Last month, financial startup Ripple Labs, Inc. (“Ripple Labs”) sued social networking app provider Kefi Labs, LLC (“Kefi Labs”) and several of its employees in California federal court for over $2 million dollars in damages, including claims for alleged trademark infringement, unfair competition and cybersquatting.

How can other app providers minimize their risk of similar legal surprises?

Ripple App

In October 2014, after devising the Ripple mobile application on his rooftop in Seattle, Paul Stavropoulos quit his job and started developing the app full-time. A user of the Ripple app can share a photo or written text (called a “ripple”) with other nearby Ripple users. Those users can choose to “spread the ripple” to more users in their close proximity. Ripple users earn points for popular posts, which increases the reach of their ripples.

Stavropoulos formed Kefi Labs last November. Ripple’s beta launch was this January, and the app was formally released in the iTunes and Google Play stores in February 2015. This March, Kefi Labs filed a RIPPLE trademark application with the U.S. Patent and Trademark Office for mobile applications.

Ripple Labs Sues Kefi Labs and App Developers for Alleged Trademark Infringement

Ripple Labs owns 13 federally registered RIPPLE, RIPPLE LABS, RIPPLE TRADE and RIPPLE COMMUNICATIONS trademarks (collectively) for a broad range of computer programs, hardware and software, as well as financial, computer and telecommunications services. On October 2, 2015, Ripple Labsinitiated legal action against Kefi Labs, Stavropoulos and two other members of the Ripple app team (including Stavropoulos’ brother) in federal district court in San Francisco.

Ripple Labs alleges that the Defendants’ unauthorized use of the “Ripple” name for their mobile application, website and related marketing materials constitutes trademark infringement, as well as state, federal and common-law unfair competition. Further, Ripple Labs’ complaint claims that Defendants’ domain name and website located at violate the Anticybersquatting Consumer Protection Act – a federal statute designed to protect the public from the bad faith, abusive registration of Internet domain names.

Ripple Labs is seeking:

  • at least $2.1 million in actual and statutory damages, as well as attorneys’ fees;
  • an injunction prohibiting the Defendants from continuing to use the “Ripple” name;
  • express abandonment of Kefi Labs’ RIPPLE trademark application; and
  • transfer of the domain name to Ripple Labs.

Developing an App? Proceed with Caution

App providers invest a great deal of time and revenue developing and promoting their mobile applications. Trademark disputes, such as the Ripple matter detailed above, can sometimes prove fatal for app startups. Therefore, as early as possible in the creative process, names, logos, designs, slogans and other branding features associated with mobile applications should be carefully vetted by an experienced intellectual property attorney to minimize the risk of unwelcome legal surprises from third-party brand owners.