Nexsan Technologies Incorporated v. EMC Corporation,

Filing 97

Judge William G. Young: ORDER entered. FINDINGS OF FACT AND RULINGS OF LAW"For the foregoing reasons, this Court rules that Nexsan has priority over EMC to the UNITY trademark in relation to computer data storage and associated technologies. Further proceedings shall take place in accordance with this determination of trademark priority."(Sonnenberg, Elizabeth)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
)
)
)
Plaintiff,
)
)
v.
)
)
EMC CORPORATION,
)
)
Defendant.
)
___________________________________)
NEXSAN TECHNOLOGIES,
INCORPORATED,

CIVIL ACTION
NO. 16-10847-WGY

YOUNG, D.J.

April 14, 2017

FINDINGS OF FACT AND RULINGS OF LAW
I.

INTRODUCTION
The issue before this Court is trademark priority.

Nexsan

Technologies, Inc. (“Nexsan”) is a manufacturer and provider of
computer data storage, backup, and management technologies.
First Am. Compl. (“Am. Compl.”) ¶ 6, ECF No. 89.

EMC

Corporation (“EMC”) is a Fortune 200 company that also develops
and manufactures data storage technologies.

Def. EMC

Corporation’s Answer, Affirmative Defenses, & Countercls.
(“Answer”) 3 ¶ 12, ECF No. 20.

Since the commencement of this

suit, EMC has been acquired by Dell, Inc.

Id.

In 2016, Nexsan and EMC each independently launched new
computer data storage systems branded “UNITY.”

Am. Compl. ¶¶ 9,

21.

The parties dispute which company has the rights to the

UNITY name.

On March 22, 2016, Nexsan filed two intent-to-use

trademark applications with the United States Patent and
Trademark Office (“USPTO”), requesting use of the UNITY and
NEXSAN UNITY marks for computer data storage hardware and
software.1

Id. ¶ 7.

Nexsan claims to have engaged in market

research and testing to introduce its product and the UNITY mark
prior to filing its application.

Id. ¶ 8.

EMC counters that it

publicly used the UNITY mark first, in connection with its “VNX”
product line beginning in early 2014.

Answer 11 ¶ 14.

Nexsan brought this action seeking declaratory judgment of
priority and non-infringement of its trademarks2 against EMC
(count I) under 28 U.S.C. section 2201, and for false
designation of origin and unfair competition in violation of the
Lanham Act, 15 U.S.C. § 1125 (count II).

Am. Compl. ¶¶ 37-49.

The parties filed cross-motions for summary judgment on the
issue of priority to the UNITY mark.

Nexsan Technologies,

Incorporated’s Mot. Summ. J., ECF No. 46; Def. EMC Corporation’s
Mot. Partial Summ. J., ECF No. 40.

Both briefed the issue and

1

U.S. Trademark Application Serial No. 86,948,640 (filed
Mar. 22, 2016); U.S. Trademark Application Serial No. 86,948,652
(filed Mar. 22, 2016).
2

EMC also filed counterclaims against Nexsan for trademark
infringement and unfair competition. Answer 9 ¶ 5. Those
counterclaims are not addressed in this opinion.
[2]

submitted statements of fact.

Nexsan Technologies’ Mem. Supp.

Mot. Summ. J. (“Pl.’s Mem.”) 9, 15, ECF No. 47; Nexsan
Technologies, Inc.’s Mem. Opp’n EMC Corporation’s Mot. Partial
Summ. J. (“Pl.’s Opp’n”), ECF No. 57; Nexsan’s Local Rule 56.1
Statement Undisputed Facts (“Pl.’s Facts”), ECF No. 50; EMC
Corporation’s Mem. Law Supp. Mot. Partial Summ. J. (“Def.’s
Mem.”), ECF No. 53; EMC Corporation’s Statement Undisputed
Material Facts (“Def.’s Facts”), ECF No. 54; EMC Corporation’s
Resp. Nexsan’s Local Rule 56.1 Statement Undisputed Facts
(“Def.’s Additional Facts”), ECF No. 61; EMC’s Reply Supp. Mot.
(“Def.’s Reply”), ECF No. 65.

By agreement of the parties, the

Court held a case stated hearing3 on January 11, 2017, on the
issue of priority of ownership of the UNITY mark.

This Court

now makes the following findings of fact and rulings of law.
II.

FINDINGS OF FACT
A.

Nexsan Registered the UNITY Mark in March 2016

In January 2016, Nexsan began researching brand names for a
recently developed computer technology.

