Recalling the 1960s movie David and Goliath, a battle between IT titan Dell EMC and relative minnow Nexsan has been waged in the federal court for the District of Massachusetts over the use of the trademark “Unity.” Both companies market storage arrays branded “Unity.” EMC wrote a cease and desist letter to Nexsan concerning misuse, claiming prior use. However, Nexsan believed that claim to be erroneous, countering that it had filed for the trademark before EMC. It sued the giant for misuse first.
In case number 1:16-cv-10847-WGY in the federal court for the District of Massachusetts, Nexsan’s complaint stated: “EMC has threatened suit unless Nexsan abandons its UNITY trademarks.” Nexsan sought “a declaration that it has priority to, and is not infringing upon, certain trademark rights asserted by EMC Corporation.” The cease and desist order from Dell EMC was an obvious attempt at strong-arm tactics by the storage giant against the smaller company. Dell EMC not only failed to obtain the results it was expecting—this being Nexsan running off scared into the twilight and surrendering its trademark—but also ended up on the wrong arm of a trademark suit.
The crux of the case rests on the date that the Unity name was first deemed a protected name. EMC contended in its defense that it could claim prior use before its trademark date of April 29, 2016, and before the Nexsan filing date of March 22, 2016. This, it said, gave its use of the trademarked name precedence over Nexsan’s prior registration. Nexsan obviously contended this defense.
I think a little bit of history may be in order here to gain some context.
Prior to submitting its filing for the Unity trademark on the March 22, 2016, Nexsan made a trademark search for the word UNITY on March 7, 2016. It found that the word was not in use by any computer data technology company. If it had found a prior entry, obviously it would not have submitted its claim and would have chosen a different word for its product. EMC registered its claim for the word on the April 29, 2016, after deciding to rename its VNX and VNXe arrays UNITY. EMC stated that it had prior rights to the name due to the fact that Chad Sakac, president of its converged division, in a blog on his personal site referred to “unity.” However, having read the post myself, I would say that Chad referred to the word in the context of single code base for the product, not as a product name. The court agreed with this position, further adding that even though Chad is a senior employee of EMC, the site is not an offical EMC resource. Now, EMC might have had a better base to bat from if it had been referring to the product as UNITY during its private beta testing stage for the product. However, the product was rather confusingly referred by three different names: Thunderbird, Oberon, and UNITY. Further, the name UNITY did not appear on any hardware during this period.
EMC’s defense document to the court states: “In March 2015, EMC began giving sales presentations about its UNITY products to current and potential customers…In total, EMC delivered eighty-four presentations, each attended by up to 100 individuals from different groups of customers, distribution partners, and potential customers.” Again EMC undermined its position by using both the Thunderbird and UNITY names in these presentations. Further, all attendees at these briefings signed NDAs, meaning that this usage was not open to public scrutiny.
On Friday, April 14, 2107, the court declared:
This Court concludes that EMC has not carried its burden to establish prior use, and thus Nexsan has priority to the UNITY mark based on its intent-to-use applications.
It held that EMC’s beta testing did not legally demonstrate public prior use of the UNITY trademark due to a small test population, multiple array name use, and the testers’ having to sign NDAs. Neither did its pre-sales presentations, as they were also covered by NDAs and reached only a small number of people.
Further, Sakac’s blog was personal and not official EMC material, which, among other reasons, disqualified EMC from establishing prior public use of the Unity name.
What Are the Next Steps for EMC and Nexsan?
The obvious answer is that EMC will need to rebrand its Unity arrays.
As a result of this ruling, Nexsan now has grounds to sue Dell EMC for trademark infringement for continued use of the Unity name. However, Dell EMC may just attempt to pay Nexsan off to prevent any further escalation and to have Nexsan rename its brand. Possible, but unlikely. Nexsan has the moral high ground here. It could go for punitive damages against EMC, though this is also unlikely. I believe that whatever happens, EMC will settle this out of court.
What is interesting is that the court has now clearly defined the boundaries for trademarks. Had Chad’s post been on an official site and not his personal one, the ruling might have been different. If the product briefings had been public and not under NDA, EMC might have been able to prove prior use. The moral of the story is that if you are going to use a new trademark, do your due diligence on it. Nexsan did, and it carried the day. It followed the correct procedures and did a usage check.
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