Battle of the App Logos: PayPal v. Pandora

PayPal filed a lawsuit in a New York Federal Court on May 19, 2017, seeking an injunction and damages against Pandora for its new logo.[1]

The logo (a blue “P” in block form) is so similar to PayPal’s logo (two blue “P”s in block form) that customers have complained about the confusion.[2] PayPal states that Pandora has violated two sections of the Lanham Act, as well as New York State Law.[3] This post is going to focus on the two sections of the Lanham Act.

PayPal’s first claim is for False Designation of Origin which states that any person, or company, that uses in commerce a symbol,

or any false designation of origin, false or misleading description of fact or false or misleading representation of fact, which (A) is likely to cause confusion, or to cause mistake, or to deceive…or (B) in commercial advertising or promotion, misrepresents the nature, characteristics qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities shall be liable in a civil action.[4]

PayPal has a pretty good case against Pandora for violating this portion of the Lanham Act. Currently, most people utilize mobile applications (“apps”) for everyday life, including music, payments, etc. When Pandora changed its logo in October of last year, many consumers that had both PayPal and Pandora started to complain and/or wonder if Pandora and PayPal were now one company. This confusion, which PayPal pointed out in its exhibits attached to the complaint, strongly supports PayPal’s claim that Pandora violated Section 43(a) of the Lanham Act.[5]

PayPal also claims that Pandora violated Section (c) of the Lanham Act as well which states in pertinent part: an owner of a “famous mark that is distinctive” is entitled to an injunction against anyone who tries to use the mark in commerce “that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.”[6] According to the statute, a mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.”[7] Here, it is clear that PayPal’s mark is famous as everyone that uses the app or its website has seen the infamous double P logo.

The dilution of trademarks falls into two categories under the Lanham Act: (1) dilution by blurring and (2) dilution by tarnishment.[8] PayPal has a stronger claim under dilution by blurring as that is defined in the Lanham Act as “association arising from the similarity between a mark and a famous mark that impairs the distinctiveness of the famous mark.”[9]

Dilution by tarnishment is defined as, “association arising from the similarity between a mark and a famous mark that harms the reputation of the famous mark.”[10] PayPal alleges in its complaint that Pandora has tarnished its reputation by using the new logo, but it does not seem that PayPal has been directly harmed using Pandora’s mark.[11] A finding of confusion between PayPal and Pandora’s Logos does not automatically prove a claim for trademark dilution.[12]

In sum, PayPal does have a valid claim against Pandora for its use of the new logo. The similarities are so striking that consumers have opened one app on their phone looking to pay for something (PayPal) and instead found said app playing music (Pandora). PayPal would have a stronger claim if Pandora were a payment company, but because of how the apps on consumers’ cell phones operate, just the logo alone and the confusion it has already created among consumers gives PayPal a strong case against Pandora for trademark dilution and infringement. Pandora has yet to comment or respond to PayPal’s complaint.[13]

For more information about trademarks and false association take a look at William Ford’s article in Volume 16 Issue 3 entitled Restoring Rogers: Video Games, False Association Claims, and the “Explicitly Misleading” Use of Trademarks.

[1] See PayPal Compl., https://arstechnica.com/wp-content/uploads/2017/05/paypaltrademarkflap.pdf (last visited June 17, 2017).

[2] Id. at p. 3.

[3] Id. at p. 29-32.

[4] 15 U.S.C. §1125(a).

[5] See PayPal Compl., at 20-27.

[6] 15 U.S.C. §1125(c).

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] See PayPal Compl., at 30-31.

[12] Star Markets, Ltd. v. Texaco, Inc., 950 F. Supp. 1030 (D. Hawaii 1996).

[13] See Debra Cassens Weiss, PayPal sues Pandora Over the Letter ‘P,’ ABA Journal, (May 25, 2017) http://www.abajournal.com/news/article/paypal_sues_pandora_over_the_letter_p; and Derek Hawkins, PayPal Has Some Harsh Words for Pandora in a Lawsuit Challenging its Logo Similarities, The Washington Post, (May 24, 2017), https://www.washingtonpost.com/news/morning-mix/wp/2017/05/24/paypal-has-some-harsh-words-for-pandora-in-a-lawsuit-challenging-its-logo-similarities/?utm_term=.1f2192805dac.