Trademarks at the Supreme Court: The Court Extends Trademark Registration to “Generic.com” Brands
On June 30, 2020, the Supreme Court issued its second and final trademark opinion of the 2019 – 2020 term. The first opinion resolved a circuit split on the availability of profit remedies for trademark owners; the second determined the eligibility for trademark registration of compound generic marks.
In Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492 (2020), decided in April, the Court addressed whether the Lanham Act required a plaintiff to show that the defendant willfully infringed in order to recover the defendant’s profits from a violation under 15 U.S.C. 1125(a). The parties in that case had entered into an agreement in which the plaintiff provided fasteners for the defendant’s leather goods. The plaintiff eventually discovered that the defendant’s manufacturers had been producing counterfeit fasteners under the plaintiff’s mark. It alleged and proved a violation under § 1125(a) for false or misleading use of a trademark. The trial jury found that, although the defendant had acted with “callous disregard” of the plaintiff’s trademark rights, it had not willfully infringed. Id. at 1494.
The Court noted that the plain language of § 1117 did not require a “willful” violation of 1125(a) in order for the plaintiff to recover defendant’s profits and further noted that the Lanham Act was generally explicit when it wished to impose such a state-of-mind requirement on a violation or remedy. Defendants relied, instead, on the statute’s qualification that a plaintiff’s ability to recover a defendant’s profits under § 1117(a) was “subject to the principles of equity”; it asserted that courts of equity had long required a willful violation for plaintiffs to recover profits in trademark cases and that the Lanham Act had preserved this tradition. The Court did not find the case law on this point convincing, and concluded that the statute’s “principles of equity” language “more naturally suggests fundamental rules that apply more systematically across claims and practice areas.” Id., at 1496. Although the defendant’s mental state is relevant in a court’s determination of the appropriate remedy for a trademark violation, there is no requirement that a plaintiff alleging a violation of § 1125(a) show that the defendant acted willfully in order for the plaintiff to recover wrongful profits as remedy.
The Court’s opinion in U.S. Patent and Trademark Office, et al. v. Booking.com B.V., No. 19-46, 2020 WL 3518365 (U.S. June 30, 2020), considered whether the addition of a generic top-level domain to an already generic term, thereby creating a “generic.com” mark, necessarily results in a generic compound mark that is incapable of registration. The Patent and Trademark Office (“PTO”) had refused registration to the mark BOOKING.COM, basing its decision on the Supreme Court’s prior ruling in Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., 128 U.S. 598 (1888), that the simple addition of the corporate designation “Company” to an otherwise generic mark did not create a distinctive mark capable of registration. Such an addition “only indicates that parties have formed an association or partnership to deal in such goods.” Id. at 602. A top-level domain, the PTO reasoned, was equivalent to a corporate designation because it simply indicates that the parties operate a website for such goods.
The Court rejected the PTO’s absolute rule and concluded that whether a mark is generic ultimately rests on whether consumers perceive it as so. The Court distinguished the top-level domains in this case from the corporate designations in Goodyear, reasoning that a “generic.com” mark implied an exclusivity that was absent in a “Generic Company” mark because only one company can own a domain name while many companies can add the corporate designation “company” to a generic term. The exclusivity of “generic.com” carried source-identifying significance. The Court also stated that the PTO misunderstood Goodyear as creating an absolute rule that a compound of generic terms is necessarily generic; properly understood, Goodyear stands for the proposition that the combination of generic terms is itself generic “if the combination yields no additional meaning to consumers capable of distinguishing the goods or services.” Booking.com, 2020 WL 3518365 at *6 (emphasis in original). Survey evidence in this case indicated that consumers understood “booking.com” to refer to a single source of goods or services. Accordingly, the Court concluded that “booking.com” was not generic and that consumers did not necessarily perceive “generic.com” marks as generic such that an absolute rule was appropriate.
In his dissent, Justice Breyer disagreed that the case was distinguishable from Goodyear. It was not the non-exclusivity of “company” that animated the Court’s decision in Goodyear, said Breyer, but that “[t]erms that merely convey the nature of the producer’s business should remain free for all to use.” Id. at *12 (Breyer, J., dissenting). A top-level domain term was not capable of distinguishing a mark because it merely conveyed that the producer had an online presence. Therefore, adding “.com” to the generic term “booking” did not elevate the mark from generic to descriptive. Breyer also expressed concern about the anti-competitive effects of the majority’s decision. He worried that the doctrine of likelihood of confusion would not sufficiently preserve competition in generic terms if producers were able to appropriate “generic.com.” Finally, he noted that the survey evidence that the majority relied on was of little probative value in determining whether a mark was generic: evidence that consumers thought that “booking.com” was a brand name was evidence that consumers were familiar with the particular company Booking.com—“such association does not establish that a term is nongeneric” but merely that the business has advertised sufficiently to create the association. Id. at *13.
Both cases are victories for trademark owners. Romag Fasteners clarifies that a trademark owner need not show that a defendant acted willfully in order to recover the profits wrongfully gained through infringement. This decision enlarges the potential damage recoveries for successful infringement plaintiffs. However, willfulness remains relevant in determining the appropriate remedy for infringement, and it is unlikely that courts will often force innocent infringers to disgorge their profits. Booking.com is the more significant decision. It opens the door to trademark registration for companies that have built their brands around “generic.com” constructions and have advertised extensively to create strong consumer associations between domain names and their particular goods or services. By emphasizing that genericness is determined by reference to consumer associations, the Court has paved the way for registration of generic brand names.
The wine industry is already seeing the effects of the Booking.com decision. Wine.com, LLC, took an interest in the Booking.com proceedings and filed an amicus brief (as a member of the “Coalition of .com Brand Owners”) in support of Booking.com. The online wine retailer has been using the WINE.COM mark since the late 90s and has built considerable consumer goodwill in that mark, but the PTO denied registration of its WINE.COM word mark in 2003. Since the Court issued its Booking.com opinion in June, Wine.com has re-applied for registration of its domain name.
WINE.COM appears to be a good candidate for registration after Booking.com. But compound generic marks still face an uphill battle at the PTO—the owner of a “generic.com” domain name will need to show extensive use of the domain name as a trademark and strong consumer associations between the domain name and their company in order to obtain registration for this type of mark.