In a federal courtroom in Oakland, California, the commercial future of an $18 billion company hung in the balance over a single word.
Judge Yvonne Gonzalez Rogers found herself presiding over one of the most significant trademark disputes in the artificial intelligence era, as Perplexity AI fought to keep calling its revolutionary browser “Comet” against claims from a much smaller competitor. The case has become a defining moment for trademark law in the AI age, demonstrating how even the most well-funded companies can find themselves vulnerable to intellectual property attacks. What’s unfolding in the Northern District of California represents more than just a legal dispute—it’s a strategic battle that showcases how the right legal approach can mean the difference between market dominance and costly defeat.
This ongoing litigation illustrates the complex challenges facing technology companies as they navigate trademark law in rapidly evolving industries.
With Perplexity AI now valued at $18 billion and backed by tech giants like Meta and Jeff Bezos, the financial and strategic implications extend far beyond the immediate parties involved. The company successfully launched its Comet browser in July 2025, but under court-imposed restrictions that prevent it from competing directly in certain market spaces.
The Billion-Dollar Players Behind the “Comet” War
The battle began when New York-based Comet ML filed suit against Perplexity AI on May 12, 2025, in federal court.
Comet ML, a company specializing in AI model development platforms, had been using the “Comet” name since 2017 and secured federal trademark registrations in 2019. This gave them what appeared to be solid legal ground for their infringement claims.
On the other side stands Perplexity AI, the ambitious startup founded by former OpenAI and Meta engineers. Despite knowing about Comet ML’s existing trademark rights, Perplexity announced plans in February 2025 to launch an AI-powered web browser under the “Comet” name. The browser promised to revolutionize how users interact with the internet by integrating advanced AI capabilities that could provide direct responses and citations rather than traditional link listings.
Judge Rogers has found herself at the center of what legal experts call a defining moment for trademark law in the AI age.
As Troutman Pepper partner Michael Hobbs Jr. noted, the case represents “a shakeout of what’s the likelihood of confusion if something involves AI.” The timing couldn’t be more critical. Perplexity’s valuation jumped to $18 billion by July 2025, making it an attractive target for litigation. Bloomberg News has reported that Apple is considering a partnership deal with the company, raising the stakes even higher for all parties involved.
How Courts Analyze Trademark Confusion in the AI Age
Traditional trademark law focuses on whether consumers are likely to be confused about the source of goods or services.
But the ongoing Comet case is forcing courts to grapple with how this analysis applies when virtually every tech company claims to offer AI-powered solutions. Perplexity’s defense has centered on a critical distinction: while both companies operate in the AI space, they serve fundamentally different markets. Comet ML offers what the court characterized as a “boutique product” for AI developers and data scientists. Perplexity’s Comet browser, by contrast, was designed for all internet users as a mass-market alternative to Google Chrome.
This market segmentation argument has proven persuasive in preliminary rulings.
Despite the shared AI foundation, Judge Rogers noted during hearings that “it’s not clear to me the evidence shows direct competition between the two companies.” The court has recognized that different customer bases and distribution channels could prevent the likelihood of confusion that trademark law seeks to avoid.
The case is highlighting how outdated approaches to trademark analysis can fail in rapidly evolving industries. As partner Hobbs observed, “Comet ML’s chances may have been better five years ago when AI wasn’t so pervasive and any AI business could arguably share a market.” The proliferation of AI technologies across industries means courts need more advanced analysis than simply grouping all AI companies together. This evolution in legal thinking reflects a broader challenge facing trademark law. When emerging technologies blur traditional industry boundaries, courts must look beyond surface similarities to understand actual market dynamics and consumer behavior.
Perplexity’s Game-Changing Legal Strategy
Rather than simply defending against Comet ML’s claims, Perplexity launched a bold counterattack in July 2025 that could ultimately prove decisive.
The company filed counterclaims alleging that Comet ML had fraudulently obtained its trademark registrations, represented by the prestigious law firm Latham & Watkins. The fraud allegations center on Comet ML’s representations to the U.S. Patent and Trademark Office. Perplexity claims that Comet ML knowingly misled the USPTO by stating its “comet” and “comet.ml” marks were used for “IT consulting services” when they weren’t actually providing such services in commerce.
This strategic move demonstrates detailed understanding of trademark law’s foundational principles.
Under federal law, trademark rights depend on actual use in commerce. If Perplexity can prove that Comet ML never actually used its marks for the services claimed in its registration, those registrations could be invalidated for fraud. The counterattack also includes broader allegations that Comet ML made material misrepresentations about its use of the marks in commerce.
Such fraud claims carry significant weight because they strike at the validity of the trademark registration itself, potentially eliminating the plaintiff’s entire legal foundation. Latham & Watkins understood that this aggressive approach could shift the entire dynamic of the litigation. Rather than fighting from a defensive position, the fraud counterclaims put Comet ML on the back foot, forcing them to defend their own trademark rights while pursuing their infringement claims.
Lessons from an $18 Billion Legal Battle
The ongoing Comet case offers valuable insights for any business facing trademark challenges, regardless of size or industry.
The preliminary rulings demonstrate that market positioning often matters more than product similarity in determining trademark outcomes. Perplexity’s early success has stemmed from their ability to articulate clear differences in target markets and customer bases. While both companies offer AI-related products, the court has accepted that a boutique platform for AI developers operates in a different competitive space than a mass-market web browser.
