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KINECT for XBOX 360 and KIN Mobile Phone Not Likely to Be Confused with KINBOX Facebook Application

Tuesday, January 31, 2012

Jennifer Gaeta | Bloomberg Law Kinbook, LLC v. Microsoft, Corp., No. 10-CV-04828, 2012 BL 15872 (E.D. Pa. Jan. 24, 2012) Plaintiff Kinbook, LLC, is an online software company that instituted an action against Microsoft Corp. for unfair competition and reverse confusion in connection with its launch of the KINECT for XBOX 360 product and KIN phone. The U.S. District Court for the Eastern District of Pennsylvania granted summary judgment in Microsoft's favor, finding no likelihood of confusion with Kinbook's registered KINBOX and MUNKINBOX marks.

Microsoft's KINECT and KIN Marks

In 2001, Microsoft introduced a video game known as XBOX 360, which sold over 55 million consoles by June 2011. Under this brand, Microsoft markets the XBOX 360 console, XBOX Live, and video games. In June 2009, Microsoft launched the KINECT controller-free device, which enables a player to play a game without using an actual controller. The product is only compatible with XBOX, and Microsoft contended it chose the KINECT name because of the device's kinetic qualities. Microsoft also launched mobile smart phones known as KIN ONE and KIN TWO, as completely unrelated products. The mobile phone product was unsuccessful and Microsoft ceased production after two months.

Kinbook's KINBOX and MUNCHKINBOX Application

Kinbook is a small company that was founded to develop an application to "provide a digital world for family members and communications, for current and future generations so they wouldn't forget." Kinbook at 4. Although the original idea was to launch the application on its own website, to conserve costs, it was launched as a Facebook application instead. "The Facebook application Kinbook developed is unique in that it allows people that are members of Facebook to form their own personal social networks and not 'let everyone that they are friends with on Facebook in.'" Id. at 4-5 (citations omitted). Kinbook first named the application KINBOOK, but after discovering that Facebook often opposed trademark applications that included "___book," Kinbook re-named the application KINBOX and MUNCHKINBOX, obtaining federal trademark registrations. Kinbook did not abandon its plans to eventually launch a website and subsequently purchased the kinboxx.com and kinbox.org domain names. Kinbook also made plans to launch a mobile phone application. Kinbook's Facebook application is offered free of charge, but Kinbook intended on getting revenue from advertising.

KINECT's Effect on KINBOX

Kinbook's Facebook application has not been successful and has not generated any revenue. Although Kinbook intended on spending $250,000 to market the application, it only spent a few thousand, and only has 16,685 active members out of 750 million Facebook users. Kinbook faults Microsoft and its KINECT media blitz for its meager start, contending that Microsoft's mark is confusingly similar to its own mark.

