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Gallagher & Kennedy, P.A.

Robert J. Itri (Bar No. 10938) Charles E. Runyan (Bar No. 019277) GALLAGHER & KENNEDY, P.A. 2575 East Camelback Road Phoenix, Arizona 85016-9225 Telephone: (602) 530-8000 Facsimile: (602) 530-8500 Email: rji@gknet.com Chuck.runyan@gknet.com Attorneys for Plaintiff I Cloud Communications, LLC UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA I Cloud Communications, LLC, an Arizona Limited Liability Company, Plaintiff, v. Apple, Inc., a California Corporation, Defendant. Plaintiff I Cloud Communications, LLC (iCloud Communications), for its complaint against Defendant Apple Inc. (Apple) alleges as follows: NATURE OF THE ACTION 1. This action seeks preliminary and permanent injunctive relief, monetary No. COMPLAINT

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relief, and attorneys fees based on Apples i) federal unfair competition and false designation of origin in violation of 43 of the Lanham Act, 15 U.S.C. 1125(a); and ii) Arizona state trademark infringement, unfair competition, and injury to business reputation in violation of Arizona common law. PARTIES 2. Plaintiff iCloud Communications is an Arizona limited liability corporation

having its principal place of business in Phoenix, Arizona.

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3.

Apple is a California corporation which, upon information and belief, is the

most highly valued technology company in the world. JURISDICTION AND VENUE 4. These causes of action arise under the Lanham Act (15 U.S.C. 1051-

1127), the laws of the State of Arizona, and the common law. 5. This Court has original federal question jurisdiction and supplemental

jurisdiction over this action under 15 U.S.C. 1121 and 28 U.S.C. 1331, 1338 and 1367(a). 6. This Court has specific personal jurisdiction over Apple because Apple has

purposefully committed acts within this District from which these claims arise and/or has committed tortuous acts outside of the District knowing that such acts would cause injury in this District. This Courts general personal jurisdiction over Apple flows from Apples continuous, systematic and routine business contacts within Arizona and the Arizona District. 7. Venue is proper in this district pursuant to 28 U.S.C. 1391 because a

substantial part of the events giving rise to the claims occurred in this District. GENERAL ALLEGATIONS Cloud Computing 8. The National Institute of Standards and Technology (NIST) has defined

cloud computing as follows: Cloud computing is a model for enabling convenient, ondemand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. NIST SP 800-145. 2

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9.

More generally stated, cloud computing refers to applications and

services offered over the Internet. The cloud reference is a metaphor derived from the cloud image used to represent the Internet in computer network diagrams and is a simplification of the complex series of network connections and systems involved in online services. Any user with an Internet connection can access the cloud and the services it provides. An example of a diagram depicting cloud computing is set forth below:

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Some commonly know cloud computing services include: Gmail by

Google; Google Docs; Google Calendar; YouTube; LinkedIn; Amazon Web Services; Amazon MP3; Rackspace; Microsoft Azure; and MobileMe by Apple.

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iCloud Communications 11. iCloud Communications was formed in 2005 and is a provider of, among

other cloud computing products and services, computer telephony (telecommunication) hardware and software for the electronic transmission of email, text, audio, video, photos, information, data, video conferencing, virtual video conferencing and other content via the internet and wireless data networks. 12. iCloud Communications software applications and customer data are

hosted at and are accessed through its secure data center and telecommunications hub in Phoenix, Arizona, which was acquired and equipped by iCloud Communications at a cost of over $550,000. 13. iCloud Communications has customers located throughout North America,

South America, Europe and the Middle East. iCloud Marks 14. iCloud Communications spends tens of thousands of dollars annuallyin

excess of several hundreds of thousand of dollars since its formation in 2005in regional, national and international, electronic, print and other advertising to promote its goods and services using the following marks and logos (the iCloud Marks). iCloud I Cloud Communications

iCloud Communications

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Attached as Exhibit A are various current and historic marketing brochures and materials describing the goods and services offered by iCloud Communications under the iCloud Marks. 15. iCloud Communications also promotes, and since 2005 has promoted, its

services through its website, www.geticloud.com, where the name iCloud and other iCloud Marks are prominently displayed. See Exhibit B attached hereto. 16. iCloud Communications also uses, and since 2005 has used, the iCloud

