Apple and Amazon
In 2001, Apple opened its first Apple store in the United States. Years later, the company introduced a mobile application store called “Appstore”. The name was then changed to “Mac App Store” in 2010. Recently, the debate has been on whether the name “App Store” is Apple’s own trademark or simply a generic term.
On the opposite side, Amazon launched an online application service for Android called “Appstore” as well. Triggered by this event, Apple started a lawsuit against Amazon. Apple’s argument is that the word “App store” was not commonly used in the industry to describe a download service before they coined the phrase. Therefore, it is not a generic term. Apple also added that Amazon’s use of App Store will confuse consumers.
Amazon denied these allegations, pointing out the use of “App stores” and “app” is generic. The Judge voted in favor of Amazon, arguing that customers are not likely to confuse the two Appstores. Now, “App store” or “application store” can be used by more than one brand.
Apple and its “app store” have strong brand equity and a high level of brand awareness. Customers associate appstore to Apple; it also symbolizes a promise to provide quality applications. Apple might be facing a risk of losing parts of its uniqueness. Consumers will soon notice other “Appstores” online.
When companies name their services or products, it is important to keep in mind the effects of generic terms. Brands might lose control over their own product names and its competitive advantage. This will give competitors a chance to steal market share.
The example of Vitamin Water launched by Coca Cola in China shows the same problem when using generic terms. The Vitamin Water concept and designs were copied by brands such as “Vitamin Power” and “Victory Vitamin”. ”Victory Vitamin” is produced by Nongfu Spring and looks to be a twin of Vitamin Water with very similar packaging and flavors, but sold at a cheaper price. Coca Cola cannot defend its brand legally because both “Vitamin” and “Water” are generic terms. This allows other copied products to compete on the shelves and confuse consumers between the brands.
From the cases of Apple and Vitamin Water, one can notice the risks involved in naming products and services with generic terms. Companies spend a tremendous amount of time, effort and money to build brand equity and brand awareness. Losing such privileges means losing the hard work spent to build it. It could also hurt the company financially due to a decrease in market share and brand loyalty due to confusion. It is very important for brands to decide on the type of names they wish to use to avoid future loses.