Neo4j, Inc. v. Graph Foundation, Inc.

Background

Neo4j sued Graph Foundation over alleged trademark infringement, false designation of origin, false advertising, and federal and state unfair competition. Neo4j owns a federal registration for the “Neo4j” word mark and offers both open-source and commercial versions of its graph-database software. Graph Foundation offers software called “ONgDB,” which it describes as a free and open-source Neo4j Enterprise project and a fork of Neo4j.

Graph Foundation’s amended answer asserted three relevant affirmative defenses. An affirmative defense is a legal reason why a defendant argues it should not be held liable even if the plaintiff proves its claims. The fourth defense claimed that Neo4j abandoned its trademark through alleged confusion about the mark’s use and through open-source licensing without adequate quality control. The fifth claimed that GitHub’s terms allowed Graph Foundation to fork and use Neo4j’s open-source software. The sixth claimed that Neo4j’s trademark registration was obtained through fraud because of an allegedly incorrect date of first use.

Legal standard

The court applied Federal Rule of Civil Procedure 12(f), which allows a court to strike an insufficient, redundant, immaterial, impertinent, or scandalous matter from a pleading. The court explained that affirmative defenses must provide enough factual information to give the plaintiff notice of their basis. A defense may be struck when it cannot succeed under any set of facts consistent with the pleading. Leave to amend ordinarily should be given when amendment would not prejudice the opposing party.

Court’s analysis

For the fourth defense, the court held that the alleged confusion from using “Neo4j” as both a company name and a product name did not show that the mark had become generic or lost its significance as a mark. The court also held that alleging no right to inspect or supervise the quality of open-source licensees’ work did not, by itself, show that Neo4j failed to exercise adequate control over use of the trademark. The court nevertheless found that Graph Foundation might be able to allege facts showing a lack of actual control over the mark’s use, so it allowed amendment.

For the fifth defense, the court took judicial notice of the GitHub Terms of Service because the amended answer incorporated them by reference. The court agreed that those terms did not give Graph Foundation a legal or contractual right to violate the Lanham Act or California’s unfair-competition law. But the court found that the defense was not irrelevant: if the challenged actions complied with the GitHub terms, that could be relevant to whether use of “neo4j” in executable-file names misled consumers. The court therefore did not strike the defense.

For the sixth defense, the court agreed that an incorrect date of first use, standing alone, does not support cancellation of a trademark registration for fraud. Graph Foundation agreed to strike this defense, and the court found that amendment would be futile.

Disposition

The court granted in part and denied in part Neo4j’s motion to strike. It struck the fourth affirmative defense without prejudice and gave Graph Foundation leave to amend it. It denied the motion to strike the fifth affirmative defense. It struck the sixth affirmative defense with prejudice. Judge Edward J. Davila permitted Graph Foundation to file a second amended answer addressing the fourth defense no later than June 12, 2020.