Marks at tradeshows, in brochures, and in every communication and invoice it disseminates to customers and prospective customers. 16. By virtue of iCloud Communications long and extensive use of the iCloud

Marks, its advertising and promotional campaigns and expenditure of substantial monies thereon, iCloud Communications had, prior to June 6, 2011, established significant goodwill and valuable rights in and ownership to the iCloud Marks in connection with computer telephony and electronic data transmission and storage services. Apples Infringement of the iCloud Marks 17. Apple was formed on April 1, 1976, began to conduct business in Arizona

in 1976, and continues to conduct business in Arizona. 18. Recently, Apple began using marks identical or confusingly similar to the

iCloud Marks to promote its new cloud computing telecommunications and data services. 19. On June 6, 2011, at Apples highly anticipated Worldwide Developer

Conference (WWDC), Apple's Chief Executive Officer, Steve Jobs, publicly announced the launch of its new cloud computing telecommunications and data storage platform iCloud.

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20.

A press release issued by Apple concurrently with Steve Jobs public

announcement at the June 6th WWDC describes Apple's vision for its iCloud platform. Among other things, the press release states that Apples iCloud will wirelessly store your content in iCloud and automatically and wirelessly push it to all your devices. It further states that the iCloud platform will wirelessly transmit and store at its data center email, text, audio, video, photos and other data. A copy of the Apple press release is attached hereto as Exhibit C. 21. Moreover, in one of its recent trademark filings with the United States

Patent and Trademark Office made on June 1, 2011, Apple stated its intent to use the iCloud mark in connection with, among other services: Telecommunications; telecommunication access services; communications by computer; communication between computers; delivery of digital music by telecommunications; electronic transmission of streamed and downloadable audio and video files via computer and other communications networks; delivery of messages by electronic transmission; delivery of digital music by telecommunications; electronic mail services; streaming of video content via a global computer network; electronic transmission of audio and video files via communications networks; information, advisory and consultancy services relating to all the aforesaid. A copy of the Apples U.S. application is attached hereto as Exhibit D. 22. In a similar filing with the Trademarks and Designs Registration Office of

the European Union made on May 31, 2011, Apple indicated its intent to use the iCloud mark in connection with, among other services: Telecommunications; communication and telecommunication services; telecommunication access services; communications by computer; communication between computers; electronic sending of data and documentation via the Internet or other databasescommunication by computer, computer intercommunication; telex, telegram and telephone services; broadcasting or transmission of radio and television 6

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programs;. . . provision of telecommunications access and links to computer databases and the Internet...delivery of messages by electronic transmission; provision of connectivity services and access to electronic communications networks, for transmission or reception of audio, video or multimedia content; provision of telecommunications connections to electronic communication networks provision of telecommunications connections to the Internet or computer databases; electronic mail services; telecommunication of information (including web pages)rental and hire of communication apparatus and electronic mail-boxes; electronic news services; electronic communications consultancy; facsimile, message collection and transmission services; transmission of data and of information by electronic means, computer, cable, radio, teleprinter, teleletter, electronic mail, telecopier. A copy of the Apples E.U. filing is attached hereto as Exhibit E 23. Apple has, since the June 6th announcement, widely promoted its proposed

iCloud services across numerous marketing channels, including print and electronic 14 media and on its website, www.apple.com, and through the use of the domain name 15 icloud.com. 16 24. 17 are identical to or closely related to the goods and services that have been offered by 18 iCloud Communications under the iCloud Marks since its formation in 2005. However, 19 due to the worldwide media coverage given to and generated by Apple's announcement of 20 its iCloud services and the ensuing saturation advertising campaign pursued by Apple, 21 the media and the general public have quickly come to associate the mark iCloud with 22 Apple, rather than iCloud Communications. 23 25. 24 for its cloud computing telecommunications and data services, Apple was aware of or 25 was willfully blind to iCloud Communications use of and rights in the iCloud Marks. 26
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The goods and services with which Apple intends to use the iCloud mark