3

Pl.’s Facts ¶ 7.

In

The case stated procedure allows the Court, with the
parties’ agreement, to render a judgment based on the largely
undisputed record in cases where there are minimal factual
disputes. TLT Constr. Corp. v. RI, Inc., 484 F.3d 130, 135 n.6
(1st Cir. 2007). In its review of the record, “[t]he [C]ourt is
. . . entitled to ‘engage in a certain amount of factfinding,
including the drawing of inferences.’” Id. (quoting United
Paperworkers Int’l Union Local 14 v. International Paper Co., 64
F.3d 28, 31 (1st Cir. 1995)).
[3]

polls of Nexsan employees, UNITY was the most preferred of
prospective marks.

Pl.’s Facts ¶¶ 14-15; Decl. Judy Kaldenberg

Supp. Nexsan Technologies’ Mot. Summ. J. (“Kaldenberg Decl.”)
¶¶ 13-14, ECF No. 48.

On March 7, 2016, Nexsan completed a

trademark search for “UNITY” which revealed that the mark was
not yet used in relation to computer data technologies.
Kaldenberg Decl. ¶ 15; Suppl. Decl. Steven A. Abreu Supp. Nexsan
Technologies’ Case In Chief Issue Priority, Ex. B Part 1
(“Trademark Search Report”), ECF No. 78-2.

Nexsan subsequently

filed two intent-to-use applications for the UNITY mark with the
USPTO on March 22, 2016.

Pl.’s Facts ¶ 18; Def.’s Facts ¶ 33.

On April 25, 2016, CRN magazine, an industry publication,
previewed a favorable review of Nexsan’s UNITY products.
Compl. ¶ 10.

The following day, Nexsan announced the release of

its UNITY line.
B.

Am.

Id. ¶ 9.

EMC’s Pre-Market Activities Regarding Its UNITY
Product

While Nexsan developed its UNITY products, EMC was
developing a similar computer system to manage data storage.
Def.’s Facts ¶¶ 3-4, 32.

Since at least 2015 -- well before

Nexsan’s development -- EMC had conducted activities related to
the development and refinement of this product, which EMC
eventually called “UNITY.”

Id. ¶ 3.

These activities included

giving presentations about and shipping beta versions of its

[4]

UNITY products to customers, partners, and potential customers.
Id. ¶¶ 8-21.
1.

“Virtual Geek” Blog

Chad Sakac (“Sakac”), an EMC employee, maintains “Virtual
Geek,”4 a blog that discusses trends in the “electronic data
storage industry.”

Id. ¶ 6.

The blog contains a disclaimer

stating that it is personal in nature and not authorized by EMC.
Pl.’s Facts, Ex. K, About Me (“Virtual Geek Disclaimer”) 1, ECF
No. 50-11 (“Content published here is not read or approved in
advance by EMC and does not necessarily reflect the views and
opinions of EMC.

This is my blog, it is not an EMC blog.”).

On May 5, 2014, Sakac published a Virtual Geek blog post
titled “VNX architectural evolution keeps rolling (VNXe 3200 +
Project Liberty).”

Pl.’s Facts, Ex. J, VNX Architectural

Evolution Keeps Rolling (“Virtual Geek Post”) 1, ECF No. 50-10;
Def.’s Facts ¶ 7.

The post describes some of EMC’s recent

technologies and uses the word “unity” in reference to some of
those developments, stating, for example, that “[w]e continue to
stress and expand the footprint of the new ‘Unity’ code stack in
VNXe,” “with vNXe, the Unity codebase conversion is complete,”
and “[t]he Unity codebase in the VNXe is also the right
vehicle.”

Virtual Geek Post 2, 4.

4

Located at http://virtualgeek.typepad.com/about.html.
Def.’s Facts ¶ 6.
[5]

One EMC employee, Brian Henderson (“Henderson”), testified
that he first became aware of EMC’s UNITY product via Sakac’s
blog post.

Def.’s Facts, Ex. 2, Dep. Brian P. Henderson

(“Henderson Dep.”) 23:8-18, ECF No. 54-4.

Henderson, however,

was equivocal about his understanding of the post, stating: “I
think [Sakac] takes liberties, and I am not sure what is
happening in this, this section right here . . . . It is worded
really weird.”

