PayPal, one of the world’s largest online payment companies, has brought a trademark infringement suit against Pandora Media, Inc., the provider of an online music streaming service and application. PayPal alleges that its blue “PP” design mark (below, left) is infringed by Pandora’s recently re-designed blue “P” design mark (below, right).

The complaint alleges federal claims of false designation of origin and dilution, as well as similar state-law claims. False designation of origin is a trademark infringement claim based on an unregistered trademark (Section 43(a) of the Trademark Act), which requires a showing of a likelihood of confusion.

In the likelihood-of-confusion analysis, one factor is the similarity of the marks, on which PayPal’s complaint and media coverage focus heavily. Clearly there are some striking similarities between the marks as a whole, which may weigh in favor of a likelihood of confusion. However, another critical factor is whether the parties’ goods and services are “related” in the mind of consumers. Even identical marks can co-exist without trademark infringement if the goods or services associated with those marks are not related, such that consumers would be unlikely to be confused as to the source of those goods or services (see for example, DELTA airlines, DELTA faucets, and DELTA books).

Case law makes clear that relatedness is not necessarily established as between certain goods and services merely because they all involve software, computers, or the Internet in general. Rather, courts recognize that software is an enormously expansive field that may involve entirely unrelated goods or services. Thus, even where parties with similar marks offer software in a similar format, such as an iPhone app, the parties’ goods and services are not necessarily related if, for example, they involve distinct industries or fields of use. See, e.g., M2 Software, Inc. v. M2 Commc’ns, Inc., 450 F.3d 1378, 1383 (Fed. Cir. 2006) (holding that, despite similarity of parties’ marks containing “M2” for software, it would be “inappropriate to presume relatedness on the mere basis of goods being delivered in the same media format” given “the pervasiveness of software and software-related goods in society,” and “especially where, as here, the goods … are defined narrowly, along distinct industry lines,” namely, pharmaceutical and medical fields versus music and entertainment fields); Elec. Data Sys. Corp. v. Edsa Micro Corp., 23 USPQ2d 1460, 1463 (TTAB 1992) (“[T]he fact that both parties provide computer programs does not establish a relationship between the goods or services, such that consumers would believe that all computer software programs emanate from the same source simply because they are sold under similar marks.”).

It may be difficult for PayPal to establish relatedness as between its payment and money-transfer goods/services versus Pandora’s music streaming goods/services. If relatedness is established here, where is the limit for software? For example, Progressive Insurance also offers a mobile app with a blue “P” logo, shown below. Are insurance services related?

PayPal’s complaint focuses predominantly on the similarity of marks. But the lack of relatedness of the parties’ goods and services may carry the day. On the other hand, PayPal also brought a trademark dilution claim, which does not require the parties’ goods and services to be related. We’ll save discussion of dilution for another upcoming post, with an update on this dispute as it further develops.

What do you think about PayPal’s trademark infringement claim? Do you think consumers would be likely to assume incorrectly that Pandora’s music streaming application and services originate from or are affiliated with PayPal?