Upon information and belief, at the time Apple elected to adopt iCloud

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Apple's Pattern Of Willful Trademark Infringement 26. Although Apple aggressively protects its trademark rights, Apple has a long

and well known history of knowingly and willfully treading on the trademark rights of othersa history which began as early as the 1970s when Apple was first sued for trademark infringement by the Beatles record label, Apple Corp. Although the case was settled on the condition that Apple not enter into the music business, Apple entered into the music business in the 1990s and was sued again. 27. Apples early flagship productthe Macintosh computeralso ran afoul of

the trademark rights of both McIntosh Labs, a high-end stereo equipment maker, and a software company named Management and Computer Services, Inc. (MACS). Apples former CEO John Sculley reported that Apple paid nearly $2 million (nearly 3 decades ago) to extricate itself from the legal mess it created by its adoption of the Macintosh label. 28. Apple was sued another time for trademark infringement due to its adoption

of the name Mighty Mouse for computer devices despite Terrytoons famous trademark for the cartoon character of the same name. 29. In more recent times, Apple has been sued for its use of various marks

employing the i prefix in connection with various wireless technology goods and services. For example, Apple was sued by Cisco Systems, Inc. (Cisco) in 2007 for trademark infringement arising from Apples introduction of the iPhone. Cisco, which owned the mark iPhone, and Apple had been in licensing discussions for two years prior to the launch of the iPhone. Nonetheless, Apple ignored Cisco's trademark rights and announced the iPhone without first reaching any agreement with Cisco. 30. Upon information and belief, Apple also began using iPad without

seeking a license from Fujitsu Frontech North America, which had previously used and

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had pending before the United States Patent and Trademark Office an application for the iPad mark. 31. Most recently, in May 2010, Apple was sued by Innovative Media Group,

LLC (IMG) for infringement of IMGs federally registered iAds trademark after Apple launched its iAd mobile advertising program. 32. Apples announcement and launch of its iCloud cloud computing service

appears to be just one more example of Apples act first and worry about the consequences later approach to trademark use as even the most cursory Internet searchwhich could have easily been conducted by any of the legion of Apples inhouse marketing or legal staffwould have revealed the prior, long term usage of the iCloud Marks by iCloud Communications. 33. Moreover, as was the case of the iPhone and iAd marks, Apple

discreetly applied for a foreign trademark registration for ICLOUD months prior to the launch announcement on June 6, 2011 (Apple applied initially in Australia for iPhone, Canada for iAd and Jamaica for iCloud). That foreign ICLOUD application appears to now form the basis for the various iCloud applications for which Apple filed in the United States on June 1, 2011. Apparently, Apple is attempting to use a foreign jurisdictions laws to gain priority for its U.S. registrations while circumventing the notice and publication requirements for trademark applications filed here in the United States with respect to intent-to-use applications. 34. Apple also went through the motions of purchasing a U. S. trademark

registration for iCloud, Reg. No. 3,744,821, from a Swedish consulting company whose use of the mark post-dates that of iCloud Communications by two years. Moreover, upon information and belief, the Swedish company has continued offering the same services to the same customers under a similar mark. Thus, Apples acquisition of the mark iCloud appears to have been in gross and is, therefore, invalid.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 39. 35.

