Image Source: msn.com
Posted on August 23, 2020
Authored by Joseph Moses Parambi.
On June 30th, 2020, the Supreme Court of the United States (“SCOTUS”) laid down a landmark ruling granting Booking.com BV (Booking.com) trademark registration in United States Patent and Trademark Office v. Booking.com BV[i]. The majority 8-1 decision lays down an unusual precedent that provides registration to a mark based on a generic term. Justice Stephen Breyer wrote the lone dissenting opinion.
Legal Context
This is the third time in four years that the Supreme Court has found the United States Trademark Office practicing examination guidelines that led to the improper refusal of an applied-for mark. Consequently, the Supreme Court upheld the lower court’s holding that “booking.com” would receive protection due to its quantifiable source-identifying characteristics.
Factual Background
The United States Patent and Trademark Office (“USPTO”), the appellant, had previously denied registration to “booking.com” claiming the mark was based on a generic term. It refused to register the mark on the ground that terms that do no more than name a product or service would not be eligible for trademark protection since it would deny other providers of the same product or service from appropriating a common term to describe their goods. Booking.com BV, the respondent, sought judicial review of the USPTO decision where the District Court found that “booking.com” would not be considered generic even though its counterpart “booking” may be considered a generic term.
The Court of Appeals affirmed the District Court’s opinion and found no error in the lower court’s evaluation of how consumers perceive the mark. The Court of Appeals also rejected the USPTO’s main contention which was to consider a de facto rule that combining a generic term with “.com” would yield a generic composite result. The USPTO’s contention was in line with the SCOTUS’ prior decision in Goodyear’s India Rubber Glove Mfg. Co. v. Rubber Co.[ii] (“Goodyear’s India”) whichlaid down the rule that appending a word such as “Company” or “Inc.” after a generic term could not permit a party to have exclusive rights of the term. This rule is often termed as the “Goodyear principle.” However, the Court of Appeals found that the Goodyear Principle did not apply to the current case and rejected the USPTO’s contention of applying this rule de facto.
The USPTO appealed this decision to the SCOTUS which ruled that a term styled as “generic.com” would only be generic if it had such meaning to consumers. The SCOTUS chose to redefine compound generic marks such that a compound mark would turn generic only if the mark, taken as a whole, signified to consumers that it denoted a class of goods and services, and not a single entity. The SCOTUS rejected the USPTO’s contention of applying the de facto rule in consideration of generic marks holding that an unyielding rule that disregards consumer perception was antithetical to the Lanham Act[iii]. Further, the SCOTUS held that due to the very nature of domain registration, a domain could only be held by a single entity and hence, would be able to distinguish the holder’s goods and services from those of its competitors.
Justice Breyer’s Dissent
Justice Breyer’s dissent is a well-thought out opinion that follows the traditional goal of granting as little protection consistent with encouraging fair trade. His dissent is based on the broad theme found in Matal v. Tam[iv] (“Matal”) decided by the SCOTUS – the purpose of trademark law is to “foster competition” and “support the free flow of commerce”; a theme that the majority decision failed to incorporate in their judgement[v].
Justice Breyer’s dissent is split into two parts. The first part deals with the genericism of the “booking.com” mark and the latter discusses the anticompetitive effects of granting protection to “generic.com” marks. He reiterates well-established principles of trademark law stating that a generic mark is not eligible for protection even if it has become identified with a first user in the minds of the public[vi]. This is based on age-old intellectual property jurisprudence of generic marks; the grant of a monopoly to a single proprietor would prevent competitors from being able to describe their goods as what they are[vii].
Justice Breyer states the Goodyear principle[viii]is sound law as a matter of fact and logic. Under the Goodyear principle, common designations such as “Inc.” and “Company” do not provide the ability to distinguish an entity’s goods and services from a competitor partaking in the business of similar goods and services; ergo, where a compound term is simply the combination of a generic term with a corporate designation, the whole would not necessarily be greater than its parts.
Justice Breyer’s dissent deals with the principles discussed above and applies them to the “booking.com” term. Trademark jurisprudence in the United States has generally ignored top-level domains (“.com”, “.us”, “.net”) when analysing likelihood of confusion[ix] [x]. Second-level domains (“Facebook” in facebook.com and “booking” in booking.com) are similarly adjudged[xi] [xii].