Pl.’s Facts, Ex. M., Sept. 27, 2016 Dep. Brian

P. Henderson (“Nexsan Henderson Dep.”) 152:8-12, ECF No. 50-13.
Henderson also acknowledged that EMC used code names for the
Unity products, and that code names are rarely used as the
actual brand name.

Pl.’s Facts ¶¶ 27, 30.

“obfuscate the name” of the final product.

This is done to
Pl.’s Facts ¶ 29;

Nexsan Henderson Dep. 28:4-22.
2.

Beta Testing

EMC conducted beta testing on what would become its UNITY
products.

Answer 11 ¶ 16; Def.’s Mem. 5-6.

Participation in

the beta test program was limited to twenty organizations, each
handpicked by EMC.

Pl.’s Facts ¶¶ 39, 41; Pl.’s Facts, Ex. L

(“Thunderbird Beta Opportunity E-mail”), at EMC-087537, ECF No.
50-12 (“Like any other EMC Beta test program, the number of
slots for customer participation is limited.
need to meet the [listed] requirements.”).

Participants will

In December 2015,

EMC shipped beta versions of the products to the twenty select
[6]

organizations “for trial use and training.”

Def.’s Facts ¶¶ 14,

20; Def.’s Facts, Ex. 1, Decl. Brian Henderson (“Henderson
Decl.”) ¶¶ 4, 7, ECF No. 54-1.
early 2016.

This testing continued into

Def.’s Facts ¶ 17.
a.

Beta Test Name

EMC’s title for the product under testing was inconsistent.
At various times, EMC called the tested product (or components
thereof) “Thunderbird,” “Oberon,” and “UNITY.”

Pl.’s Facts

¶ 42; Thunderbird Beta Opportunity E-mail, at EMC-087536-37 (“In
Q1 of 2016, the Corporate Systems Engineering team will be
running the Thunderbird Beta program.

As you may already know,

the Thunderbird release is a brand new Unity platform that is
expected to GA in Q2 of 2016.”).
EMC frequently referred to the beta program as Thunderbird.
For instance, in an e-mail from Jason Fonseca dated February 4,
2016, the subject line is “Unity Licenses.”

Decl. R. David Hosp

Supp. EMC’s Opp’n Nexsan’s Mot. Summ. J., Ex. 9 (“Fonseca Email”), at EMC-083816, ECF No. 62-9.

The opening sentence of

the e-mail, however, says “[EMC] will be continuing customer
testing next week as part of the Thunderbird Beta.”

Id.

Similarly, in another EMC e-mail chain titled “CSE Feedback on
Thunderbird Needed,” EMC staff are asked to “provide feedback
. . . on the Thunderbird product.”

Def.’s Facts, Ex. 25 (“Gento

E-mail”), at EMC-035979, ECF No. 54-27.
[7]

Additionally, the beta

project final report is titled “EMC Thunderbird: Beta, Final
Report.”

Suppl. Decl. Steven A. Abreu Supp. Nexsan

Technologies’ Case Chief Issue Priority, Ex. D, EMC Thunderbird:
Beta, Final Report (“Thunderbird Final Report”) 1, ECF No. 7812.
Some beta test products displayed the UNITY mark, such as
on the opening screen and the hardware bezel, Def.’s Facts ¶ 16,
but there is no evidence that this occurred before Nexsan’s
registration of the UNITY mark.

Henderson testified that during

beta testing, the UNITY mark did not appear on the hardware, but
was added to the hardware “probably close to external launch” of
the UNITY product.

Nexsan Henderson Dep. 109:9-110:2.

Similarly, the UNITY opening screen is dated May 2016, Def.’s
Facts, Ex. 7 (“EMC Unity Screen”), at EMC-037675, ECF No. 54-9,
a date falling after Nexsan’s March 22, 2016 registration of the
mark, Pl.’s Facts ¶ 18; Def.’s Facts ¶ 33.
b.

Beta Test Confidentiality

EMC required beta testers to sign confidentiality
agreements.
174:2.

Pl.’s Facts ¶ 40; Nexsan Henderson Dep. 173:18-

These agreements define “confidential information,” in

relevant part, as:
any and all information or materials provided by one party
to the other which are in tangible form and labeled
“confidential” or the like, or, if disclosed orally, are
identified as being confidential at the time of disclosure
and are followed up within two (2) weeks in a tangible form
[8]

that is appropriately labeled, but shall not include
information or materials that (i) were, on the Effective
Date of this Master Agreement, generally known to the
public; or (ii) become generally known to the public after
the Effective Date other than as a result of the act or
omission of the receiving party.
Decl. R. David Hosp Supp. EMC’s Opp’n Nexsan’s Mot. Summ. J.,
Ex. 7, Customer Testing Program Master Product Test Agreement 1,
ECF No. 62-7.

