“Tuesday’s ruling marks a key development in the Court’s genericness doctrine. The decision will not necessarily open the floodgates to a countless number of ‘generic.com’ terms on the Trademark Register, but if you are a practitioner, expect clients to start asking to register their domain names.”
On Tuesday, June 30, the U.S. Supreme Court affirmed the Fourth Circuit’s holding that BOOKING.COM is a protectable trademark. The U.S. Patent and Trademark Office (USPTO) had refused registration of Booking.com’s housemark, finding that the mark was generic—in other words, a term that consumers understand as primarily the common or class name for the underlying services. The specific issue before the Court was “[w]hether the addition by an online business of a generic top-level domain (“.com”) to an otherwise generic term can create a protectable trademark.” The Court ultimately sided with the popular online travel company Booking.com in an 8-1 decision, holding that “[a] term styled ‘generic.com’ is a generic name for a class of goods or services only if the term has that meaning to consumers.” The ruling paves the way for the registration of “generic.com” terms upon a showing of acquired distinctiveness—but obtaining such registrations will not be easy, or cheap.
The Court’s reasoning veered from past decisions at the Federal and Ninth Circuits. In its 2010 case, Advertise.com v. AOL Advert., Inc., the Ninth Circuit held that ADVERTISING.COM was generic as applied to internet advertising services. The court found that “‘.com,’ when added to a generic term, ‘indicates a commercial entity’ [and] does not suffice to establish that the composite is distinctive, much as AOL would not have created a protectable mark by adopting the designation ‘Advertising Company.’” The Federal Circuit reached the same conclusion a year earlier in In re HOTELS.COM, L.P., holding that the “.com” addition simply shows internet commerce and does not convert the generic term “hotels” into a brand name.
USPTO and District Court
Primarily relying on In re HOTELS.COM, L.P., the USPTO rejected Booking.com’s attempts to register its mark on seven separate occasions. While Booking.com tried to overcome refusals by demonstrating the mark had acquired distinctiveness, these efforts were in vain. The Examining Attorneys found that the mark was generic, precluding Booking.com from asserting a claim of acquired distinctiveness. Four of the rejections culminated in a consolidated appeal before the Trademark Trial and Appeal Board. Despite the fact that Booking.com is one of the largest hotel-booking sites in the world, the Board affirmed the refusals to register the mark, prompting Booking.com’s appeal to the Eastern District of Virginia.
After years of failed attempts to obtain a registration for its core services, travel booking, Booking.com finally received a favorable ruling from the Eastern District of Virginia. The court held that while “booking” and “.com” are both generic terms, the combination of the two forms a descriptive mark that is protectable upon a showing of acquired distinctiveness. Establishing acquired distinctiveness can be a heavy burden and typically requires evidence of sales, advertising expenditures and methods, affidavits, survey evidence, market research, consumer reaction studies, unsolicited media coverage, and the like. Booking.com introduced a number of these items, and the court was particularly persuaded by a Teflon survey revealing that nearly 75% of the respondents identified BOOKING.COM as a brand name. The fact that BOOKING.COM-branded television commercials received over 1 billion impressions from U.S. customers annually from 2015-2016 weighed in Booking.com’s favor as well. Hence, the court found that Booking.com carried its burden in proving that the mark had acquired distinctiveness. The Fourth Circuit affirmed the decision, and the government appealed to the Supreme Court.
A Simple Premise
In an 8-1 opinion, the Court overwhelmingly rejected the USPTO’s per se rule barring trademark protection for “generic.com” terms, instead favoring a fact-specific and consumer-driven approach. Justice Ruth Bader Ginsburg authored the majority opinion with Justices Samuel A. Alito, Neil M. Gorsuch, Elena Kagan, Brett M. Kavanaugh, Sonia Sotomayor, and Clarence Thomas joining the opinion. Justice Sotomayor filed a concurring opinion, and Justice Stephen G. Breyer dissented.
At the heart of the opinion is one simple premise: “Because ‘Booking.com’ is not a generic name to consumers, it is not generic.” To reach this conclusion, the Court relied heavily on how consumers view the mark BOOKING.COM, and in particular, on the survey results Booking.com submitted to the District Court, where 74.8% of Booking.com’s survey participants identified BOOKING.COM as a brand name. The USPTO did not even contest the lower courts’ findings, based on this survey and other evidence, that consumers perceive BOOKING.COM as a brand rather than a generic name for online hotel-reservation services as a class. The Court found that disregarding consumers’ understanding of the mark in this manner conflicted with the Lanham Act’s emphasis on consumer perception. The Lanham Act states, “[t]he primary significance of the registered mark to the relevant public . . . shall be the test for determining whether the registered mark has become the generic name of goods or services.” 15 U.S.C. § 1064(3). The Court concluded that “bedrock principle of the Lanham Act is incompatible with an unyielding legal rule that entirely disregards consumer perception.”
Goodyear’s No Good in the Domain Name Context
The decision came as a surprise to some in light of the Court’s 19th century ruling in Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co. Although decided almost 60 years before the Lanham Act took effect, in Goodyear, the Court held that the addition of commercial indicators such as “company” to generic terms does not transform an otherwise unregistrable mark into one that is worthy of protection. In Booking.com, the USPTO unsuccessfully pressed for a strict application of Goodyear in the internet context. The USPTO contended that “‘.com’ is analytically indistinct from ‘company,’ as it is a generic identifier for an entity operating a commercial website, and therefore its addition to a generic term can never be protected.”