Justice Breyer’s dissent discusses the majority opinion of the SCOTUS and how such a decision would impact free trade and competition. He criticises the majority’s fact-specific approach as well as their approach to the District Court’s weighing of consumer perception. The District Court determined that consumers do not use the term “booking.com” in ordinary speech to denote a class of goods and services. Rather, “booking.com” is used to refer to services of a specific service-provider. However, Justice Breyer once again relies on prior well-established trademark jurisprudence and states that literal use is not dispositive[xiii] and hence, this fact-specific approach undertaken by the majority lays down an uncertain evolution of trademark rights. Similarly following from the Goodyear principle, “Booking Inc.” may not be trademarked since it only signifies a booking company; ergo, the result should be the same for “booking.com” which signifies the same trade as “Booking Inc.”, the former being on the internet and the latter being a physical location.
Justice Breyer also rejects booking.com’s submission that there is no evidence that consumers refer to booking.com as a class of goods and services. The dissent reads that there would practically never be such evidence available, nor would generic.com terms be found in the dictionary.
The second part of Justice Breyer’s dissent deals with the anticompetitive effects of granting registration to “generic.com” marks in the global marketplace; a marketplace slowly evolving from brick-and-mortar stores to ecommerce stores. He notes that owners of short, generic domain names enjoy a multiplicity of advantages irrespective of trademark laws. Generic.com marks are easier to remember, and generic business names may create an impression that it is the most authoritative and trustworthy source of certain goods and services[xiv] [xv]. Generic.com businesses do not enjoy protection due to the goodwill of the business, rather they receive protection due to being fortunate enough to be the first to appropriate valuable online real estate.
Justice Breyer also questions the additional competitive benefits that registration confers on owners allowing them to exclude others from using similar domain names. Trademark registration allows the Respondents to prevent competitors from registering marks such as “flight-booking.com”, “bookit.com” and “hotel-booking.com”.
Analysis
Justice Breyer’s dissent is well-reasoned and questions how the legal principles laid down by the majority could evolve long-term trademark jurisprudence. There is evidence to suggest a rising trademark law rhetoric of providing protection to marks based on public perception. Justice Breyer rightly identified that providing protection to marks based on such perception becomes problematic for the mere fact that evidence of association, no matter how strong, does not negate the generic nature of the term.
Leading treatise writer McCarthy also criticises the SCOTUS’ uncanny ability to “discard the predictable and clear line rule of the USPTO” in favour of “a nebulous and unpredictable zone of generic name and top level domain combinations that somehow become protectable marks when accompanied by favourable survey results.”[xvi]
The majority opinion lays down two major difficulties. First, it creates a “paper tiger” scenario wherein registration of the mark looks menacing but crumples when hit with the scrutiny of litigation. This creates an oddity: a party undertakes costly litigation to overcome the presumption that the applied-for generic.com mark is not registrable, followed by investing in costly litigation once again to prevent any post-grant opposition to their mark. This difficulty was left open by the SCOTUS and there is currently no precedent as to how such conflicts should be resolved.
Second, there is now a Herculean burden upon the USPTO to be able to define the protection granted to generic.com marks. This was rightly identified by Justice Breyer when he stated that competitors would not be able to register marks like “flight-booking.com” due to their textual similarity. Due to the majority opinion, there is currently nothing that stands in the way of automatic trademark eligibility for every generic.com mark. Much of the time, this decision shall now rest on the shoulders of survey evidence just as it did in this case. The SCOTUS has not provided answers to whether protection extends to the whole mark (booking.com) or whether it would also extend to the second-level domain (booking). Though the Respondent claims that they will not restrain competitors from using the term “booking” in their own marks, future generic.com mark owners may prove to be less restrained[xvii]. This ties back to our first difficulty of registration creating paper tigers – though registration looks menacing, what actual benefits does it confer? Due to the domain name system, only a single entity can own “booking.com” at any point in time. The mere fact of owning a domain gives exclusive right to the owner to use the name independent of any trademark registration. Respondents are under no threat of cybersquatters or any other entity being able to appropriate the “booking.com” mark; ergo, trademark registration does not confer any significant benefits unless the Respondents wish to extend their exclusivity beyond the domain name itself.
