Apple Inc. (NASDAQ:AAPL) and Amazon.com Inc. (NASDAQ:AMZN) have been in a friendly but collaborative rivalry over the years since Amazon.com jumped into the e-commerce market, but that competition has taken an adversarial turn in an Oakland courtroom, and both companies are in a battle over two little words.
Apple Inc. (NASDAQ:AAPL) is seeking trademark status for the team “App Store,” which came into common use with the launch of the iPhone. Amazon.com Inc. (NASDAQ:AMZN) has been using “Appstore” on its various Kindle devices that are run on the Android operating system by Google Inc. (NASDAQ:GOOG), but Apple Inc. (AAPL) sued on the claim of false advertising, stating that the term “Appstore” leads to confusion, making users think that Kindle users might be accessing the iOS app marketplace rather than the Android portal. This case had a hearing before Judge Phyllis Hamilton recently, and the initial feedback was seen as skepticism by the judge toward Apple’s case.
Apple Inc. (NASDAQ:AAPL) is claiming “exclusive” rights to the term, while Amazon.com Inc. (NASDAQ:AMZN) contends that the term is more generic and applies to the overall marketplace. Apple Inc. (NASDAQ:AAPL) contends that it “pioneered” the marketplace and that has helped the term “App Store” be more readily affiliated with iOS devices rather than others run by Android by Google Inc. (NASDAQ:GOOG) or even those run on Windows Phone by Microsoft Corporation (NASDAQ:MSFT). In its court filing, Apple Inc. (NASDAQ:AAPL) said, “A pioneering brand—the first successful brand in a new market—plays a unique role in educating consumers about the product category as a whole while simultaneously building consumer affiliation between the product and the pioneer,” noting its own survey that indicated that many consumers who heard the term “app store” connected it with Apple Inc. (AAPL) products.
However, Judge Hamilton countered. “Everyone who uses a smartphone knows the difference between the Apple iOS system and the Android system. Where’s the confusion? There’s some suggestion [by Apple] that if Amazon is using the ‘Appstore’ term someone might think they have as many apps as Apple does. Well, why? And how, in fact, does that contribute to any deception on the part of Amazon?”
In response to the survey submitted by Apple Inc. (NASDAQ:AAPL), Hamilton said, “I don’t believe any consumers were directly asked whether they were deceived.” Apple lawyers aid the question wasn’t required and was outside the parameters of the survey. Amazon.com Inc. (NASDAQ:AMZN) has no response at this point, other than sticking with its current stance that the term is generic, citing that later Apple CEO Steve Jobs used the term generically in reference to similar digital markets by the competition. Does generalization of the term affect Apple Inc. (AAPL) in the long run, and how will investors like billionaire fund manager David Tepper of Appaloosa Management LP look at this case?