EMC’s rationale for requiring a non-disclosure

agreement was, at least in part, a concern about “cannibalizing”
its own sales.

See Kaldenberg Decl. ¶ 25 (“A common concern

when releasing a new product is declining sales of legacy
products . . . the customer typically does not want to buy
something that they know will be replaced in the near future.”);
Decl. Robert Fernander Supp. Nexsan Technologies’ Mot. Summ. J.
(“Fernander Decl.”) ¶ 11, ECF No. 49 (“If consumers become aware
that technological developments will be made in a soon to be
released product, they may decide to hold off on a purchasing
decision until after the launch of a product, which can hurt the
business’s bottom line.”).

That is, EMC was aware that

prospective customers might hold off on buying its products if
they heard about the UNITY products’ upcoming launch.
Henderson Dep. 124:24-125:11.

Nexsan

Such delayed purchases could hurt

the sales of EMC’s existing product lines.

[9]

Id.

3.

Pre-Marketing Presentations

In March 2015, EMC began giving sales presentations about
its UNITY products to current and potential customers.

Def.’s

Facts ¶ 8; Def.’s Facts, Ex. 3, EMC Unity Presentations and Beta
Testing Dates 1, ECF No. 54-5; Henderson Dep. 199:12-201:6.

In

total, EMC delivered eighty-four presentations, each attended by
up to 100 individuals from different groups of customers,
distribution partners, and potential customers.
Additional Facts ¶ 65; Henderson Decl. ¶ 3.

Def.’s

At times during the

presentations, EMC used the UNITY mark to describe the products.
Def.’s Additional Facts ¶ 65; Def.’s Facts, Ex. 4, South
Carolina Federal Credit Union 48-49, ECF No. 54-6 (referencing
the product as “Unity”); Def.’s Facts, Ex. 5, Partner Technical
Summit Midrange Update, ECF No. 54-7 (referring to project
consistently as “Unity” or “Unity.Next”).
however, EMC used the Thunderbird name.

At other times,

E.g., South Carolina

Federal Credit Union 49 (denoting “Thunderbird” on Unity
2015/2016 Aspirational Roadmap).
EMC required presentation attendees to sign non-disclosure
agreements and reminded them of their confidentiality
obligations at the beginning of each presentation.

Pl.’s Facts

¶¶ 32, 37; Pl.’s Facts, Ex. P, XYZ: VNX Family Update (“XYZ
Presentation”), at EMC-017122, ECF No. 50-16 (“This information
is EMC Restricted Confidential and is provided under the terms,
[10]

conditions and restriction defined in the EMC Non-Disclosure
Agreement in place with your organization.”); Pl.’s Facts, Ex.
Q, ABC, at EMC-001680, ECF No. 50-17 (providing the same
disclaimer as the XYZ Presentation).5

EMC’s standard non-

disclosure agreement states:
Confidential Information will not include, or will cease to
include, as applicable, information or materials that
(i) were generally known to the public on the Effective
Date; (ii) become generally known to the public after the
Effective Date, other than as a result of the act or
omission of the receiving party . . . .
Def.’s Facts, Ex. 11, EMC Nondisclosure Agreement 1, ECF No. 5413.
C.

Nexsan’s Knowledge of EMC’s Use of UNITY Mark

On March 7, 2016, Nexsan received a trademark report for
the UNITY mark, which revealed no use of the UNITY mark in
relation to computer data storage, let alone use by EMC.

See

generally Trademark Search Report.
On March 19, 2016, a Nexsan employee, David Grey (“Grey”),
sent an e-mail to his supervisor, Judy Kaldenberg
(“Kaldenberg”), in which he wrote: “Do we have the trademark for
Unity?

I’ve been told EMC is launching a replacement to VNXe

with the product name Unity this May.”

5

Def.’s Facts, Ex. 12

This Court, respecting the protective order entered on
July 11, 2016, WGY Protective Order, ECF No. 30, uses generic
names when referring to any customers identified in sealed
filings.
[11]

(“Grey E-mail”), at NEXSAN-000404, ECF No. 54-14; Kaldenberg
Decl. ¶ 17.

While at a bar with other Information Technology

(“IT”) professionals, Grey had overhead rumors of EMC’s upcoming
launch of UNITY.