Another flaw we see in the majority opinion is the majority’s weighing of survey evidence. The respondent submitted survey evidence that 74.8% of participants were able to distinguish booking.com as a service provider rather than a class of goods and services. 33% believed that “washingmachine.com” – which does not correspond to a brand – was a service provider. This difference could easily be accounted for by the $5 billion that the Respondent spent on marketing in the year 2018 alone. Survey evidence has evolved into a flawed method of testing consumer perception due to its very weak structure that only tests for consumer association of a term. Survey evidence has limited probative value in this context since large companies may establish such an association through investments in securing public identification. Survey evidence cannot establish the genericism of the mark[xviii] [xix] and therefore, the majority opinion in Booking.com could be considered cursory at best. Heavy investment cannot and should not transform the nature of a term.
The majority’s opinion that the Goodyear principle did not apply to the current case once again hints at the court’s inability to evolve with technology in trademark cases. The majority held that only a single entity may occupy a certain domain and hence, consumers can infer a certain mark refers to a certain entity. The majority’s converse opinion is erroneously derived from the principle laid down in Goodyear. The majority used the example of “wine.com” being able to differentiate itself as a service provider however “Wine Inc.” and “Wine Company” would only denote a class of goods. E-commerce sales now account for a whopping 16% of total sales in the United States. Most businesses choose to sell online and hence, “.com” is the new “Inc.” – a fact the majority should have rightfully recognized.
Practical Significance
The decision in Booking.com sits outside the framework previously established by the SCOTUS in Matal and Goodyear’s India. The majority decision creates opportunities for generic.com domain holders but simultaneously creates uncertainty and poses more questions to the evolution of trademark jurisprudence.
The majority opinion could lead to a multiplicity of anticompetitive effects in the United States wherein every good and service is characterized by one seller, for example, flowers.com for flowers, pizza.com for pizza. This is the opposite of the competitive multi-firm marketplace that most economies seek to achieve. Had the Court refused registration to the mark, it would have led to a far cleaner landscape and evolution of trademark rights with regard to generic.com marks.
Joseph Moses Parambi graduated with a B.B.A. LL.B (Hons) from Jindal Global Law School with a specialization in Intellectual Property and Technology laws. He is currently working as a Legal Associate with Marlabs Inc., and takes a keen interest in the economic implications of the application of intellectual property.
[i] Patent and Trademark Office v. Booking.com B. V., 591 U.S. (2020)
[ii] Goodyear’s India Rubber Glove Mfg. Co. v. Rubber Co., 128 U.S. 598 (1888)
[iii] Lanham Trade-Mark Act of 1946, 50 Stat. 427 (Jul. 5,1946), codified, as amended, at 15 U.S.C. 1051 et seq.
[iv] Matal v. Tam, U.S. (2017)
[v] Id. at 4-5
[vi] CES Publishing Corp. v. St. Regis Publications, Inc., 531 F. 2d 11, 13 (CA2 1975) (Friendly, J.)
[vii] 1993. Introduction to Trademark Law & Practice. 2nd ed. Geneva: World Intellectual Property Organization, p.21 (“…in view of the absolute need of the trade to be able to use them, they must not be monopolized.”)
[viii] Goodyear’s India Rubber Glove Mfg. Co. v. Rubber Co., 128 U.S. 598 (1888)
[ix] Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F. 3d 1036, 1055 (CA9 1999)
[x] Advertise.com v. AOL, LLC, 2010 WL 11507594 (CD Cal.)
[xi] 1 McCarthy §7:17.50
[xii] 2 McCarthy §12:39.50
[xiii] H. Marvin Ginn Corp. v. International Assn. of Fire Chiefs, Inc., 782 F. 2d 987, 989–990 (CA Fed. 1986)
[xiv] Meystedt, What Is My URL Worth? Placing a Value on Premium Domain Names, 19 Valuation Strategies 10, 12 (2015)
[xv] Folsom & Teply, Trademarked Generic Words, 89 Yale L. J. 1323, 1337–1338 (1980)
[xvi] 1 McCarthy §7:17.50
[xvii] Advertise.com v. AOL, LLC, 2010 WL 11507594 (CD Cal.)
[xviii] Miller Brewing Co. v. Jos. Schlitz Brewing Co., 605 F. 2d 990, 995 (CA7 1979)
[xix] In re Hikari Sales USA, Inc., 2019 WL 1453259, *13 (TTAB 2019)
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