Rippln sued for trademark infringement
When we last checked in on Rippln, we noted that the company had gone suspiciously quiet for a few weeks. I say suspiciously because prior to the silence it was a task in itself to sift through Rippln’s hype machine and keep track of the company.
Firing back through Troy Dooly (who “works for some of the investors in Rippln”), CEO Brian Underwood (right) explained that the lack of communication was due to US holidays.
[2:38] I said Brian you’ve been silent, what’s happening?
He said “what are you talking about, it’s Thanksgiving. Some of us left down and went to Thanksgiving prior, some afterwards
We’re still conducting business. Matter of fact we do two calls a week, that isn’t being silent.
Now we haven’t done blog posts and stuff. I can’t win for losing, with you or these other critics.
If I make too much noise, you guys tell me I’m hyping this stuff. If I don’t make any noise cuz we’re working, then we’re “running” or we’re having a eulogy or some crap like that.
Shortly after Underwood’s response, Rippln released its long-awaited Communicator App… and then things went quiet again. A few posts popped up on Rippln’s Facebook page during December, with the last one a Christmas message dated December 25th.
Almost a fortnight later there’s been nothing from Rippln corporate, with affiliates once again left wondering what is going on:
No doubt Underwood’s answer would be “well it’s Christmas and New Years, can’t we get a break”, and for that reason I was going to leave writing a followup till mid January or so.
I say “was” because yesterday news broke that this time around, there might be an entirely different reason for Rippln’s silence. One that strikes at and threatens the future of the company altogether…
In a lawsuit filed on December 27th in a District Court of California, Ripple Labs are accusing Rippln of trademark infringement. As part of their sought relief, Ripple Labs are also requesting a preliminary injunction be granted, which would effectively shut down Rippln’s business operations in their entirety.
Ripple Labs, and I must admit this confused me, assert that both Ripple Labs and Rippln ‘operate in the world of virtual currency‘.
According to Ripple Labs lawsuit,
Under the RIPPLE Trademark, Ripple Labs offers services whereby individuals can create, credit, and disburse money—both real and virtual—to people within a peer-to-peer social network.
This service acts as an alternative to the current on-line currency exchange services presently in existence by offering a truly decentralized exchange service and also providing a platform by which individuals may grant or extend credit to one another.
The credit created under the RIPPLE Trademark has become a new form of digital currency.
Rippln on the other hand is an MLM company that pushes products through a company-wide network marketing compensation structure.
Decide for yourself, here’s the basis for Ripple Labs’ “virtual currency” claim:
Defendants’ goods and services include compensating users monetarily and through value equivalents in the form of Defendants’ own virtual currency in connection with Defendants’social networking platform.
For example, Defendants are now using RIPPLE and RIPPLN in connection with an “incentivized sharing” concept (i.e., getting paid for sharing), that has been called “the new model of currency,” thereby associating themselves with currency and monetary value.
If I’m reading that right, Ripple Labs are asserting that volume (typically Personal Volume (PV)), constitute a virtual currency.
That would mean every MLM company, according to Ripple Labs, is operating a virtual currency in that they use points of some sort to track commissions.
Ponzi points (as used by Zeek Rewards and Better Living Global Marketing for example) are most definitely a virtual currency, but product sale PV points? I’m not convinced on that one seeing as you can’t trade the points.
You sell something, the company tracks a point value to your affiliate account and then they pay you at set intervals based on that value. Bit different to a virtual currency.
And I think there might be some misunderstanding with the whole “new model of currency” in Rippln’s marketing material. Again, unless I’m mistaken, that refers to downlines as a currency, rather than volume points within Rippln’s compensation plan itself.
It’ll be interesting to see if a court agrees Rippln are infact trading in a virtual currency or not.
Continuing on, Ripple Labs then go on to slam Rippln’s business model:
While Plaintiff Ripple Labs is an established, well-respected, and highly legitimate on-line currency exchange service, known within the industry and major publications as the “next big thing” in virtual currency, Defendants (Rippln) operate a social networking platform that is essentially nothing more than an online pyramid scheme.
A bit of overindulgence on the self-flattery… but openly declaring Rippln to be “an online pyramid scheme”? Oh snap!
And Ripple Labs don’t stop there…
(Rippln’s) actions are calculated to, and actually do, deceive consumers about the source and quality of their services.
As a result, Defendants are harming consumers and potential consumers of Ripple Labs by intentionally causing confusion as to the source of Defendants’ goods and services, and at the same time irreparably damaging the goodwill associated with Ripple Labs and its RIPPLE trademark.
