challenging a media publisher’s statements that a mark is generic. The publisher isn’t using the mark in a traditional trademark sense referring to its own goods or services, and principles of free speech the First Amendment should enable a publisher to express its opinion as to genericness.”

US law is quite clear on the matter, and does not give trademark owners any legal remedy against authors and publishers for using a trademarked term in its generic sense. They are of course free to ask publishers not to misuse the term for the sake of accuracy, but as the majority of OSAlert readers live in countries where smartbook is a legitimately generic term, we’re under no moral obligation to do so. So, dear readers in Germany, Antigua, Austria, Australia, Benelux, Switzerland, Czech Republic, Denmark, Spain, Finland, France, United Kingdom, Italy, Democratic People’s Republic of Korea, Republic of Korea, Monaco, Norway, Poland, Portugal, Russian Federation, Sweden, Singapore, Turkey and Ukraine, consider this your official notice that the smartbooks we’re reporting about are not the products of Smartbook AG, so don’t be fooled. And yes, if you read that list carefully, all you North Korean OSAlert readers, don’t go misusing the Smartbook trademark, or you’ll face international condemnation.

So OSAlert is protected by the United States’ still-liberal freedoms of the press, and though Smartbook AG could try pursuing legal action against us in Germany, I don’t think it would be worth their trouble. We won’t go out of our way to promote the term “smartbook” as a generic, but we won’t censor our news either. Good luck with your money-making scheme, guys!