9th Circuit Reverses Dropbox’s Summary Judgment in Trademark Dispute by Ironhawk Technologies

On Tuesday, Ninth Circuit Judges A. Wallace Tashima, Milan D. Smith, Jr., and Mary H. Murguia issued an opinion reversing and vacating the Central District of California’s granting of summary judgment in favor of defendant Dropbox Inc. and remanding for trial in Ironhawk Technologies Inc.’s trademark infringement lawsuit after the appellate panel found there to be real issues of material fact.

According to the opinion written by Smith, Ironhawk created computer software that utilizes “compression and replication to transfer data efficiently in ‘bandwidth-challenged environments’ ” marketed under the name SmartSync, for which it has had a trademark registration since 2007. The appellate panel noted that in 2017 Dropbox launched its Smart Sync feature, which “allows users to see and access files in their Dropbox cloud storage accounts from a desktop computer without taking up the computer’s hard drive space.” As a result, Ironhawk sued Dropbox for trademark infringement.

Previously, the district court granted summary judgment to Dropbox, stating that Ironhawk “could not prevail because a reasonable trier of fact could not find a likelihood of consumer confusion,” prompting Ironhawk to appeal.

The Ninth Circuit held that there was a real dispute of material fact regarding the likelihood of consumer confusion “under a reverse confusion theory of infringement, which occurs when a person who knows only of the well-known junior user comes into contact with the lesser-known senior user, and because of the similarity of the marks, thinks that the senior user is the same as or is affiliated with the junior user.” In particular, the appellate panel found that “a reasonable jury could conclude that consumers would believe Dropbox is a source of, or a sponsor of, Ironhawk’s Smart Sync.” Therefore, the Ninth Circuit said that, based on competing evidence, there was a real dispute about consumers. However, applying the factors in Sleekcraft, the court stated that there is a reasonable likelihood of confusion.

Tashima, dissenting, stated that he generally agreed with the trademark principles of the majority but that he was not convinced that a reasonable jury would find a likelihood of consumer confusion. However, Tashima agreed with the majority’s conclusion in regards to the relevant consumer class, which includes Ironhawk’s existing military customers and the potential commercial customers to whom it markets, but still asserting that the majority erred because it did not consider that these potential customers were “large, sophisticated commercial enterprises, and any sale would be subject to a prolonged sales effort and careful customer decision making.”

Brown George Ross LLP and the Law Office of Alex Kozinski represent Ironhawk Technologies. Covington & Burling LLP represents Dropbox.