The Points Guy Just Wants to Fly: American Airlines Sues over Trademark Infringement
American Airlines debuted its frequent flyer program, now known as AAdvantage, in 1981, rewarding top flyers with a free round-trip first class ticket to Hawaii, and other airlines hastened to catch up.[1] In the forty years since, these frequent flyer programs grew into huge opportunities for both travelers and airlines – travelers could secure upgrades to existing flights and take new ones without spending any additional money, and airlines collected millions of unique data-points on their customers.[2] Brian Kelly, the founder of a website called The Points Guy, has made his career helping followers optimize how they utilize their loyalty points across programs, from frequent flyer miles to credit card points to hotel points.[3]
However, in January of this year, American Airlines sued Brian Kelly and The Points Guy over its reward-management app.[4] Specifically, American Airlines is suing Mr. Kelly over the use of the AAdvantage trademark, as well as the privacy rules associated with the loyalty program.[5] American argues that The Points Guy App improperly uses confidential and proprietary customer data, in conflict with the AAdvantage terms of use.[6] The Points Guy preemptively sued American Airlines in Delaware last week, seeking a court declaration that customers can manage and input their own data in third-party apps.[7] While the issue of private data usage between apps will prove to be a contentious matter going forward, the trademark question has precedential analogues to consider in the present.
One of the defining rights of trademark ownership is the ability to stop the use of the same or a confusingly similar trademark by another.[8] However, there are two exceptions to this general principle: “classic” fair use and nominative fair use.[9] The classic understanding of fair use exists where another’s trademark is “used for its ordinary, descriptive meaning to describe a product or service.”[10] On the other hand, nominative use occurs when a third party uses another’s trademark to refer to the actual trademark owner or identify a product or service of the trademark owner. Authorization of the use by the trademark owner is not necessarily required to ensure non-infringement. To qualify as nominative fair use, the following elements must be present:
1. The product or service in question is not readily identifiable without use of the trademark;
2. Only so much of the mark as is reasonably necessary to identify the product or service is used; and
3. Use of the mark does not suggest sponsorship or endorsement by the trademark owner.[11]
The Points Guy must demonstrate to the court that the use of the AAdvantage logo and name, which are only used in a dropdown menu for users to input their frequent flyer information,[12] is only a nominative fair use, and thus not an infringement on American Airlines’ trademark. If American Airlines is able to limit the use of their trademark in third-party apps like The Points Guy, the market for apps that seek to optimize and organize consumers’ data will be greatly impacted.
Footnotes
