Zoom Sues RingCentral For Trademark Infringement

Trademarks are valuable pieces of intellectual property. Companies expend significant sums to promote their trademarks to the public. The association a consumer makes between a trademark and a high quality product is an indicator of the value of a trademark. Frequently owners of trademarks will license a trademark to other companies. The motivation to license a trademark can vary greatly. Sometimes a manufacturer will license their trademark to other manufacturers that produce products outside the trademark owner’s core business, or a sports team will license their trademark to clothing manufacturers.

A trademark license is governed by both trademark law and contract law. Contract law governs the general terms of how the contract is interpreted, and trademark law imposes additional requirements. Trademark law requires a trademark owner to enforce quality control over licensed product. If a trademark owner fails to demand and enforce quality control over licences products, the trademark owner risks loosing the trademark. A trademark license can be the basis of a valuable partnership, one company cannot do everything. Licensing technology and trademarks allows a licensee to offer its customers a broader product portfolio, while focusing on its core competencies. The licensor benefits by getting broader exposure of its products to customers. A well crafted trademark licensing agreement can help ensure that the two parties have a fruitful partnership, however a well crafted trademark agreement is even more important when the two parties get into a dispute.

ZOOM VIDEO COMMUNICATIONS, INC., vs. RINGCENTRAL, INC., 3:21-cv-1727 (N.D.CA 2021) is an example of a case where the relationship soured between two parties in a trademark licensing agreement.

Zoom is a company that provides video conferencing technology to consumers and businesses. Because of the global lockdowns this past year Zoom has become a house hold name. Zoom first released its video conferencing software and service to the public under the ZOOM trademark in August of 2012, and its user base has grown steadily since. RingCentral was a mature voice internet protocol and video conferencing service provider. In October 2013, while Zoom was still a fledgling company little known in the marketplace, Zoom and RingCentral entered into a partnership. Zoom licensed its video conferencing software to Ringcentral provided that the software be labeled as powered by Zoom.

The RingCentral has for years now been reselling Zoom’s video conference service, relabeling it as “RingCentral Meetings,” and presenting it to the public using Zoom’s trademarks as a RingCentral technology that is “powered
by Zoom.” The licensing agreement was amended several times and the parties relationship became strained.

The details of exactly what happened between the parties is unclear because the lawsuit filed by Zoom is heavily redacted. Reading between the lines, one can assume that Zoom’s popularity exploded when the global pandemic hit in 2020. Zoom negotiated the agreement when it was a fledgling company it probably heavily favored RingCentral. Zoom probably outgrew the licencing agreement.

Zoom sent a letter to RingCentral on July 27, 2020 asking it to stop using the Zoom trademark. RingCentral continued to include a “Powered by Zoom” watermark on the display of its RingCentral Meetings product. Zoom again alerted RingCentral that it was in violation of the licensing agreement and that Zoom was going to stop allowing RingCentral customers to access Zoom’s servers. RingCentral then sent out a letter to customers saying that it was transitioning from “RingCentral Meetings” to “RingCentral Video” to ensure the highest quality. However as of March 2021 new RingCentral was still offering customers RingCentral Meetings.

In March 2021 Zoom filed suit against RingCentral for unfair competition and false destination of origin, breach of contract and several other causes of action. In its complaint Zoom claims that RingCentral’s unauthorized use of Zoom’s trademark has hindered Zoom’s ability to control the quality of the services offered under the ZOOM Mark. And that the continued unauthorized use of the Zoom trademark was intended to mislead consumers.

RingCentral has not answered the complaint yet and the complaint is heavily redacted so the key lines of the contract are unknown. How this lawsuit plays out will depend heavily on what the licensing agreement states.

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