Kaldenberg Decl. ¶ 17; Def.’s Facts, Ex. 17,

Dep. Judy Kaldenberg (“Kaldenberg Dep.”) 15:24-17:2, ECF No. 5419.

Kaldenberg subsequently performed an Internet search for

EMC and UNITY, but did not find any relationship between EMC and
UNITY aside from Sakac’s Virtual Geek blog post and a comment on
a blog post.

Kaldenberg Decl. ¶ 19.

On March 22, 2016, Nexsan

filed trademark applications with the USPTO to register the
UNITY mark.

Pl.’s Facts ¶ 18; Def.’s Facts ¶ 33.

On May 23, 2016, Nexsan’s Senior Marketing Director, John
Merrill (“Merrill”), sent an e-mail regarding Nexsan’s search
engine optimization strategy for its UNITY product.

Def.’s

Facts, Ex. 23 (“Nexsan SEO E-mails”), at NEXSAN-001820, ECF No.
54-25.

Merrill wrote: “Intent is to have paid search terms for

EMC Unity that will hit a landing page about EMC Unity, but lead
them over to learn more about Nexsan Unity -- bate [sic] and
switch.”

Id.

[12]

D.

EMC Files for the UNITY Trademark

On April 29, 2016, EMC filed for trademark registration of
its UNITY marks in connection with computer goods and services.6
Def.’s Facts ¶ 22.

On May 2, 2016, EMC publicly launched its

UNITY products at the company’s annual trade show.
III.

Id. ¶ 23.

RULINGS OF LAW
EMC asserts that its beta testing and pre-market

presentations establish its priority to the UNITY mark.
Mem. 15-18.

Def.’s

Nexsan counters that EMC’s pre-sale activities were

not extensive enough to grant EMC priority.

Pl.’s Opp’n 13-17.

This Court concludes that EMC has not carried its burden to
establish prior use, and thus Nexsan has priority to the UNITY
mark based on its intent-to-use applications.
A.

Legal Framework

Notice and notice failure play a major role in intellectual
property law.

Borrowing from analogous doctrines in the law of

copyright, trademark holders are “granted exclusive rights as a
way to promote socially beneficial goods.

But if these

exclusive rights are not calibrated correctly, they can impose
more costs than public benefits.

In other words, [trademark]

can end up suppressing more communicative activity than it
encourages.”

Amanda Reid, Claiming the Copyright, 34 Yale L. &

6

U.S. Trademark Application Serial No. 87,020,237 (filed
Apr. 29, 2016); U.S. Trademark Application Serial No. 87,020,119
(filed Apr. 29, 2016).
[13]

Pol’y Rev. 425, 426 (2016).

“Notice of [these] preexisting

rights plays a critical role in resource planning.”

Peter S.

Menell, Economic Analysis of Copyright Notice: Tracing and Scope
in the Digital Age, 96 B.U. L. Rev. 967, 968 (2016).
In the United States, an individual may acquire trademark
rights in two ways: under the Lanham Act, 15 U.S.C. §§ 1051-72,
or common law.

General Healthcare Ltd. v. Qashat, 364 F.3d 332,

335 (1st Cir. 2004) (citing United Drug Co. v. Theodore Rectanus
Co., 248 U.S. 90, 97 (1918)).

“[I]n either circumstance, the

right is conditioned upon use in commerce.”

Id.

First, a party may file for registration of a mark with the
USPTO if it presently uses, or has a bona fide intention to use,
the mark in commerce.

15 U.S.C. § 1051.

While registration

does not give a presumption of entitlement to the mark, it does
place the burden of proof on any party seeking priority to the
registered mark based on prior use.

See Hydro-Dynamics, Inc. v.

George Putnam & Co., 811 F.2d 1470, 1472 (Fed. Cir. 1987).
The second method of acquiring ownership of a mark is by
showing prior use, see Herbko Int’l, Inc. v. Kappa Books, Inc.,
308 F.3d 1156, 1162 (Fed. Cir. 2002), even absent registration,
see Boathouse Grp., Inc. v. TigerLogic Corp., 777 F. Supp. 2d
243, 248 (D. Mass. 2011) (Gorton, J.) (citing Volkswagenwerk
Aktiengesellschaft v. Wheeler, 814 F.2d 812, 815 (1st Cir.
1987)).