Irreparable Harm Suffered by iCloud Communications Apple has used, and continues to use, iCloud in connection with its

efforts to advertise, market, and promote its cloud computing services throughout the world using many of the same marketing channels used by iCloud Communications. 36. Apples announcement of and the launch of its advertising campaign for its

iCloud service have so thoroughly swamped the reputation of iCloud Communications and the goodwill it had built up over the years in the iCloud Marks that is likely to causeand has actually causedconfusion among consumers of cloud computing services and members of the general public as to the source of the parties goods and services. In fact, iCloud Communications has received numerous inquiries from both existing and prospective customers regarding whether it is now owned or affiliated with Apple. 37. Additionally, it is likely that consumers will be given the misimpression

that Apple, not iCloud Communications, is the source of the services offered under the iCloud Marks and/or that iCloud Communications is an unauthorized user of and is infringing upon Apples trademark rights. Such misimpressions will damage iCloud Communications reputation. 38. The loss of and damage to the goodwill in the iCloud Marks, the damage

to iCloud Communications reputation and confusion among consumers is likely to continueand, in fact, intensifyunless Apple is enjoined from its use of the mark iCloud. FIRST CAUSE OF ACTION False Designation of Origin and Unfair Competition Violating 35 U.S.C. 1125(a) iCloud Communications repeats and realleges all allegations contained in

paragraphs 1 to 38 and by this reference incorporates them here.

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40.

Apple has knowingly and intentionally misrepresented and falsely

designated to the public the source and origin of their products, goods and services. Apples unauthorized use of the mark iCloud is likely to cause confusion, or to cause mistake, or to deceive consumers as to Apples affiliation, connection or association with iCloud Communications and as to the true origin, sponsorship and approval of iCloud Communications services and rights in and authorization to use the iCloud Marks. 41. Apples acts constitute unfair competition and false designation of origin

violating 43 of the Lanham Act, 15 U.S.C. 1125. 42. 43. Apples acts have been willful. iCloud Communications has been damaged by, and Apple has profited

from, Apples wrongful conduct in an amount to be proven at trial. 44. Monetary relief alone is inadequate to fully address the irreparable injury

that Apples illegal actions have caused and will continue to cause to iCloud Communications if this court does not enjoin Apple. iCloud Communications is, therefore, entitled to preliminary and permanent injunctive relief to stop Apples unfair competition. SECOND CAUSE OF ACTION Unfair Competition Violating Arizona Common Law 45. iCloud Communications repeats and realleges all allegations contained in

paragraphs 1 to 44 and by this reference incorporates them here. 46. Apples acts in using the mark iCloud has deceived, misled and confused

the public generally, and specifically iCloud Communications' customers and potential clients, and will continue to do so if such use continues. 47. Unless enjoined, Apple will continue to willfully infringe and violate

iCloud Communications rights in the iCloud Marks, which will irreparably harm iCloud

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Communications and cause iCloud Communications tremendous damage to their goodwill, business reputation, and trademark services. THIRD CAUSE OF ACTION Trademark Infringement Under Arizona Common Law 48. iCloud Communications repeats and realleges all allegations contained in

paragraphs 1 to 47 and by this reference incorporates them here. 49. iCloud Communications has developed substantial common law trademark

rights in the iCloud Marks under Arizona law and in all jurisdictions where iCloud Communications has used those marks. 50. Apple has infringed the iCloud Marks by using confusingly similar marks

in commerce in Arizona in a way that has caused and likely will continue to cause consumer confusion as to iCloud Communications' association with, affiliation with, or sponsorship of Apple and their products, goods and services. 51. Apples acts have been willful and in conscious disregard of the trademark

rights of iCloud Communications. 52. iCloud Communications has been damaged by, and Apple has profited

from, Apples wrongful conduct in an amount to be proven at trial. 53. iCloud Communications is entitled to damages and enhanced damages in

amounts to be proven at trial. 54. Monetary relief alone is inadequate to fully address the irreparable injury

that Apples illegal actions have caused and will continue to cause to iCloud Communications if this Court does not enjoin Apple. iCloud Communications is therefore entitled to preliminary and permanent injunctive relief to stop Apples unfair competition.