The Court disagreed, describing the comparison as “faulty” given that only one entity can occupy a particular internet domain name at a time. Two companies named “The Wine Company” could simultaneously conduct business and be incorporated in different states. In contrast, domain names are exclusive, and two companies are precluded from adopting identical domain names. As explained in Booking.com’s brief, “[b]ecause domain names are one of a kind, a significant portion of the public will always understand a generic ‘.com’ term to refer to a specific business.” The Court therefore rejected the USPTO’s position that “generic.com” terms are categorically incapable of identifying a source.
Meeting the Burden
Critically, the Court’s ruling does mean that all “generic.com” terms will be automatically classified as nongeneric. Parties attempting to register “generic.com” terms will still bear a heavy—and expensive—burden of proving that their marks have the requisite distinctiveness. The key test assessing whether a “generic.com” term is generic is “whether consumers in fact perceive that term as the name of a class or, instead, as a term capable of distinguishing among members of the class.” As Justice Sotomayer emphasized in her concurrence, evidence driving this inquiry can consist of any number of types of evidence, including consumer surveys, dictionaries, and usage by consumers and competitors. One challenge in such determinations is the reliability of survey data, which Justice Breyer addressed in his dissent. As a result, the Court directed the USPTO to use a holistic set of criteria in evaluating consumer perception of “generic.com” terms.
The USPTO’s history of permitting the registration of similarly styled marks also influenced the Court’s decision. The Court pointed to two analogous registrations: ART.COM, registered for “art prints, original art, [and] art reproductions” on the Principal Register and DATING.COM, registered for “dating services” on the Supplemental Register (an option for descriptive, but not generic, marks). The Court found that the USPTO’s advocating for a sweeping rule that “every ‘generic.com’ term is generic . . . absent exceptional circumstances” ran afoul of the USPTO’s own past practice. If the Court had adopted the USPTO’s rule, multiple existing registrations would have been vulnerable to cancellation. Federal Circuit precedent dictates that the USPTO must decide each case on its own record and on its own merits (see, e.g., In re Nett Designs, Inc.), but it would not be surprising if the USPTO revisits its current practice to avoid the inconsistencies that the Court identified. Embracing more uniform examination standards, besides allowing for more predictability for practitioners, could help prevent the USPTO’s own records from undermining positions that the USPTO may want to take in court.
The Court also dismissed the USPTO’s concerns regarding the monopolization of generic terms. The USPTO put forth policy arguments that granting companies registrations for “generic.com” terms could inhibit competitors from using domain names that necessarily describe the underlying goods or services. Yet, the Court reasoned that these same concerns apply to all descriptive marks, stating, “We have no cause to deny Booking.com the same benefits Congress accorded other marks qualifying as nongeneric.” BOOKING.COM qualifies as an exceedingly weak mark, entitling third parties to come closer to the mark than would be the case with a stronger mark. Booking.com even acknowledged that close variations such as “ebooking.com” and “hotel-booking.com” were unlikely to infringe. The fair use doctrine permits third parties to use others’ descriptive marks to describe their goods and services as well. These doctrines placated the Court’s concerns regarding the ruling’s potential anti-competitive effects, but it will be interesting to see whether Booking.com sticks to its promises to not go after such other companies, or if other “generic.com” brands are more aggressive in their enforcement strategies.
Concurrence and Dissent
Justice Sotomayor, a former intellectual property litigator, filed a concurrence narrowing her understanding of the majority opinion. First, she agreed with Justice Breyer that consumer-survey evidence “may be an unreliable indicator of genericness” but did not interpret the majority opinion as suggesting that surveys should be the sole indicator of genericness. Second, she noted that the USPTO may have correctly concluded that Booking.com is perceived as generic for online hotel-reservation services, but that question was not before the Court. The USPTO’s decision not to contest whether consumers perceive BOOKING.COM as a brand allowed the Court to bypass complex evidentiary issues such as what constitutes an effective consumer survey design in the genericness context.
Justice Breyer sided with the USPTO and believed that Goodyear should have been extended to “generic.com” terms. His dissent centered on anti-competitive concerns and why the USPTO should be reluctant to embrace survey evidence in examining “generic.com” terms. He emphasized the general policy rationale underlying the prohibition on registering generic terms: the USPTO should not grant trademark owners monopolies on widely used, easy-to-remember terms. He predicted that granting exclusive trademark rights in “generic.com” terms will inevitably “inhibit, rather than . . . promote, free competition in online commerce.” Additionally, he noted that some courts and the Trademark Trial and Appeal Board “have concluded that survey evidence is generally of little value in separating generic from descriptive terms.” Under Justice Breyer’s view, the fact that surveyed consumers might create an association between a “generic.com” term and a particular source due to extensive advertising does not transform the nature of a generic term.
Tuesday’s ruling marks a key development in the Court’s genericness doctrine. The decision will not necessarily open the floodgates to a countless number of “generic.com” terms on the Trademark Register, but if you are a practitioner, expect clients to start asking to register their domain names—especially if they have otherwise had trouble protecting their descriptive or generic marks. Further, even if, as Justice Sotomayor says, surveys are not “the be-all and end-all” for evaluating genericness, they will certainly play an important role in the examination of “generic.com” terms. Reliable, well-designed consumer surveys can range from tens to hundreds of thousands of dollars, so especially at the registration stage, this will create a cost barrier for many brand owners. The registration of “generic.com” terms will most likely be reserved for large corporations whose marks are already quite well-known.