Neo4j, Inc. v. PureThink, LLC

Background

Neo4j USA owns the registered “Neo4j” trademark. Neo4j Sweden AB, described in the opinion as Neo4j USA’s wholly owned subsidiary, owns copyrights related to Neo4j software and licenses those copyrights to Neo4j USA. Neo4j Sweden distributes a version of the software under the GNU General Public License and the GNU Affero General Public License, which allow users to copy, modify, combine, and distribute the software subject to stated notice requirements.

Neo4j USA and PureThink entered into a partner agreement under which PureThink agreed to sell and support the commercial version of the software. Neo4j USA later notified PureThink of a material breach and terminated the agreement after PureThink allegedly failed to cure the breaches. The case includes Neo4j’s claims against the defendants and several counterclaims and affirmative defenses concerning the “Neo4j” trademark.

Neo4j moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). This type of motion challenges whether the opposing party’s pleadings are legally sufficient. The motion concerned cancellation and abandonment theories asserted by John Mark Suhy, PureThink, and iGov Inc., including both counterclaims and affirmative defenses.

Cancellation Arguments

The defendants alleged that Neo4j’s trademark registration was obtained through fraud because the registration application stated dates of first use that the defendants claimed were false. In opposition to the motion, the defendants conceded that misstating the date of first use, standing alone, does not support cancellation of a trademark.

The court held that the cancellation arguments therefore failed to state a legally plausible claim or defense. It found that amendment would be futile and granted the motion as to those arguments. The court dismissed with prejudice Suhy’s First Cause of Action, PureThink and iGov’s Eleventh Cause of Action in their amended counterclaim, and the Seventh Affirmative Defense in the answer.

Abandonment Arguments

The defendants also argued that Neo4j abandoned its trademark because “Neo4j” was used as both a company name and the name of software products, and because Neo4j-branded software was distributed under open-source licenses without adequate quality control.

The court ruled that using the same mark as a company name and a product name, without more, did not show that the mark became generic or lost its significance as a trademark. The allegation that both Neo4j USA and Neo4j Sweden used “Neo4j” in their names was also insufficient to establish abandonment, even if the companies were not treated as related.

The court separately considered the defendants’ “naked licensing” theory. Naked licensing is the alleged failure of a trademark owner to exercise adequate quality control over licensed uses of the mark. The court held that distributing software under the GPL and AGPL, without more, did not establish naked licensing or abandonment. The licenses’ notice requirements showed an effort to identify modifications, and the defendants did not allege that Neo4j had actually failed to control licensees’ use of the trademark.

The court nevertheless allowed amendment because the defendants might be able to allege that Neo4j failed to exercise actual control over licensees’ use of the mark. It granted the motion as to the abandonment arguments and dismissed them with leave to amend. This applied to Suhy’s Second Cause of Action, PureThink and iGov’s Tenth Cause of Action in their amended counterclaim, and the Ninth Affirmative Defense in the answer.

Disposition

Judge Davila granted Neo4j USA’s motion for judgment on the pleadings in full. The specified cancellation claims and affirmative defense were dismissed with prejudice. The specified abandonment claims and affirmative defense were dismissed with leave to amend. The defendants were permitted to file a consolidated amended counterclaim by June 5, 2020, solely to add allegations supporting an abandonment argument as described in the order.