This distinction has proved more important than the underlying AI technology that both products share.
The case also showcases the power of aggressive legal strategy. By challenging the validity of Comet ML’s underlying trademark registrations, Perplexity transformed a defensive battle into an offensive campaign. This approach requires significant legal expertise and resources, but it has provided multiple paths to potential victory.
Perhaps most importantly, the dispute highlights the critical importance of early legal consultation. While Perplexity has achieved favorable preliminary rulings, the company has faced months of uncertainty, court proceedings, and substantial legal costs that proper trademark clearance might have avoided entirely. For businesses operating in competitive technology sectors, the case underscores the need for thorough analysis of not just existing trademarks, but also the strength and validity of those registrations.
A mark on the USPTO database doesn’t necessarily represent an insurmountable obstacle if it was improperly obtained or maintained.
Protecting Your Business from Trademark Ambush
The Comet dispute illustrates how quickly trademark conflicts can escalate from cease-and-desist letters to federal court proceedings that threaten entire product launches.
Smart businesses take proactive steps to avoid such scenarios before they begin. Effective trademark clearance goes far beyond simple database searches. It requires understanding your target market, analyzing competitive landscapes, and evaluating the strength of existing registrations that might pose conflicts.
In technology sectors where innovation moves rapidly, this analysis becomes even more critical.
Consider implementing monitoring systems that track new trademark applications and uses in your industry. Early detection of potential conflicts provides more options for resolution, whether through negotiation, opposition proceedings, or strategic adjustments to your own plans. The international dimension adds another layer of complexity. Comet ML had already secured a court order in Germany prohibiting Perplexity’s use of the Comet name for AI web browsers.
Such international victories can provide leverage in U.S. litigation and demonstrate the global nature of modern trademark disputes.
Building strong trademark portfolios also means understanding the difference between defensive and offensive strategies. While many businesses focus solely on protecting their own marks, the Comet case shows how challenging weak registrations can become a powerful litigation tool.
The Real Cost of Getting Trademark Strategy Wrong
Beyond the obvious legal fees, trademark disputes carry hidden costs that can devastate business plans.
Perplexity has faced the very real possibility of delaying or fundamentally altering its browser launch, potentially costing millions in lost market opportunity and development investment. Preliminary injunctions represent perhaps the greatest risk in trademark litigation. Unlike monetary damages that can be calculated and paid later, court orders that prevent product launch or force rebranding can destroy years of marketing investment and competitive positioning.
The Comet case has shown how quickly courts can impose such restrictions when trademark rights appear strong.
Well-funded companies like Perplexity also become attractive litigation targets precisely because of their resources. As intellectual property attorney Richard Assmus noted, “If I were the plaintiff Comet, I’d be thinking like, ‘How much can we get out of this?'” The $18 billion valuation makes settlement discussions complicated by the potential for enormous damages claims. The reputational costs extend beyond immediate financial impact. Trademark disputes often receive significant media attention, particularly in the technology sector.
Companies may find themselves defending not just their legal position, but their business reputation and market credibility.
For smaller businesses, the costs can be even more devastating. While Perplexity has the resources to mount an aggressive defense and counterattack, most companies lack the financial capacity for extended federal court litigation against determined opponents.
Why Expert Legal Guidance Makes the Difference
The ongoing Comet case demonstrates the advanced legal thinking required to navigate modern trademark disputes successfully.
The strategic approach combines deep knowledge of trademark law with creative tactical approaches that can transform the competitive dynamic. Understanding when and how to challenge existing trademark registrations requires specialized expertise that goes beyond basic legal compliance. The fraud allegations against Comet ML’s registrations show how experienced counsel can identify vulnerabilities that less experienced approaches might miss.
The case also highlights the importance of building comprehensive legal strategies rather than simply responding to immediate threats.
Perplexity’s counterattack has created multiple pressure points that could ultimately contribute to their favorable resolution. As an experienced trademark attorney who has filed over 6,000 trademark applications with the United States Patent & Trademark Office, I understand the complex strategic considerations that cases like the Comet dispute involve.
My practice emphasizes not just trademark registration, but also the counseling and enforcement strategies that protect your business interests over the long term.
Having received my law degree from Harvard Law School and served as Editor-in-Chief of the Harvard Latino Law Review, I bring both academic understanding and practical experience to high-stakes trademark matters. My clients benefit from representation that combines thorough legal analysis with strategic business thinking designed to achieve the best possible outcomes. The Comet case reminds us that trademark law in the modern economy requires more than basic compliance.
It demands detailed understanding of market dynamics, competitive strategy, and the evolving legal landscape that governs intellectual property rights in rapidly changing industries.
Don’t wait until you’re facing an $18 billion trademark battle to develop your intellectual property strategy. Contact my office today to discuss how proper trademark planning can protect your business interests and position you for long-term success in competitive markets. Whether you’re a startup planning your first product launch or an established company expanding into new markets, early consultation can prevent costly disputes and build the foundation for sustainable growth.
The ongoing Comet case proves that with the right legal strategy, companies can navigate even the most challenging trademark disputes successfully.
Make sure your business has the protection it needs before conflicts arise.
