Supreme Court Rules on Domain Marks’ Validity

July 10, 2020

Author:Shuying Lin
associate at YK Law LLP. Her practice areas include litigation, commercial transactions, securities laws & fund formation, and cross-border M&A. 
On June 30, 2020, in an 8-1 decision, the Supreme Court of the United States ruled in favor of Booking.com, holding that BOOKING.COM is not a generic term that cannot be registered as a federal trademark. 
Although BOOKING alone is a generic term for hotel reservation services, after adding a top-level domain .COM to it, the resulting combination can be non-generic and eligible for federal trademark registration. 
Booking.com was denied registration by the USPTO
Booking.com offers online travel reservations services under the brand name “Booking.com”, which is also the domain name of its websites. 
In 2011 and 2012, Booking.com filed several applications with the United States Patent and Trademark Office (USPTO) to register certain marks containing the term BOOKING.COM. 
USPTO rejected its applications, as it determined that BOOKING.COM generically refers to online hotel reservation services. 
According to USPTO, BOOKING is a generic term for hotel reservation services, the top-level domain .COM refers to a commercial website, and the combination of the two does not change the fact that it is a generic mark. 
Under federal trademark laws, generic marks are ineligible for federal trademark protection
A trademark distinguishes one company’s goods or services from another’s. U.S. trademark laws protect the ability of consumers to distinguish among competing products and ensure that they will get the product which they ask for. 
The laws also secure to the mark owner the good will of his or her business. 
  
The Lanham Act, enacted in 1946, provides federal statutory protection for trademarks. It also establishes a system of federal trademark registration. 
The owner of a federally registered trademark enjoys “valuable benefits”, including a presumption that the mark is valid. 
As one of the requirements for federal trademark registration, a mark must be distinctive. 
Distinctiveness may be expressed on an increasing scale: 
(1) generic; 
(2) descriptive; 
(3) suggestive; 
(4) arbitrary; or 
(5) fanciful. 
The higher the number, the more distinctive and the stronger the mark is (meaning it will obtain more protection under federal trademark laws).
The most distinctive marks are arbitrary marks, fanciful marks or suggestive marks. Arbitrary marks are marks that have no relation to the underlying product, e.g. APPLE for computers. 
Fanciful marks are marks that had no meaning before it was adopted, e.g. KODAK film.

Suggestive marks are marks that contain wording that hint at the products or services — the consumers need to imagine or think to understand what the nature of the underlying product or services might be, e.g. TIDE for laundry detergent.

Descriptive marks are weaker marks. They are marks that that describe one or more characteristics of the products or services.

Descriptive marks are eligible for federal registration, if they acquire secondary meaning, or in other words, if they achieve significance “in the minds of the public” as identifying the applicant’s goods or services.

At the lowest end of the distinctiveness scale are the generic marks.

Generic marks are ineligible for federal trademark registration. Generic marks only refer to the name of the product or services itself, e.g. WINE for wine, LAW FIRM for a law firm.

As such, they are incapable of distinguishing a company’s products or services from the goods or services of others and therefore are ineligible for federal registration.

Further, generic marks are not protected by federal trademark laws so that other people can use generic words to describe their products or services.

Lower courts determined that BOOKING.COM is not generic and eligible for registration
On April 15, 2016, Booking.com challenged the denial of its registration of the trademarks in the United States District Court for the Eastern District of Virginia. 
The District Court sided with Booking.com. Specifically, the court determined that BOOKING.COM is not a generic mark. Instead, it is a descriptive mark
As discussed above, descriptive marks are marks that describe the products or services. 
They are eligible for federal registration, if consumers can readily perceive them to identify specific brands. 
According to the District Court, Booking.com offered sufficient evidence that consumers consider BOOKING.COM a brand name rather than a common name for online hotel reservation services. 
As such, the court decided that BOOKING.COM can be registered as a descriptive mark.
USPTO appealed to the United States Court of Appeals for the Fourth Circuit. In early 2019, the Court of Appeals affirmed the District Court decision. In the same year, the USPTO filed a petition for certiorari with the Supreme Court of the United States.
Supreme Court ruled in favor of Booking.com
Supreme Court ruled in favor of Booking.com, rejecting USPTO’s per se rule that a generic name, when combined with a top-level domain, necessarily results in a generic mark that is ineligible for federal trademark registration. 
In the Majority Decision penned by Justice Ruth Bader Ginsburg, the high court held that a term styled “generic.com” is not a generic name for a class of goods or services, if the term, taken as a whole, does not have that meaning to consumers. 
Based on the evidence from the lower court, consumers do not in fact perceive BOOKING.COM to be a common name for online booking services. As such, BOOKING.COM is not generic. The court wrote:
[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.
USPTO did not dispute that consumers perceive BOOKING.COM to identify a brand name, but it nevertheless argued that consumers’ perception does not matter in the case where a generic term is combined with a generic top-level domain, as the combination is per se generic. 
USPTO argued that the proposed rule followed from the case Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., 128 U.S. 598 (1888), where the court determined that a term styled “generic company” is not eligible for trademark protection. 
The Supreme Court distinguishes “generic.com” from “generic company”, as only one entity can occupy a particular Internet domain name at a time so unlike a mark styled “generic company”, “generic.com” can be a source indicator. 
Moreover, the court found the adoption of a rule that entirely disregards consumer perception is incompatible with a bedrock principle of the Lanham act. It is also inconsistent with USPTO’s past practice. 
For example, USPTO has registered ART.COM for online retail services selling art works and DATING.COM for dating services. 
Accordingly, the court refused to adopt the per se rule proposed by the USPTO.
USPTO also contended that terms similar to BOOKING.COM should not be eligible for federal registration for policy concerns, as it would exclude competitors from using similar marks like EBOOKING.COM or HOTEL-BOOKING.COM. The Supreme Court disagreed. 
It noted that even though BOOKING.COM may be eligible for federal registration, it is a descriptive mark and therefore a weak mark. 
Hence, close variations are unlikely to infringe. 
Moreover, the court noted that, even where some consumer confusion exists, if the competitor uses the descriptive term “fairly and in good faith” and merely uses it to describe his or her own goods other than using it as a mark, there will be no trademark infringement. 

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