Ownership via prior use may be acquired in two ways:
[14]

(1) making “first actual use of a mark in a genuine commercial
transaction,” Allard Enters. v. Advanced Programming Res., Inc.,
146 F.3d 350, 358 (6th Cir. 1998); see also, Bayshore Grp. Ltd.
v. Bay Shore Seafood Brokers, Inc., 762 F. Supp. 404, 411 (D.
Mass. 1990) (Bowler, M.J.); or (2) having “prior use analogous
to trademark or service mark use,” Herbko, 308 F.3d at 1162.
In order to satisfy the “use in commerce” requirement, a
party asserting prior commercial use of a mark must demonstrate
that the mark was affixed to goods, and those marked goods
“[were] sold or transported in commerce.”
§ 1127(1)(B) (emphasis added).

15 U.S.C.

Transportation alone, without

sale of goods, is sufficient to establish trademark rights if it
raises “an element of public awareness of the use.”
Healthcare, 364 F.3d at 335.

General

Whether the “use in commerce”

requirement is satisfied is assessed on a case-by-case basis,
based on the totality of the circumstances.

See Chance v. Pac-

Tel Teletrac Inc., 242 F.3d 1151, 1159 (9th Cir. 2001); see also
International Healthcare Exch., Inc. v. Global Healthcare Exch.,
LLC, 470 F. Supp. 2d 365, 371 (S.D.N.Y. 2007).
A party can claim priority when the prior use is an
analogous use, i.e., there is “evidence showing, first,
adoption, and, second, use in a way sufficiently public to
identify or distinguish the marked goods in an appropriate
segment of the public mind as those of the adopter of the mark.”
[15]

New England Duplicating Co. v. Mendes, 190 F.2d 415, 418 (1st
Cir. 1951); see also Herbko, 308 F.3d at 1162.

Analogous use is

a fact-specific inquiry, Mendes, 190 F.2d at 418, which “does
not require direct proof of an association in the public mind,”
Herbko, 308 F.3d at 1162.

Generally, the party is required to

demonstrate that its use of the mark “was sufficiently clear,
widespread, and repetitive to create the required association in
the minds of potential purchasers between the mark as the
indicator of a particular source and the service to become
available later.”

T.A.B. Sys. v. PacTel Teletrac, 77 F.3d 1372,

1376 (Fed. Cir. 1996).
Because Nexsan filed intent-to-use trademark applications
for the UNITY mark on March 22, 2016, Pl.’s Facts ¶ 18; Def.’s
Facts ¶ 35, the burden rests on EMC to prove its priority to the
UNITY mark.

See Hydro-Dynamics, 811 F.2d at 1472.

In

particular, EMC must demonstrate “prior use sufficient to create
an association in the minds of the purchasing public between the
[UNITY] mark and [EMC’s UNITY products].”
1162.

Herbko, 308 F.3d at

Such use must be “open and notorious,” T.A.B. Sys., 77

F.3d at 1376; see also American Express Co. v. Goetz, 515 F.3d
156, 161 (2d Cir. 2008), and proven by a preponderance of the
evidence, see Sengoku Works Ltd. v. RMC Int’l Ltd., 96 F.3d
1217, 1219 (9th Cir. 1996).

[16]

B.

EMC’s Beta Testing Does Not Confer Priority

EMC alleges that its beta testing in part warrants EMC’s
priority to the UNITY mark via analogous use.

Def.’s Mem. 5-6.

This Court holds that EMC’s beta test does not establish
priority for three reasons: (1) the group of participants was
too small to form a substantial segment of EMC’s customer base,
(2) the beta test was confidential, and (3) EMC did not
consistently use the UNITY name.
Evaluation of analogous prior use through beta-testing is
dependent on the nature and extent of the specific beta test as
well as other supporting factors.

See CCBN.com, Inc. v. C-

call.com, Inc., 73 F. Supp. 2d 106, 111 (D. Mass. 1999) (Saris,
J.).

For example, one court held that a public beta test of a

social media application on a website “was ‘sufficiently public’
to establish ‘use’ in the trademark sense.”
Supp. 2d at 249.

Boathouse, 777 F.

In another case, however, a court expressed

skepticism about whether a private beta test with a small group
of hand-selected participants was sufficiently public so as to
confer priority.

CCBN.com, 73 F. Supp. 2d at 110, 111.

In

order for beta-testing to be a sufficient basis for priority,
that testing must reach a sizable proportion of the relevant
public, and the testing cohort must constitute more than a
small, hand-picked group.

