On June 30, 2020, the U.S. Supreme Court (“SCOTUS”) had no reservations in finding that Booking.com is a recognized trademark and not a generic term as the United States Patent and Trademark Office (“USPTO”) had argued. In the highly anticipated 8-1 majority opinion written by Justice Ginsburg, SCOTUS ultimately ruled that the adding of the “.com” top level domain (“TLD”) to what would otherwise be a generic term, could transform a “generic.com” term into a protectable trademark, if consumers can distinguish the term as a recognizable trademark.
Background of Trademark Law
A trademark is a source identifier that allows brands and companies to build goodwill with consumers and protect the public so that consumers can feel confident when purchasing the goods or services of one company versus another. Federal trademark registration requires that a mark be inherently distinctive. If the mark is not a coined term, it can still be distinctive if it is arbitrarily applied to the goods or services or it is suggestive. Trademarks like KODAK, CAMEL and TIDE are all examples of inherently distinctive trademarks. Descriptive trademarks are not entitled to registration on the Principal Register absent secondary meaning in the minds of consumers. Generally, generic terms are incapable of becoming distinctive because they define a class of goods. Generic terms are available to everyone to use and cannot be monopolized as trademarks.
Facts of the Case
Booking.com is a popular travel company that allows users to make travel reservations online. Booking.com spent more than eight years trying to secure trademark protection for its name. It filed applications to register four trademarks in connection with their travel-related services, each with different visual features, but all containing the core mark BOOKING.COM. The marks were all refused registration at the USPTO on grounds that the mark is generic and the TTAB upheld the Examiner’s findings. The USPTO’s rationale was that people would view “booking” and “.com” by their original meanings, not as a source identifier, and that even if the combined term was descriptive, the mark lacks secondary meaning.
Booking.com appealed the TTAB decision to the U.S. District Court for the Eastern District of Virginia, where it introduced survey evidence of the mark’s distinctiveness. The survey evidence demonstrated that nearly 75% of consumers considered BOOKING.COM to be a brand name and not a generic term. As a result, the District Court overturned the TTAB’s decision and the USPTO appealed. The Court of Appeals for the Fourth Circuit affirmed the District Court’s finding.
The Supreme Court’s Decision
This is a very fact specific holding. SCOTUS makes clear that its holding is based on “whether a [generic.com] term is generic depends on its meaning to consumers.” The Court was hesitant to adopt the USPTO’s argument, which relied on long-standing precedent in Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., because that case “entirely disregards consumer perception.”
During oral arguments, a lot of time was spent talking about Internet domain names and the majority opinion makes clear that BOOKING.COM is not generic because “only one entity can occupy a particular Internet domain name at a time, so ‘[a] consumer who is familiar with that aspect of the domain-name system can infer that BOOKING.COM refers to some specific entity.’” SCOTUS rejected the USPTO’s premise that “generic.com” terms are always incapable of functioning as source identifying trademarks.
To illustrate the point, the majority’s opinion explains generic marks describing a class of services and how the BOOKING.COM marks fail this test because consumers do not perceive the marks to be generic. Consider this preposterous example:
[I]f ‘Booking.com’ were generic, we might expect consumers to understand Travelocity – another such service – to be a ‘Booking.com.’ We might similarly expect that a consumer, searching for a trusted source of online hotel-reservation services, could ask a frequent traveler to name her favorite ‘Booking.com’ provider.
If the mark were truly generic, this is exactly how consumers would talk to each other. SCOTUS realized through the survey evidence provided that this was not how consumers recognized the strength of the brand. It recognized that one of the bedrock principles of the Lanham Act states that the generic character of a term is highly dependent on its meaning to consumers.
Finally, while the USPTO attempted to argue that granting the trademark registration would grant Booking.com the right to go after similar “booking” sites, SCOTUS was not overly concerned about any anti-competitive efforts. During oral arguments, Booking.com admitted its mark is weak and entitled to a narrow scope of protection making it “harder…to show a likelihood of confusion.” Booking.com conceded that a Federal registration would not prevent competitors from using the “booking” term descriptively.
Justice Breyer’s dissent primarily focused on the idea that a “generic term plus a corporate designation” could not be transformed into a compound mark where the whole has a greater significance than its parts. He maintained that “.com” has no capacity to identify goods and services according to Goodyear. He acknowledged that there may be exceptions to this rule, especially with the expansion of new TLDs, but says that those exceptions are not present in this case. Justice Breyer expressed concerns about the survey questions and the fact that generic names by their nature are easy to remember, giving owners of such domains a distinct competitive advantage.
Ultimately, since consumers recognized BOOKING.COM as a brand, SCOTUS was not prepared to find the mark generic in this case, rejecting the USPTO’s bright line rule that all “.com” marks must be found generic and put similarly situated registrations at risk of being cancelled. In finding a “generic.com” term that consumers perceive as a brand can function as a trademark to be a weak brand, the majority dismissed any fears of abuse when enforcing the rights.
Impact of the Decision
This is a resounding decision for brand owners. As trademark counsel, we still believe the best trademarks are those that are more readily enforced and inherently distinctive. However, for those brand owners who intentionally choose to follow a more descriptive branding strategy and put the necessary financial resources behind creating secondary meaning in the minds of the consuming public, this decision reinforces what the Lanham Act stands for – that consumers drive our purchasing decisions and are the building blocks of our trademark system. After all, trademarks are designed to protect consumers. We understand Justice Breyer’s concerns over the territoriality issues of domain names and the possible restrictions to free competition on the Internet. However, it is exceedingly costly to secure generic domain names even without a brand strategy and even more expensive to create a brand around them, and this decision may only add to the costs. We agree that survey evidence should be crafted carefully and with attention to detail, but when brand recognition numbers are so favorably associated with one company, it is difficult to ignore the validity of that data.
We expect an increase in the registration of generic domains by domain name squatters and the asking price of any generic domains not already commercialized to also rise. For brand owners and marketers, it is important to remember this decision is narrow in its holding – it does not grant blanket approval for every “generic.com” domain to be granted trademark approval. The basic tenants of trademark law should not be ignored. There is a greater scope of protection in an arbitrary or suggestive mark versus a descriptive mark. We will be curious to see how the USPTO will examine going forward. The USPTO may still refuse to register marks, even on grounds of genericness, and it will certainly become more costly to argue these refusals. We also believe footnote 5 of the decision may leave the door open for the USPTO to refuse applications on grounds of failure to function. It will be interesting to see how the USPTO responds with Examination Guidelines and during the examination process in the coming months.
If you have any questions about this decision or help with your trademarks, please contact us.
Author’s Note: I would like to extend my deep gratitude to Hayley Leviashvili, J.D. and Founder gigLAW, for her assistance in preparing this blog post
Stacey C. Kalamaras is the founding partner of Kalamaras Law Office, LLC. She has extensive intellectual property experience with a particular focus on trademark prosecution and enforcement. She has protected some the world’s largest brands in more than 150 countries and specializes in helping small and medium sized businesses grow and protect their brands. Contact her at info@klolegal.com.
Stacey is also the founder and lead instructor of Trademarkabilities®, an online trademark academy for lawyers, whose mission it is to prepare lawyers to be confident and effective practitioners before the USPTO. To learn more, please visit https://www.trademarkabilities.com/.