July 2, 2020
The U.S. Supreme Court on June 30, 2020, decided U.S. Patent & Trademark Office v. Booking.com B.V., handing a win to Booking.com and holding that whether a generic term combined with a “.com” domain name results in a generic composite term “depends on 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.”
Generic terms, which simply name a good or service rather than distinguish the source, are not eligible for protection as trademarks. Descriptive terms, which describe a feature or function of the good or service, are minimally protected unless the mark has acquired distinctiveness or secondary meaning. The PTO had refused to register BOOKING.COM, taking the position that the term “booking” is generic for online hotel-reservation services, and merely adding the top-level domain “.com” would not take the mark outside generic territory. To the PTO, generic + generic = generic.
The Supreme Court rejected that per se rule in the context of so-called “generic.com” trademarks — i.e., internet domains that combine generic terms with “.com.” First, the court focused on the fundamental principal that the strength of trademarks depends on how they are perceived by the consuming public. Second, the court distinguished “generic.com” from adding “Company” or “Corporation” to the end of a generic name, which the Supreme Court in Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., 128 U.S. 598 (1888), held cannot confer trademark eligibility. The difference with the domain, the court explained, is that “generic.com” can refer only to the single corresponding website. If consumers know that “generic.com” is associated with only one website, operated by only one proprietor, then “generic.com” is not a generic name to consumers.
On July 2, 2020, the U.S. Supreme Court also vacated the ruling by the Fourth Circuit Court of Appeals that Booking.com pay the PTO’s attorney’s fees incurred when Booking.com appealed the PTO’s refusal to register BOOKING.COM to federal court. In December 2019, the Supreme Court had ruled in Peter v. NantKwest, Inc., 140 S.Ct. 365, that the Patent Act’s provision allowing the PTO to recover “expenses” when an applicant appeals to federal court does not include attorney fees. In light of that recent decision, the Supreme Court indicated that the nearly identical provisions of the Lanham Act would preclude the PTO from recovering attorney’s fees it incurred in Booking.com, and remanded this to the 4th Circuit for further consideration.
In all, the Supreme Court’s decision about domain names in Booking.com means that a “generic.com” name will not necessarily be generic. Although a “generic.com” mark would still face the issues of confusingly similar marks that often attend descriptive marks, the “generic.com” mark may be eligible for federal registration and the host of benefits that registration provides.
For a company operating under a name that contains highly descriptive or generic words and that also has a strong presence in online retail, the Supreme Court’s ruling indicates that there may be an avenue for registering the company’s domain as a trademark. However, the ability to register would depend on the strength of the mark as a whole (the Principal Register — the register that grants the most benefit to a trademark owner; or the Supplemental Register — the register reserved for descriptive trademarks that may become distinctive over time). While affirming that BOOKING.COM is not generic, the Supreme Court also stated that BOOKING.COM is descriptive. As the Supreme Court cautioned, “trademark law hems in the scope of [descriptive] marks short of denying trademark protection altogether.”
Booking.com provided the U.S. District Court for the Eastern District of Virginia evidence that its descriptive mark had acquired distinctiveness and thus was eligible for registration on the Principal Register. Booking.com B.V. v. Matal, 278 F.Supp.3d 891, 919 (2017). Such evidence included a consumer survey showing 74.8 percent of respondents recognized BOOKING.COM as a brand name, a record of sales success, and advertising expenditures associated with its BOOKING.COM nationwide advertising campaign to show that consumers recognize that descriptive term as a brand name. Such consumer recognition and supporting evidence was built over time and through advertising efforts and expenditures. If seeking to protect a company’s domain with descriptive wording as a trademark, a company would need to use the domain as a whole in advertising to develop the kind of consumer recognition needed for registration on the Principal Register.
Companies with highly descriptive names, particularly those that have been unsuccessful seeking federal registration in the past, may want to consider revising their branding strategy to use their domain names as brands more actively than they have in the past, and then registering those domain-brands as trademarks, in light of the Supreme Court’s decision. Ownership of a federal trademark registration is beneficial in numerous ways. It not only gives the owner the presumption of ownership of the trademark throughout the United States, but it also is required to access many anti-counterfeiting rights and remedies. Some online marketplaces require registration of the relevant trademark in order for an owner to pursue take-downs of infringing products or services, and ownership of a federal trademark registration makes enforcement through Uniform Domain-Name Dispute-Resolution Policy (UDRP) proceedings and litigation significantly easier. A registration can be used strategically to enforce rights against counterfeiters, stop cybersquatting, and prevent “bait and switch” advertising tactics using the “generic.com” name.
The U.S. Supreme Court’s decision marks a significant turning point in how the PTO will treat marks that incorporate domain names. Until now, the PTO has taken the position in trademark examination rules that domains do not have source-identifying significance (see TMEP 1215.02). This position was expressly rejected in the Supreme Court’s opinion. What likely has not changed is the PTO’s requirements on proof of use in commerce as a trademark. As with all trademarks generally, the PTO will require evidence that an applied-for trademark is used in a manner that potential purchasers will perceive as indicating the source of the goods/services. And, as illustrated by the Supreme Court’s opinion, consumer perception of the term is key. “Generic.com” appearing in the top banner of a webpage is likely to be prominent enough usage to show that consumers perceive “Generic.com” as a source-identifier. In contrast, an advertisement containing the statement “visit us on the web at generic.com” would not be sufficient to show use as a trademark. Companies with highly descriptive or generic names can take best advantage of this decision by building a brand strategy that actively uses the company’s domain name not only in the URL, but as a prominent brand itself, in its advertising.