See id. at 111.

[17]

EMC conducted a small, closed beta test with twenty
participant organizations.

Pl.’s Facts ¶ 39.

EMC, however,

states that it markets its products to “tens of thousands of
customers.”

Pl.’s Facts ¶ 4; Henderson Dep. 43:1-10.

Twenty

beta testers are an insubstantial proportion of this market.
Cf. CCBN.com, 73 F. Supp. 2d at 111.

Indeed, the vast majority

of the relevant public never learned of UNITY, and thus could
not associate the UNITY mark with EMC by means of the beta
tests.

Cf. Mendes, 190 F.2d at 418 (establishing priority where

plaintiff “used the mark in publicizing his product in a leading
trade periodical”).
Additionally, each beta tester was bound to secrecy by a
non-disclosure agreement that required the signee to keep
confidential both the technical details of the test product and
the product name(s).
Dep. 173:18-174:2.

Pl.’s Facts ¶¶ 39-40; Nexsan Henderson

Because it was EMC’s plain intent for the

tested product and its associated names to remain non-public, it
is unreasonable to believe that the beta test established “open
and notorious” publicity.

See T.A.B. Sys., 77 F.3d at 1375-76

(finding analogous use claim fails where “no evidence was
presented enabling one to infer that a substantial share of the
consuming public had been reached”); see also American Express,
515 F.3d at 161-62.

[18]

Moreover, EMC failed to refer consistently to the tested
products as UNITY.

In fact, EMC identified the goods with

numerous monikers, often within the same document.

Thunderbird

Beta Opportunity E-mail, at EMC-087536; Thunderbird Final
Report; Gento E-mail, at EMC-035978-79.

Using different names

during beta testing diminishes the public’s ability to associate
a single mark with the tested goods, as it is unclear which mark
to attach to the goods.

This renders use of the mark

insufficiently clear or repetitive to establish priority.
Accordingly, this Court rules that EMC did not use the UNITY
mark in a manner that was clear, widespread, or repetitive
enough for the beta tests to constitute analogous use sufficient
to establish priority for the UNITY mark.
C.

EMC’s Pre-Sale Presentations Do Not Confer Priority

EMC also argues that its eighty-four pre-sale presentations
were sufficiently public to support priority.
18.

Def.’s Mem. 15-

In response, Nexsan contends that the presentations cannot

support priority because they were shrouded in secrecy and
reached an insufficient proportion of the relevant public.
Pl.’s Mem. 15-16.

This Court holds that EMC’s presentations do

not support priority.
While courts have stated that pre-sale publicity activities
such as demonstrations and presentations “may be adequate to
establish prior use in commerce,” International Healthcare, 470
[19]

F. Supp. 2d at 371 (internal quotation marks and citations
omitted), absent actual sales, some courts have required presales marketing to be “sufficiently extensive,” CCBN.com, 73 F.
Supp. 2d at 110 (citing New West Corp. v. NYM Co. of Cal., Inc.,
595 F.2d 1194, 1200 (9th Cir. 1979)).

For example, a “handful

of presentations, seminars and lectures” over a two-year period
was insufficient to establish analogous use, id.; but extensive
pre-sale presentations coupled with beta-testing was sufficient,
Boathouse, 777 F. Supp. 2d at 249.
Although the record lacks the precise number of attendees
at EMC’s pre-sale presentations, up to 100 people attended each
presentation, totaling over 1,000 individuals.
¶ 3.

Henderson Decl.

EMC’s customer base for its UNITY products, however, is

“IT Departments,” Henderson Dep. 43:2-7, not individuals.

Thus,

the appropriate inquiry is whether the number of IT departments
represented at the eighty-four presentations reached a
sufficient proportion of the relevant public (i.e., IT
departments).

See Mendes, 190 F.2d at 418.

EMC boasts at least

10,000 prospective customers for its UNITY product.
Dep. 43:2-10.

Henderson

Presentations reaching only 84 to 1,000 out of

more than 10,000 customers are insufficiently public so as to
link the UNITY name and EMC’s associated product.
International Healthcare, 470 F. Supp. 2d at 371.

[20]

See

This conclusion is bolstered by EMC’s requirement that
presentation attendees sign non-disclosure agreements.

Although

EMC contends that the non-disclosure agreements extended only to
the technical specifications of the technology discussed, not to
the “UNITY” name associated with the technology, Def.’s Facts
¶¶ 26-27, this is unsupported by the broad and unqualified
language of the agreements.

