OpenAI Wins Affirmation of Temporary ‘Open AI’ Trademark Ban (1)

OpenAI Inc. thwarted a technologist’s bid to regain the right to use “Open AI” during a trademark dispute, as a split Ninth Circuit upheld a preliminary injunction Wednesday.

Open Artificial Intelligence Inc., which owns a 2015 supplemental “Open AI” trademark registration and the open.ai web domain, failed to undercut a finding that OpenAI would likely prevail, the US Court of Appeals for the Ninth Circuit said. A lower court held “Open AI” likely wasn’t “used in commerce” by co-defendant Guy Ravine’s entity before OpenAI became a household name in late 2022.

The unsigned majority opinion of Circuit Judges Sidney R. Thomas and John B. Owens noted that more than a million users had used OpenAI’s image-to-text generator DALL-E. They said that plausibly indicated OpenAI had gained consumer recognition—a requisite for use of descriptive marks to establish trademark rights.

When OpenAI or Ravine established rights by first using a distinctive trademark to distinguish their product would determine which mark has priority.

Ravine argued the court should have credited US Patent and Trademark Office findings from last year that OpenAI hadn’t established consumers recognized “OpenAI” as a source-indicator. Meanwhile, Ravine said, he had a valid registration and used the mark before OpenAI had any trademark right.

Dissenting Circuit Judge Daniel P. Collins said that while OpenAI may have become a household name, the court didn’t apply the proper standard and “made confusing and insufficiently explained findings.”

OpenAI has sought a trademark in its name since 2016, but the PTO repeatedly found it merely descriptive. Ravine objected to the PTO about its latest bid in 2022, after which OpenAI filed its 2023 lawsuit in the US District Court for the Northern District of California. It alleged Ravine had deceived the PTO over whether he was using his claimed mark in commerce and that his use of “Open AI” confused consumers.

District Court Judge Yvonne Gonzalez Rogers granted an injunction barring Ravine from using the mark during the lawsuit. Ravine said he pitched the idea of an AI lab around Silicon Valley in 2015, the same year OpenAI was founded,But Rogers noted his site was dormant from 2017 until the launch of ChatGPT in 2022, and had made limited use of his claimed Open AI mark.

As a descriptive mark, either party must show consumers recognize their use of OpenAI as an indicator of a particular producer before it could claim rights. Wednesday, the majority opinion said the lower court’s finding that OpenAI’s mark had gained secondary meaning by September 2022 wasn’t “clearly erroneous.”

Judges noted that by that time, more than 1.5 million users were creating 2 million images per day with DALL-E. That traffic, coupled with substantial advertising, supported an inference that a “substantial segment of consumers” associated the mark with a single source, the court said. The majority added that evidence suggested Ravine’s generator may not have even existed in November 2022 as he claimed.

But Collins noted that while the district court initially said the PTO finding that OpenAI hadn’t established secondary meaning came in January 2022, it later corrected itself that it was actually January 2023. The court, Collins argued, never reconciled its use of OpenAI releases and consumer activity in mid-to-late 2022 to explain changes in consumer perceptions—purportedly after a PTO ruling that hadn’t yet occurred, Collins said.

But the majority said that while “deference to the PTO’s classification decision is sensible,” it also, absent legal error, owes “great deference to a district court’s factual decision on whether a mark is distinctive.”

Quinn Emanuel Urquhart & Sullivan LLP represents OpenAI. Bird Marella Rhow Lincenberg Drooks & Nessim LLP represents Open Artificial Intelligence Inc. and Ravine.

The case is OpenAI v. Open Artificial Intelligence Inc., 9th Cir., No. 24-1963, 11/13/24.