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FOURTH CAUSE OF ACTION Injury to Business Reputation Under Arizona Common Law 55. iCloud Communications repeats and realleges all allegations contained in

paragraphs 1 to 54 and by this reference incorporates them here. 56. Apples use of the iCloud mark is confusingly similar to and constitutes

infringement of iCloud Communications' Marks. Apples use injures iCloud Communications' business reputation because consumers will believe that iCloud Communications is affiliated with or related to or has the approval of Apple, and any adverse reaction by the public to Apple and the quality of its products and the nature of its business will injure the business reputation of iCloud Communications. 57. Apples use of the iCloud Mark is likely to cause, and has caused,

consumers to believe that Apple, not iCloud Communications, is the true source of the goods and services offered under the iCloud Marks and that iCloud Communications is infringing upon the trademark rights of Apple in using the iCloud Marks. 58. Apple has engaged in conduct in bad faith that constitutes unfair, unlawful

and fraudulent business practices under the common law of the State of Arizona, causing harm and irreparable injury to iCloud Communications. 59. iCloud Communications has no adequate remedy at law to address fully

this irreparable injury that Apples illegal actions have caused and will continue to cause iCloud Communications if not enjoined. iCloud Communications is therefore entitled to preliminary and permanent injunctive relief to stop Apples use of the iCloud mark. PRAYER FOR RELIEF WHEREFORE, iCloud Communications prays for judgment in its favor and against Apple as follows: A. preliminarily and permanently enjoining Apple, its servants, agents and employees and all other persons in active concert or participation with 13

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Apple and their respective successors and assigns, from directly or indirectly: 1) using the iCloud name or marks similar to iCloud, or any Internet domain name or any other name or mark confusingly similar to the iCloud Marks, in any manner or form, or any other reproduction, counterfeit, copy or colorable imitation of such marks either alone or in combination with any other designation, or in connection with any advertising, marketing, promotion, offer for sale, or sale of Apples telecommunications services throughout the United States and the world; 2) expressly or impliedly representing itself to customers, potential customers, suppliers, potential suppliers, or the general public to be affiliated with iCloud in any way; 3) representing by words or conduct that any product or services provided, offered for sale, sold, advertised, or rented by Apple and supplied, authorized, sponsored or endorsed by or otherwise connected with iCloud Communications; and 4) competing unfairly with iCloud Communications in any manner;

B. ordering Apple to deliver for destruction all labels, signs, prints, insignia, letterhead, brochures, business cards, invoices and any other written or recorded material or advertisements in its possession or control containing the iCloud name or any other colorable imitation of any one of the marks in the iCloud Marks or confusingly similar variation of the iCloud family of marks; C. ordering Apple to file with this Court and to serve on iCloud Communications within thirty (30) days from the date of entry of any 14

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restraining order or injunction, a report in writing, under oath, setting forth in detail the manner and form in which Apple has complied with the terms of the injunction; D. order Apple to pay iCloud Communications: 1) all profits, gains and advantages obtained from Apples unlawful conduct, in an amount to be determined at trial; 2) all monetary damages sustained, and to be sustained, by iCloud Communications as a consequence of Apples unlawful conduct, including lost profits and reasonable royalties, in an amount to be determined at trial; and 3) iCloud Communications costs and disbursements of this action, including reasonable attorneys fees and otherwise; E. finding Apples acts have been willful and, therefore, order that Apples profits or Plaintiffs damages, whichever is greater, be trebled; F. awarding interest on the above damage awards; G. invalidating U.S. Trademark Reg. No. 3,744,821 as having been abandoned due to its in gross transfer to Apple; H. ordering Apple to transfer to iCloud Communications the iCloud.com domain name; and I. awarding such other relief as the Court may deem just and proper. JURY DEMAND iCloud Communications demand a trial by jury on all issues so triable.

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RESPECTFULLY SUBMITTED this 9th day of June, 2011. GALLAGHER & KENNEDY, P.A. By /s/ Robert J. Itri Robert J. Itri Charles E. Runyan 2575 East Camelback Road Phoenix, Arizona 85016-9225 Attorneys for Plaintiff I Cloud Communications, LLC

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