It is illogical to believe that

presentation attendees would be able to mention “UNITY” freely,
but, when asked what UNITY is, merely be able to reply “I cannot
say.”

Rather, the far more logical interpretation is that the

agreements rendered confidential both the UNITY name and
underlying technology.

The non-disclosure agreements thus

foreclose the publicity that is the hallmark of analogous use.
EMC asserts that the UNITY name was already public because
of the Virtual Geek blog post, EMC’s pre-sale activities, and
“word of mouth,” Def.’s Facts ¶¶ 24, 27; Henderson Dep. 45:1315, as evidenced by Nexsan’s knowledge that EMC planned to use
the UNITY name, Def.’s Reply 3.

This argument is unavailing.

The Virtual Geek blog’s references to “unity” are not
public references to EMC’s UNITY product for three reasons.
First, the blog is clearly personal in nature and is not
authorized by EMC.

Virtual Geek Disclaimer 1.

A member of the

public would not reasonably believe that the words used in the
blog reflect actual commercial intent or authorization by EMC.
[21]

That is, the words selected -- including “unity” -- are Sakac’s
and Sakac’s alone.

Second, Henderson’s testimony reveals that

the post’s language is unclear.
152:8-12.

See Nexsan Henderson Dep.

Given the ambiguous wording, a reader would not

reasonably presume that Sakac’s words reflect definite
commercial intent on the part of EMC, especially regarding
something as precise as a trademark.

Third, the industry

practice of “obsfucat[ing]” trade names, Fernander Decl. ¶ 10,
supports the Court’s finding.

Even if a reader understood

Sakac’s blog post and believed that it reflected commercial
intent by EMC, that reader would undoubtedly not identify
“unity” as a trade name.

Rather, a reader would interpret

“unity” as either a generic descriptor or a pseudonym.
Additionally, because the non-disclosure agreements forbade
the signers from publicly discussing the UNITY name, any word of
mouth marketing -- i.e., discussions between presentation
attendees or beta testers and other potential customers -- would
fail to create the required association between EMC and the
UNITY mark.

Even if the presentation attendees or beta testers

spoke openly amongst themselves, any such conversations would
continue to limit knowledge of UNITY to the same insubstantial
fraction of the relevant market.

There is no evidence before

the Court to suggest any other venue through which word of mouth
marketing using the UNITY name could have occurred.
[22]

Lastly, Nexsan’s knowledge of EMC’s potential UNITY
trademark does not establish public awareness.

Grey’s

overhearing a single conversation, Grey E-mail, at NEXSAN000404; Kaldenberg Decl. ¶ 17, and Kaldenberg’s resulting
discovery of the Virtual Geek blog, Kaldenberg Decl. ¶ 19, does
not establish that a wider segment of EMC’s customer base would
link EMC and the UNITY name.

Although this Court finds

Merrill’s “bate [sic] and switch” e-mail extremely
reprehensible, because the email was sent after Nexsan’s
trademark filing, Pl.’s Facts ¶ 18; Def.’s Facts ¶ 33; Nexsan
SEO E-mails, at NEXSAN-001820, it does not establish public
awareness at the time of Nexsan’s filing.7

Accordingly, this

Courts rules that EMC’s pre-sale presentations do not establish
prior use.

7

In this context, “bait and switch” could indicate a
commercial intent to piggyback on another vendor’s product. EMC
argues that Nexsan’s use of such a strategy is evidence that
Nexsan acted in bad faith when it rushed to file its trademark
applications. Def.’s Reply 9-10. This, however, does not
accord with the Court’s holdings. Having held that the public
was not aware of EMC’s use of the UNITY mark prior to Nexsan’s
filing, this Court cannot conclude that Nexsan filed in an
effort to benefit from the EMC’s goodwill in the UNITY mark.
Therefore, although evidence of a “bait and switch” strategy is
irrelevant here, it ought be condemned, if proven. At this
stage, this Court withholds judgment as to whether Nexsan
actually attempted to fraudulently confuse consumers. The
consequences of Merrill’s conduct shall be considered during
further proceedings in this case.
[23]

IV.

CONCLUSION
For the foregoing reasons, this Court rules that Nexsan has

priority over EMC to the UNITY trademark in relation to computer
data storage and associated technologies.

Further proceedings

shall take place in accordance with this determination of
trademark priority.

/s/ William G. Young
WILLIAM G. YOUNG
DISTRICT JUDGE

[24]