Nimble third-party developers provide consumers services that mainstream banks have ignored, but being in the software vanguard also has its pitfalls. Ask Jeff Peiffer.
In February 2010, Peiffer, a mobile banking entrepreneur, released an application for Google Inc.'s Android mobile operating system that let smartphone users check balances at banks that were lacking their own Android apps, including JPMorgan Chase & Co.
The New York bank, which did not release its own Android app until November, was mum on Peiffer's app at the time. Behind closed doors, though, Peiffer apparently ruffled the bank's feathers, and last month JPMorgan Chase filed a trademark infringement claim with Google, requesting that it remove Peiffer's "Android Banking" app from the Android Market.
Though banks have tolerated and even drawn inspiration from third-party services such as personal financial management websites, Peiffer's situation highlights the murky trademark-infringement territory that developers enter when building services targeted for specific banks' users. Legal experts say trademark infringement is determined by several factors, including whether a product or service confuses a customer by using another entity's name and whether an entity's trademark would be devalued by another entity's use of the mark.
JPMorgan Chase, Peiffer says, still hasn't explicitly stated how the app infringed its trademarks, nor has Google. Google informed Peiffer of JPMorgan Chase's claim in a March 28 email, which Peiffer provided American Banker a copy of, and a copy of the form that JPMorgan Chase submitted.
"We believe that our customers' information is most secure when accessed through a free Chase-developed app, and we don't want to cause confusion for customers," a JPMorgan Chase spokeswoman said in an emailed statement Wednesday. The notice that JPMorgan Chase filed with Google cited other Android apps too, including ones named "Chase Turbo Lite," "ATM & Bank Finder" and "Quick Mobile Banking."
Peiffer said he responded to both Google and JPMorgan Chase, and that Google informed him to take up the issue with the bank. JPMorgan Chase did not respond to him, Peiffer said.
"I find that very frustrating, to be perfectly honest," Peiffer said in an interview Wednesday. "As a small developer, for something like this to happen, thankfully Android Banking wasn't my livelihood, because if it was, I'd be done."
Google did not respond to inquiries on Wednesday.
Peiffer, meanwhile, has submitted a revision of his Android Banking app to Google's Android Market. The new version refers to JPMorgan Chase as "C***e (rhymes with "face")" as opposed to just Chase. The app also allows customers of American Express Co., Capital One Financial Corp., Fifth Third Bancorp and other companies to check their balances and, in some cases, pay bills and do other activities.
Jennifer Lefere, an intellectual property attorney with Hool Law Group PLC in Phoenix, explained that while JPMorgan Chase may appear to be picking on Peiffer, a small entrepreneur, the bank could very well have a case. A consumer might associate one product, such as the Android Banking app, with the company whose trademark is being used (in this case, JPMorgan Chase). If the product provided a subpar experience, potentially affecting the reputation of the trademark holder, a court could find that to be infringement, Lefere said.
In addition, if a company offers its own version of the service in question, that can affect whether a court would determine infringement had occurred.
In Peiffer's case, many of the banks he initially included in the application did not have their own apps for smartphones, which he said was one factor that motivated his development of the app.
Whether he was first does not necessarily make a difference in the eyes of trademark law, Lefere said.
If a company that owns a trademark is "likely to go into that area of business," it is typically thought to have "senior rights" over its use, despite the absence of an official product or service, Lefere said.
However, trademark law also upholds the idea of nominative fair use, wherein an entity could potentially use another entity's trademark to describe the ability of a service.
"You are generally free to use a trademarked term to accurately refer to the trademark owner," Mark Lemley, the William H. Neukom Professor at Stanford Law School and director of the Stanford Program in Law, Science and Technology, wrote in an email.
"If that is all the Android Banking app does — accurately relate that you can connect to your Chase account using it — I don't think the app maker has done anything wrong," Lemley said.
At one time Peiffer was offering an app, specifically for Wachovia customers, that used Wachovia's name in the title. Wells Fargo & Co., which now owns Wachovia, contacted Peiffer and asked him to take the app down, which he did.
He had offered a similar app for JPMorgan Chase customers using the Chase name, which he changed to "Android Banking" after that experience, Peiffer said.
"The specific question that comes up here is: When is it OK for a party to use somebody else's trademark, where the idea is not to describe their own product that they're selling, like this app, but to identify the party whose mark it is and their services?" said Herb Hart, a shareholder with the Chicago law firm McAndrews, Held & Malloy Ltd. He said the courts' determination varies widely from jurisdiction to jurisdiction.
The description of the Android Banking app both before JPMorgan Chase filed its notice with Google and the version Peiffer has since released includes a disclaimer that says it is not written, endorsed or supported by the banks it is compatible with.
JPMorgan Chase has seen significant adoption of its own Android app since its release in November, spurred by the inclusion of a mobile check deposit feature it also offers on Apple Inc.'s iPhone. JPMorgan Chase's app is among the most downloaded free finance apps in the Android Market and is among the top rated.
Peiffer's app had been one of the highest-ranked paid finance apps in the Android Market, with a price tag of $5.
"I had about 20,000 downloads and about 1,400 ratings and had an average rating of 4.6," Peiffer said. He added that he worked for JPMorgan Chase on internal software from 2004 to 2008, though he does not work there today.
Since releasing the revised version of the app last week, Peiffer has reached about 400 downloads and about 10 ratings, with a similar average rating.
Many of the buyers of the revised app had previously purchased the earlier version of Android Banking, Peiffer said, adding that he is refunding the cost of the app to those return buyers.
For Aaron McPherson, a practice director with IDC Financial Insights in Framingham, Mass., security is a bigger issue than the trademark and other branding issues.
It is unwise for consumers to trust their banking credentials to a service that is not officially sanctioned by their bank or credit union, McPherson said.
"Even if the current provider is on the up and up, you've got no guarantee that control of the app won't be sold to someone else," he said.
Consumers may also be forfeiting their rights by using third-party services to access their account data in the event that fraud occurs, McPherson said.
"If you went through an app that … they don't sanction and they actually tried to shut down, I don't think you're going to get a lot of sympathy from them when you call them to say that your account's been compromised," he said.
Peiffer said his app functions much like a Web browser — it pulls in account information from the banks' own websites when a consumer uses his app to log in.