Neo4j, Inc. v. PureThink, LLC

Background

Neo4j USA owns the “Neo4j” trademark. Neo4j Sweden, its wholly owned subsidiary, owns copyrights in Neo4j software and distributes a version called “Neo4j Community Edition” under the GNU General Public License and the GNU Affero General Public License. Those open-source licenses allow users to use, modify, support, combine, and distribute the software, subject to conditions concerning notice of modifications.

Neo4j USA entered into a 2014 Partner Agreement with PureThink under which PureThink agreed to sell and support the commercial version of the software. The agreement included a limited license to use Neo4j trademarks to market and promote the products. Neo4j USA later notified PureThink of a material breach and terminated the agreement.

The defendants asserted a counterclaim for declaratory relief based on alleged trademark abandonment and included a substantively identical affirmative defense. They argued that Neo4j’s open-source distribution was an uncontrolled, or “naked,” trademark license because Neo4j allegedly failed to control the quality of third-party software modifications and use of the Neo4j mark. After an earlier ruling, the court allowed the defendants to amend their pleadings to allege that Neo4j failed to exercise actual control over trademark licensees.

Issues and analysis

Neo4j moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the abandonment counterclaim for failure to state a claim. It also moved under Rule 12(f) to strike the corresponding affirmative defense as insufficient.

Under the Lanham Act, a trademark may be abandoned if its use is discontinued with an intent not to resume, or if the owner’s conduct causes the mark to become generic or otherwise lose its significance as a mark. The defendants relied on the second route and argued that naked licensing caused abandonment. Naked licensing generally involves a trademark owner granting a trademark license and then failing to monitor the quality of goods or services provided under the mark.

The court held that the defendants’ allegations about third-party software modifiers did not state an abandonment claim. The GPL and AGPL are copyright licenses, not trademark licenses. The court concluded that users modifying the software under those licenses had no right to use the Neo4j trademark without a separate trademark license. Because the defendants did not allege that Neo4j granted third-party modifiers trademark licenses, their allegations concerned alleged failure to pursue unauthorized trademark use, not failure to control trademark licensees. The court also noted that the defendants did not allege that Neo4j’s conduct caused the mark to become generic or otherwise lose its significance.

The court separately addressed allegations concerning Suhy and PureThink. Those allegations involved use of the Neo4j trademark under the Partner Agreement, which contained an express trademark license. The court held that the defendants were barred from asserting abandonment based on Neo4j’s alleged failure to control their own licensed conduct. A licensee may not challenge the licensor’s mark based on facts arising during the license term, and PureThink entered into the trademark license in 2014 and allegedly used the mark afterward.

Judicial notice

The court declined to take judicial notice of the additional documents Neo4j submitted: a 2015 trademark policy, 2019 trademark guidelines, a PureThink webpage, and a Dun & Bradstreet report. The court found that the relevant portions of the policy and guidelines were already excerpted in the complaint, and that the remaining documents were not relevant to its analysis. The court had previously taken judicial notice of the GPL and AGPL.

Disposition

The court granted Neo4j USA’s motion. It dismissed the Tenth Cause of Action in the Second Amended Counterclaim and struck the Ninth Affirmative Defense in the Amended Answer with prejudice. Because the defendants had already amended their pleadings on this issue, the court found that further leave to amend would be futile.