Defendants have also engaged in cybersquatting by registering and using the domain names rippln.com and startmyripple.com with a bad faith intent to cause confusion with Ripple Labs’ RIPPLE Trademark and to profit from such use.
I don’t quite think Rippln’s domain acquisition amounts to cybersquatting, but it’s an open-secret the company has failed to really do anything with the two domains mentioned.
On the trademark infringement issue, this seems to revolve primarily around similarities between Rippln and Ripple Labs’ respective logos, and use of the term “ripple” by Rippln.
Are Ripple Labs and Rippln’s logos similar?
The fonts are similar and you can clearly see where Rippln got their inspiration from… but it’s a totally different colour-scheme. And Rippln putting smiley faces in the three circles is probably enough to differentiate the two logos from each other.
The use of “ripple” though might be where Rippln comes undone.
Anybody who’s even vaguely aware of Rippln will be familiar with all the talk at Rippln about “starting a ripple”, the “ripple effect”, “growing your ripple” and so on and so forth.
This I don’t know how Rippln can talk themselves out of and clearly, if a Judge agrees Rippln are operating a virtual currency business, could land them in hot water.
Especially when you consider that
On May 24, 2013, Ripple Labs filed a Notice of Opposition with the United States Patent and Trademark Office, requesting that the Trademark Trial and Appeal Board deny the ‘124 application and the ‘099 application on the grounds that the Infringing Mark, RIPPLN, is confusingly similar to Ripple Labs’ RIPPLE Trademark pursuant to Section 2(d) of the Trademark Act.
Ripple Labs’ lawsuit doesn’t make any mention of a resolution to their “Notice of Opposition”, but it demonstrates that Rippln were aware of the issue as far back as May 2013.
As Ripple Labs observe:
Perhaps most notably, Defendants have recently started to call their leadership team the “Ripple Success Team.”
And according to Ripple Labs, the end result of all of the above is that
Although Defendants have only recently started to use the Infringing Marks in commerce, there have already been at least a dozen documented instances of actual confusion with Ripple Labs’ RIPPLE Trademark.
On one occasion, Ripple Lab’s CEO and Co-Founder Mr. Larsen was approached by an acquaintance from his son’s soccer team who received an invitation to join the Infringing RIPPLN Website, and was under the impression that Ripple Labs and Mr. Larsen were associated with the social networking scheme.
The user signed up for the Rippln website, solely because he thought it was associated with Mr. Larsen.
Mr. Larsen was thereafter approached by his personal trainer, Milton Quining. Mr. Quining excitedly told Mr. Larsen that his daughter got the invitation for “Ripple” and “signed right up.”
In fact, Mr. Quining’s daughter had signed up for the Rippln service—not for Ripple Labs’ service—because she was under the impression that it was associated with Ripple Labs and Mr. Larsen.
Thereafter, on April 26, 2013, users communicating on a Bitcoin Talk Forum were similarly under the impression that RIPPLE and RIPPLN were associated with one another, and were under the false impression that users needed an invitation to take advantage of RIPPLE services, as they did with the RIPPLN service.
It wasn’t until a Ripple Labs employee corrected the users, that they realized the two services were unaffiliated.
On May 10, 2013, Alan Safahi, founder and CEO of ZipZap, Inc. and a business colleague of Mr. Larsen’s, contacted Mr. Larsen to inquire whether he was familiar with the website startmyripple.com, and further stated that Mr. Safahi’s clients were confused about the relationship between the parties.
Next, on May 11, 2013, in a discussion board called RippleForum on Ripple Labs’ website, one user inquired about the relationship between RIPPLE and RIPPLN, and if they were one in the same.
Another RIPPLE user corrected the confusion, noting that the two were “completely unaffiliated” and added:
“… It’s easy to mix the two up for newcomers I think some of the people who got hyped about Rippln will stumble upon Ripple, which might be a beneficial side effect; Ripple is mostly know by BTC [Bitcoin] enthusiasts for now.
I just hope there won’t be too much confusion and that the two will become distinguishable….”
Similarly on another discussion forum, wickedfire.com, an additional instance of actual confusion occurred, wherein one user explains to the other the difference between the two services:
“Rippln’ and ‘Ripple’ are two different things. ‘Ripple’ is meant to be a virtual currency gateway that is due to launch, that allows you to exchange BTC [bitcoin] for fiat or whatever you want. That’s what’s been incorporated into Bitstamp.
