Updated July 2022
Originally published May 2021
Melissa D. Goolsarran Ramnauth, Esq.
The trademark world is buzzing with the latest trademark infringement lawsuit. This one involves Clubhouse-- the popular audio app that is quickly growing and expanding. Clubhouse is currently valued at $4 billion. So how did this happen?
Business Insider summarizes the matter as follows: "SBS Consulting's website 'TheClubhouse' is a networking site for sports business professionals. The company said in its May filing that the buzzy audio app Clubhouse had infringed on that name."
Clubhouse Trademark Lawsuit Explained
The Clubhouse Trademark lawsuit can be further explained as follows:
Alpha Exploration Co. launched the app last spring and it exploded in popularity in the fall/winter of 2020.
However, SBS Consulting Group launched its “TheClubhouse” service in 2018 and received its trademark registration in December of 2019. It launched corresponding apps and SBS claims that its TheClubhouse apps were removed after Alpha’s Clubhouse app gained wide-spread fame.
SBS filed a lawsuit against Alpha seeking both monetary damages and an injunction preventing Alpha from continuing to use the Clubhouse name.
Trademark experts are divided on the likelihood of SBS succeeding in its lawsuit. Some think that there is an overlap in services and therefore grounds for Alpha to stop using the name. Namely, both include services related to sports and networking. Others think that the Clubhouse name is a weak mark and therefore afforded minimal protection under federal trademark law. In other words, the name is not fanciful (like Kodak) or arbitrary (like Apple). Fanciful and arbitrary marks are more protected under US Trademark Law.
The overall takeaway from this scenario is that businesses need to apply for trademarks, just like they would prepare all the other initial legal documents-- state registration, contracts, domains, etc.
You never know how quickly your business will take off. You want to be on the right side of the law and minimize risks of infringement lawsuits. If Alpha’s Clubhouse loses the lawsuit, they could be enjoined from using the name. That would then mean that they have to possibly spend hundreds of thousands of dollars to re-name, re-brand, and re-launch. Alpha skipped a $1,500 trademark process and now their $4 billion company is jeopardized.
For reference, a trademark is a name, phrase, or design that identifies a business's brand.
The main benefits of having a US registered trademark is that (1) it saves money if you were ever involved in a lawsuit (by establishing certain trial requirements), and (2) it gives you national ownership. You may have broad protections if you are an online company but the trademark will allow you to stop copycats from using the name in similar categories. Further, a trademark is also a valuable asset when investors determine the valuation of companies.
An experienced attorney can conduct a clearance search to make sure that you are not at risk of being sued for using a name that someone else used first. At MDGR LAW, we send you a summary report within 1 week. After that, we prepare and file the trademark application with the United States Patent & Trademark Office within another week. The USPTO takes about 1 year to issue the registration. Then you can use the US Registration to get trademark rights in other countries pursuant to the Madrid Protocol.
The Clubhouse Trademark Lawsuit Settlement
UPDATE: The parties involved in the Clubhouse dispute reached an undisclosed settlement.
If you’re just starting your business, or have been running your business for some time, we would be glad to assist you with trademarks.
Melissa D. Goolsarran Ramnauth, Esq.
Trademark & Business Law Firm