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“Judge Collins, dissenting, called the orders ‘confusing’ and said they revealed that the district court was applying the incorrect legal standard.”
OpenAI, Inc. has won a fight at the U.S. Court of Appeals for the Ninth Circuit to preliminarily enjoin Open Artificial Intelligence, Inc. and its owner, Guy Ravine, from using the marks “OpenAI” or “Open AI” in commerce. But one of the three judges dissented, calling the findings in the district court’s orders granting the injunction “confusing and insufficiently explained.”
The district court concluded that OpenAI, Inc. had likely acquired secondary meaning in the mark OpenAI by September 2022, before Defendants first used the mark in commerce. While Ravine claimed they released an “Image Generator” in November 2022, but “Plaintiff’s evidence suggests this Generator may never have existed,” said the Ninth Circuit’s majority opinion. Ravine also argued he rebutted the presumption of irreparable harm on a theory of laches, since OpenAI didn’t sue him for eight years. The Ninth Circuit said, under Tillamook Country Smoker, Inc. v. Tillamook Cnty. Creamery Ass’n, 465 F.3d 1102, 1108 (9th Cir. 2006), “a trademark owner may wait until the junior user ‘moves into direct competition . . . selling the same ‘product’ through the same channels and causing actual market confusion.” When Ravine’s company began hosting Stable Diffusion in November 2022, the confusion became potentially harmful to OpenAI’s reputation.
Ravine also requested that the injunction be narrowed so he is permitted to use the open.ai domain for non-infringing purposes, but the appellate court said he can make this request on remand. He also sought a new trial due under either Rule 59(e) or 60(b) due to failures of previous counsel, but the majority said the district court did not abuse its discretion in denying that motion.
Judge Daniel Paul Collins dissented, however, opining that the district court failed to concretely identify how OpenAI established that “its mark had acquired secondary meaning before the first infringing use by” Open Artificial Intelligence, Inc. and Ravine. “It consequently failed to make clear factual findings sufficient to support a conclusion that a preliminary injunction was warranted under that standard,” said the dissent.
Collins pointed out that the district court’s original order contained an error with respect to the date the USPTO rejected OpenAI, Inc.’s application to register its mark under the argument that the mark was not yet “distinct enough to guarantee [P]laintiff its exclusive use.” The original order said that this rejection occurred on January 3, 2022, when it was in fact January 3, 2023. The original order added that despite this ruling in January 2022, “the subsequent launches of ‘two products, ChatGPT and DALL E 2,’ in November 2022 and September 2022 had made Plaintiff’s mark ‘a household name.’”
When Ravine filed a motion for reconsideration due to the error, the district court issued a new order including two errata. The order corrected the date to 2023 but then simply changed the subsequent language from “since at least September of 2022, if not earlier,” Plaintiff’s mark “was at least suggestive,” to “since at least September of 2022, if not earlier,” Plaintiff’s mark “had acquired secondary meaning.”
The order went on to explain why the court denied the motion for reconsideration and defended its error as irrelevant since “whether [P]laintiff acquired secondary meaning by the end of 2022 or the beginning of 2023, the [c]ourt found that [P]laintiff is likely to prove that it has a protectible interest in its mark; [D]efendants, on the record on front of it [sic] at the preliminary injunction stage, could not.”
Collins called the orders “confusing” and said they revealed that the district court was applying the incorrect legal standard, namely, “that it thought the relevant standard was which party’s mark first acquired secondary meaning, but that is wrong,” Collins wrote. Ultimately, Collins said he would vacate the orders and remand for the district court to make factual findings under the correct legal standard.