‘Rippln’ is a pyramid ponzi scheme. One is trading on the other’s name to attract members….”
The examples of confusion provided by Ripple Labs goes on, mostly citing instances of those in BitCoin circles confusing or having to clarify the difference between the two companies to others.
I can totally see where Ripple Labs are coming from on this point, and I think this is the core strength of their case.
All up, in support of their preliminary injunction Ripple Labs allege Rippln are guilty of
- creating confusion which has “irreparably damaged” Ripple Labs’ brand
- infringing on Ripple Labs’ “Ripple” trademark by using ‘the identical name “Ripple” and the nearly identical mark “Rippln”‘
- an intention by Rippln to “expand their services” (to further compete with Ripple Labs)
- acting in “bad faith”
- promoting Rippln whose services “overlap” ‘channels of trade and consumers‘ of Ripple Labs
Ripple Labs has suffered irreparable harm and will continued to do so absent preliminary injunctive relief.
The loss of control over the movant’s name and reputation and loss of goodwill has consistently been held to constitute irreparable injury.
As discussed above, Defendants’ acts are causing immediate, irreparable harm to Ripple Labs that urgently requires injunctive relief.
If Defendants are permitted to continue their illegal practices, Ripple Labs will continue to suffer substantial damage to its reputation as well as losses to its revenue and erosion of its customer base.
This amounts to an enormous hardship on Ripple Labs.
On the other hand, Defendants have no lawful right to a website built from intellectual property they knowingly stole from Ripple Labs.
As such, issuance of a preliminary injunction will impose no legitimate or legally recognizable hardship on Defendants.
The preliminary injunction sought by Ripple Labs, if granted, would immediately prohibit Rippln from
- using Ripple Labs’ RIPPLE trademark or any confusingly similar variation thereof, including but not limited to the mark, RIPPLN
- diluting, blurring, passing off, or falsely designating the origin of Ripple Labs’ RIPPLE trademark and from injuring Ripple Labs’ goodwill and reputation
- doing any other act or thing likely to induce the belief that the Defendants’ services are in any way connected with, sponsored, affiliated, licensed, or endorsed by Ripple Labs
- registering, using or trafficking in any domain name that is identical or confusingly similar to Ripple Labs’ RIPPLE trademark, including but not limited to rippln.com, startmyripple.com, and ripplncommunicator.com
- using or displaying the RIPPLE trademark or any variation thereof, including without limitation the word mark RIPPLN, for goods or services in any location, circumstance or environment, including on the Internet, or as domain names, email addresses, meta tags, invisible data, or otherwise engaging in acts or conduct that would cause confusion as to the source, sponsorship or affiliation of Defendants with Ripple Labs
Or in not so many words, ensure that “Rippln” as a business no longer exists.
Ripple Labs lawsuit names Terry Lacore, LaCore Enterprises, LLC and Rippln Inc. as defendants, none of which to date have filed a reply (due 24th of January).
Meanwhile a hearing for the request of a preliminary injunction has been set for February 6th.
And as far as I’m aware of, no public statement has been issued by Rippln addressing the lawsuit.
You’ve got to wonder if they’re considering throwing the towel in or not. The release of Rippln Communicator, delayed as it was, didn’t really seem to achieve anything other than a bit of affiliate cheerleading on the company’s Facebook page.
Will fighting Ripple Labs’ lawsuit trigger a point of diminishing returns threshold for the company, or will Rippln fight it and press on?
Update 2nd February 2014 – After previously requesting an extension to reply to Ripple Labs’ lawsuit, Rippln has applied for a further one week extension to the initial February 6th response deadline. They’ve also asked for a two week extension on the hearing date.
In their motion, Rippln claim to have
entered into discussions (with Ripple Labs) that may resolve or limit the issues that need to be presented to the Court in this matter, and request a brief extension of these deadlines to continue those discussions.
The motion has to be granted by a Judge but I don’t see why it wouldn’t be (Ripple Labs don’t have a reason to oppose it).
New dates if the motion goes through will be February 13th for a response and opposition to the injunction, and March 6th for a hearing.
Update 15th February 2014 – Following the collapse of Rippln, a settlement has been reached in the lawsuit. According to a “Standby Order of Dismissal” filed on the 13th of February,
The Court has been informed that the above-entitled action has settled. Accordingly, the
Court vacates all pretrial and trial dates.
The parties are required to file a stipulation of dismissal by April 14, 2014.
The terms of the settlement have not been made public.