The company behind the Telegram messaging app has won an injunction barring a startup company from using the name “Gram” for its own cryptocurrency.
Senior Judge Charles Breyer of the U.S. District Court for the Northern District of California on Wednesday found that Telegram Messaging Inc. had established priority to the Gram mark, and the company was likely to succeed on the merits of its false designation of origin, common law trademark infringement and statutory unfair competition claims.
Telegram, which is developing a new in-house distributed ledger platform called the Telegram Open Network, plans to launch a multibillion initial coin offering in the fourth quarter of this year. According to court filings, the company already has $1.5 billion in signed purchase agreements for its native cryptocurrency called the Gram.
“Telegram argues persuasively that it did more than prepare to use the mark, it used it to the tune of millions of dollars in sales,” Breyer wrote. “Those purchase agreements were titled “PURCHASE AGREEMENTS FOR GRAMS” and required purchasers to pay the required funds ‘in full immediately’ in exchange for Telegram’s promise to issue coin to the purchaser on the network launch date.”
Telegram sued Florida-based startup Lantah LLC in May with counsel from Skadden, Arps, Slate, Meagher & Flom. Lantah, a small company started by 23-year-old Daniel Jeffery in Florida last summer, announced last September on its website that it intended to launch its own ICO for a currency called the Gram. In February, the company filed a trademark application at the USPTO for Gram’s use in connection with financial services, and more specifically cryptocurrency. Lantah initiated an ICO in March for its Gram currency and at the same time submitted a filing with the SEC representing that the total offering amount was $4,285,714 but that $0 had been sold.
Lantah’s lawyer, Donald Thompson of San Francisco’s Thompson & Co., contended that Telegram hadn’t used the Gram mark in commerce yet since it was offering “private fundraising for prospective services” and had only prepared to use the mark in an ICO that hadn’t yet launched.
But Breyer disagreed, finding that the purchase agreements for Telegram’s Grams, which had been recorded with the SEC, “did more than prepare to use the mark.”
“Telegram certainly thought it had engaged in commerce when it recorded those sales with the SEC, and the purchasers certainly thought they had engaged in commerce when they sent Telegraph their money,” Breyer wrote. “Moreover, the law supports the notion that the taking of orders, even without filling those orders, is a use” for the purposes of trademark, the judge concluded.
Skadden’s John Neukom and James Pak, who represent Telegram, didn’t respond to messages Thursday, nor did a company spokesman.
Jeffery, Lantah’s CEO, said in an email statement that the company plans to appeal.
“Lantah both used and applied to register the disputed mark before Telegram. We are disappointed that the district court resolved this preliminary motion on other grounds,” he said. “Goliath may have taken Round 1, but David is still in the fight. Stay tuned.”
Read the decision below: