by , 2:50 PM EDT, September 9th, 2005

Just a week after Creative said it was "looking at all its alternatives" in defending what it calls the "Zen Patent," which covers the company's MP3 player interface and is said to be similar to the iPod's interface, Apple seems to have infringed on Creative's territory when it announced the iPod nano on Wednesday. Creative launched its Zen Nano Plus earlier this year, beating Apple to the market with the word "nano" on an MP3 player by several months.

An article at The Register's Web site said that a Creative spokesperson confirmed his company's legal department "is aware of the matter," but he would not state what legal action will be taken, if any. Both the iPod nano and the Zen Nano Plus are flash-based players, although Creative's product is comparable to the iPod shuffle in terms of capacity. Both are also available in black or white, but Creative also offers eight other colors.

Applying a Multi-Factored Test

While Apple's use of the word "nano" after Creative had already established it in the marketplace may seem like infringement, Louis D. Brandeis School of Law professor Lars Smith told The Mac Observer that such a claim requires a multi-factored test by a court, which includes comparing the marks' look ("Zen" is much more prominent on Creative's page than "Nano," he pointed out), typical consumer knowledge, the junior user's intent (which would be Apple's intent, in this case) and more.

Simply stating that the word is the same is not enough, although Mr. Smith did express surprise that Apple chose to use it when it almost certainly knew that "nano" was already part of another MP3 player's name. "The best bet for Apple was to not use the same term," he said. "That's what I would have done."

"But at the end of the day, it's about whether or not the consumer is confused," he explained. "If you can't prove confusion, you can't win the case, even though it's the same word." As an example, he cited Delta Faucets and Delta Airlines -- neither can sue the other over the use of the word "Delta" because no consumer is going to accidentally buy an airline ticket when they meant to purchase a sink faucet.

However, because the iPod nano and Zen Nano Plus are both MP3 players sold in many of the same online and brick-and-mortar retail outlets, Creative could claim that it is losing sales due to consumer confusion. "For example, if you type in 'nano' at Amazon and both come up, that could be a problem," Mr. Smith said.

The Mac Observer determined that both MP3 players do appear in the list of search results at Amazon.com when "nano" is entered in the search engine for electronics. Entering the term in Google brings back several links for the iPod nano, along with completely unrelated links, but none for Creative's product, at least on the first couple pages of results.

Part of the test of consumer confusion is the price of a product. The cheaper it is, explained Mr. Smith, the more likely a consumer may be confused while making a purchase. On the other end of the spectrum, a very expensive item will likely require enough forethought on the part of the buyer that he will understand what he is purchasing and how it differs from the competition. In this case, MP3 players currently occupy a space that doesn't qualify as a casual purchase but is not a major buying decision either.

Apple's Options

Apple would have several options, though, if Creative did indeed initiate legal action, according to Mr. Smith. One is the legal concept of famous trademarks, such as Disney or Coca-Cola, that are so prominent their owners can claim dilution if others use them in any context. "If the Zeno Nano didn't sell many units," he explained, "that may not be dilution [of Creative's mark]."

Dilution might also work in Apple's favor because the company could claim that the entire product names should be considered. "If you take the entirety of the marks," Mr. Smith said, "they could be different enough [to limit customer confusion]. The court may say that iPod and Zen are the dominant terms, not 'nano.'"

In addition, "nano" is a commonly used term that describes a one-billionth unit of measurement, such as a nanosecond. It's also part of the word "nanotechnology," which is commonly recognized as the creation of electronic circuits and devices on an atomic level.

"Nano is a descriptive word that conveys the impression of size," Mr. Smith noted, "so Apple could argue that it's more descriptive, especially if it's used a lot in the technology field." In that case, terms in common use typically can't get trademark protection.

Just the Start

In the end, Mr. Smith said, it all comes down to proving consumer confusion, "and trying to divine the mind of the typical consumer is a guessing game. Weighing in Creative's favor is the fact that they used the term 'nano' first and that both products are the same thing. The overall packaging is not dissimilar."

In addition, Mr. Smith noted, when one company comes along and infringes on an established trademark, a hefty damage award can result. But it will take years for Creative to get to that point, if it initiates legal action. Meanwhile, Apple, by virtue of its dominant position in the MP3 player market, could easily usurp the term "nano" and render it worthless to Creative.

"Creative has a real problem," Mr. Smith said. "All the goodwill they created with the term 'Nano' is now gone."