Court Finds No Likelihood of Confusion

Microsoft moved for summary judgment on the ground that there was no likelihood of confusion between the marks. The court explained that likelihood of confusion is an element of both the trademark infringement and unfair competition claims. Likelihood of confusion is determined by application of the following list of factors:
(1) the degree of similarity between the owner’s mark and the alleged infringing mark; (2) the strength of the owner’s mark; (3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase; (4) the length of time the defendant has used the mark without evidence of actual confusion arising; (5) the intent of the defendant in adopting the mark; (6) the evidence of actual confusion; (7) whether the goods, though not competing, are marketed through the same channels of trade and advertised through the same media; (8) the extent to which the targets of the parties’ sales efforts are the same; (9) the relationship of the goods in the minds of consumers because of the similarity of function; and (10) other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant's market, or that he is likely to expand into that market.
Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983). Applying the above factors, the court found no likelihood of confusion. The court noted that this case was one of reverse confusion, which "occurs when a larger, more powerful company uses the trademark of a smaller, less powerful senior owner and thereby causes likely confusion as to the source of the senior user’s goods or services." Kinbook at 10 (quoting Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 474 (3d Cir. 1994)). Accordingly, certain of theLapp factor were analyzed slightly differently from where there is direct confusion. — Similarity of the Marks The court first looked at the similarity of the parties' marks (shown below), noting that it was the most important of the factors: image1.jpegimage2.jpegimage3.jpegimage4.jpeg Mark Images from Court Opinion On the similarity of the marks, the court noted that the only element that the marks had in common was "kin," and that alone did not equate to a likelihood of confusion. "As Microsoft explained at length in its motion papers, numerous third-parties' trademarks contain the term 'kin' for a variety of services and products, including multiple social networking web sites and services." Kinbook at 14. Accordingly, the court found that there was insufficient evidence from which a jury could find that the marks were similar. — Strength of the Kinbook Marks Additionally, the court did not find Kinbook's marks to be particularly strong. The marks were, at best, weak, suggestive marks, as the "kin" component was in widespread use in the friends and family market. Moreover, although in a reverse confusion analysis the strength of the smaller, senior user is given less weight than in a forward confusion analysis, Kinbook failed to present any evidence that its marks had marketplace recognition at all. It had only 16,752 users at best, and scaled down its advertising to only a few thousand dollars. — Price of Products and Sophistication of Consumers On the price of the goods and sophistication of consumers, the KINECT product sold for $150, or $300-500 when bundled with the XBOX 360. The court stated that it was sufficiently expensive not to be an impulse purchase. The court also noted that the KIN phone retailed for $199, and purchasers had to sign up for a Verizon wireless service plan, for which consumers would exercise a great deal of care. Kinbook's application was free on Facebook. The court found that a likelihood of confusion between products of such disparate price points was remote at best. Kinbook argued that where the class of purchasers is mixed, the court should look to the least sophisticated purchaser, here, a five year old XBOX purchaser. The court responded "no matter what else the ever-remarkable current-day precocious 5 year-old can accomplish, this Court cannot fathom a 5 year-old with either the faculties or the financial means to independently purchase a retail item costing hundreds of dollars." Kinbook at 21. Moreover, "even the hypothetical precocious 5 year-old dispatched by indulgent parents (or grandparents) to make her or his own selections of amusement would likely be able to distinguish between a free software application, and a $150 piece of gaming hardware." Id. Finally, the court noted that the only purchasers of the KINECT product would also be XBOX owners or purchasers. — Actual Confusion On the actual confusion factor, Kinbook contended that in the short period of time that the products were available, there were four instances of confusion. The court found that only one instance actually referred to the KINBOX application and did not relate to a purchasing decision mistake. Similarly, the two articles submitted by Kinbook merely surmised that KINECT for XBOX could be abbreviated as KINBOX, and one article literally referred to the KIN phone's packaging as a KIN box. Accordingly, the court found that Kinbook had not presented any evidence of actual confusion. — Intent On intent of adopting the mark, Microsoft conducted a trademark search a few months before Kinbook filed its trademark applications. The court found that this indicated that Microsoft had not intended on preying on Kinbook and was likely unaware of its very existence. Kinbook argued that the Third Circuit had adopted a carelessness standard on the issue of intent in reverse confusion cases, but the court disagreed, finding that the Third Circuit adopted no such standard. — Advertising and Marketing Channels. As for advertising and marketing channels, Kinbook advertises its application exclusely by using Facebook banner ads and is only compatible with Facebook. KINECT is sold only with XBOX 360 and is marketed in electronic stores and on Microsoft's website, as well as on television and on the Internet. The KIN phones were only used on Verizon's network and were sold exclusively in Verizon's stores and online. Thus, the parties used their marks on non-intersecting marketing channels. Kinbook argued that both the products have been advertised on Facebook. However, the court explained that virtually all companies advertise on Facebook. Therefore, as the products only intersected on Facebook, this factor had no measurable weight. — Targets of the Parties' Sales Efforts The court noted that the parties do not compete and do not target their sales efforts at the same consumers. The Kinect gaming sensor is targeted at customers who already have an interest in buying an XBOX 360. The KIN phone targeted customers interested in buying a new phone. Kinbook, on the other hand, target customers who use Facebook and want to share information with an enclosed group of family members. Kinbook at 27. Kinbook argued that Microsoft's re-launch would focus more on Kinbook's primary demographics, including women and family. The court explained that this was true of virtually every product, and that even if Microsoft targeted everyone, this alone was insufficient to establish the factor. Accordingly, the court did not find that there was enough evidence from which a jury could conclude that this factor weighed in Kinbook's favor. — Similarity of the Parties' Products The court explained that the products at issue performed different functions from a gaming sensor, to a phone, to a social media application. Kinbook tried to equate the KINECT product with the XBOX platform, but the court noted that they were not the same. — Likelihood of Expansion There was no evidence that Kinbook planned to expand into the manufacture of gaming products or mobile phones. Although it intended to create a future application for mobile devices, the court noted that it had no intention to create the phone itself, and the market for phones and mobile applications are distinct. Finally, Microsoft had already discontinued the sale of the mobile phones. Accordingly, the court found that Kinbook failed to present a triable issue of fact on any of the likelihood of confusion factors and granted Microsoft's motion for summary judgment.   DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. 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