A Critical Lesson for Every Marketing and Product Team
By: SLG Staff
Zoom, one of the biggest winners during the Coronavirus era, clearly needs to brush up on its new product clearance procedures. How did Zoom step into hot water? Well, someone there apparently had a great idea to launch a new online service called “Zapp” (as in “Zoom” “app”). Zapp enabled third-party developers to create and distribute apps for use and integration on the Zoom videoconferencing platform.
Obviously full of excitement during the product development path, Zoom either forgot about — or ignored – an almost identically named — and similarly functioning — service launched in 2012 called “Zap” by leading tech co. “Zapier, Inc.” Zapier’s “Zap” tool supports integrations for over 2,900 Internet applications, including Zoom – and also for Twitter, Gmail, Facebook, Salesforce, Shopify, Instagram, LinkedIn, and others. Zoom had actually been hosting Zap on the official Zoom website through a partnership with Zapier that began in 2015. That partnership allowed Zoom’s and Zapier’s users to integrate the Zoom videoconferencing app with other third-party applications.
As could be expected, Zoom’s Zapp launch created a huge online backlash by Zapier customers against Zoom. This was followed by a lawsuit against Zoom by Zapier for trademark infringement and unfair competition in the U.S. District Court for the Northern District of California. It is particularly noteworthy that Zapier did NOT own a registered trademark for the word “Zap.”
In the face of the backlash and the lawsuit, Zoom promptly retreated. The case was settled after less than a month. Despite the public unavailability of the Zoom-Zapier settlement agreement, based on SLG’s extensive litigation experience, we would theorize that Zapier agreed to withdraw the case only if Zoom immediately stopped using the term “Zapp” — anywhere.
This theory appears to be supported by extrinsic evidence. SLG’s research shows that while organic Google links still contain the word “zapps” – we did not find any use by Zoom of the term “Zapp” – and the new service is now referred to as “Zoom Apps”.
What Went Wrong?
As attorneys that are regularly engaged by our clients to assist in product pre-launch name clearance counseling and advice, we ponder the question: “where was the breakdown that led to what we call a ‘Ziasco’ (a Zoom fiasco)?”
- Did Zoom’s marketing department launch the service without consulting the legal department?
- Did the Zoom Zapp project team act autonomously?
- Did Zoom’s legal counsel give Zapp clearance since Zapier did not own a registered trademark for “Zap”?
- Did Zoom’s legal counsel warn of the potential consequences?
- Was Zoom’s legal counsel’s advice disregarded by the product team that minimized the likely consequences or the swiftness of Zapier’s response?
- Was a management decision taken to launch Zapp despite the warnings with a “Plan B” to change course in the event of objections?
- Did Zoom believe that it could bully or buy its way out of any legal consequences?
We probably will never know.
New Product Teams Should Follow Three (3) Basic Guidelines BEFORE New Product Launches.
From SLG’s standpoint, every new product team should follow three (3) guidelines to avoid a Zoom-Zap situation:
- Conduct A Thorough Name Search. Prior to product launch, conduct a thorough name search with experienced legal counsel, including domain names, corporate names, product names, and in the U.S. Patent & Trademark database.
- You May Need to Reject the Name You Love – and Find Another. Recognize that despite how in love you are with a proposed new product name, if that name is similar in sound, sight, and meaning, to another registered or unregistered trademark being used by a competitor or non-competitor, then you need to conduct a deeper cost-benefit analysis and reconsider launching a product or service with the name.
- Never Underestimate Litigation Consequences. Do not underestimate the swiftness, cost, and disruption of IP infringement litigation. Zoom wisely took action to quickly end the litigation — however, Zoom undoubtedly paid a very high price.
SLG has extensive experience advising clients on trademark, trade dress, fair use, and related intellectual property matters. We would be happy to assist your company navigate the possible pitfalls presented by these and other issues. For more information, please contact SLG at firstname.lastname@example.org.
SLG did not represent either party in the Zoom-Zapier case and the information contained in this article is based solely upon a review and analysis of public records.
 The case is captioned as Zapier, Inc. v. Zoom Video Communications, Inc., Index No. 3:20-cv-07506 (N.D. Cal. 2020).