High Court Booking.com Case Highlights Stale TM Test
Aside from a little static, Monday's oral arguments in the US Patent and Trademark Office v. Booking.com BV case went off without a hitch — the first telephonic argument before the US Supreme Court, necessitated in this age of COVID-19.
Novelty was not limited to the telephonic appearance of the court and parties: The legal issue presented itself required the court to square old-fashioned statutory text and case law with the modern, plugged-in world.
The central question in the case was whether adding ".com" to an otherwise generic term somehow transforms that term into a trademark. In particular, at issue was the registrability of "Booking.com," the domain name that points to Booking.com's popular internet reservation website.
Nearly a decade ago, Booking.com applied to register this term for use in connection with its online hotel reservation services, but the USPTO refused registration. The agency concluded that "Booking.com" was generic as applied to online hotel reservation services and thus could not be registered as a trademark under the Lanham Act.
A generic term names a category or genus of goods or services, such as soaps, shampoos or baseball caps. Under the Lanham Act, no one can hold exclusive rights in a generic term in connection with the goods or services it names. The policy rationale is simple: Generic terms do not refer to a particular source of goods or services and so fail to perform the function of a trademark. Moreover, allowing one business exclusive use of a generic term would stifle competition by preventing its competitors from accurately referring to their own products.
If the USPTO determines that mark is generic, it will deny registration. If, however, the USPTO concludes that the term merely describes the qualities or characteristics of the goods or services for which registration is sought it will permit registration upon a showing of secondary meaning. To demonstrate secondary meaning, an applicant is required to show that the applied-for mark is understood by consumers to refer to goods from a single source, rather than merely describing those goods. The line between descriptive and generic terms can therefore be critical to a business's establishing trademark rights in a term or phrase.
Here, the USPTO concluded that the term "booking" was generic because it referred to a reservation or arrangement to buy a travel ticket or stay in a hotel room. In the USPTO's view, when combined, "booking" and ".com" would still be understood by consumers to generically refer to an online reservation service for travel, tours and lodging.
The US District Court for the Eastern District of Virginia reversed. It held that the primary significance of "booking.com" to the relevant consumers was not as a generic term for on-line hotel reservation websites. In reaching this conclusion, the district court noted in particular the lack of any evidence that consumers use "booking.com" as a generic term for such websites, and a consumer survey showing that a majority of respondents understood that "Booking.com" referred to a specific brand. The US Court of Appeals for the Fourth Circuit affirmed.
In November, the Supreme Court granted the USPTO's petition to hear the case. And hear was all it did. The court certified the following issue for its first ever live-streamed, telephonic oral argument: "Whether the addition by an online business of a generic top-level domain ('.com') to an otherwise generic term can create a protectable trademark."
The USPTO essentially launched a multifaceted argument. Counsel relied on the 1888 Supreme Court case Goodyear Co. v. Goodyear Rubber Co.1 That case, the government urged, established a bright-line rule that an unregistrable generic term does not become registrable when it is combined with a generic business designation, such as "Co." In other words, generic + generic = generic.
That rule applies with equal force in the internet context, the government argued; just as adding "Co." does not render a generic term any less generic, nor does adding a generic top-level domain like ".com."
Nevertheless, the Goodyear decision itself long predates the passage of the Lanham Act and the creation of the internet and the domain name system. And, none of the justices seemed anxious to rely upon such an ancient decision. Indeed, Chief Justice John Roberts raised this issue right out of the gate, asking the government why the court should look to "a 130-year-old case" rather than the text of the Lanham Act to determine the test for genericness.
In response, the government argued that Goodyear had not been abrogated by the Lanham Act and was still good law. The USPTO and courts around the country have interpreted Goodyear to have established a bright-line rule that "generic.com" terms (comprised of a generic term and a generic top level domain) are not registrable. And, in any event, according to counsel for the government:
Even without Goodyear, you have this very basic trademark policy that has always been true, which is that generic terms simply are not susceptible to appropriation by a particular business, even when there's secondary meaning.
The government expressed another grave concern: If entities were permitted to register generic terms as marks merely by adding ".com", companies would then be able to use trademark law to prevent competitors from registering domain names that accurately reflect their own goods or services. For example, Booking.com might prevent others from registering marks or employing domain names that encapsulated "booking.com", such as "ebooking.com" or "hotelbooking.com."
Moreover, the USPTO argued, trademark protection was not necessary for these "generic.com" domain names. When an entity acquires a domain name, such as booking.com, it is the sole owner of the domain name and no one else can register that exact name. This measure of practical exclusivity already gives the domain name owner a great commercial advantage, rendering trademark protection superfluous.
Several justices analogized this case to the permissible trademark registration of phone numbers and street addresses. Justice Clarence Thomas suggested that Booking's registration is closer to a 1-800 number, which may be registered upon a showing of secondary meaning and which, like domain names, is similarly unique. Per Justice Thomas' reasoning, if Booking.com could obtain a registration for "1-800-Booking," why would the registration of "Booking.com" be problematic?
The government distinguished the phone number example by explaining that only in internet cases like this one do the domain names encapsulate third party domain names: While Booking.com could "monopolize 'Booking' on the Internet" and block out competitors like ebooking.com and hotelbooking.com, the same would not be true of its registration of 1-800-Booking.
Booking.com, for its part, insisted that Goodyear was no longer good law, having been abrogated by the Lanham Act and not consistently applied by the USPTO or the courts. Instead, it argued, the USPTO is required to apply the primary significance test to assess genericness in the context of "generic.com" domain names. This test is found in both in Section 1064(3) of the Lanham Act, which governs the cancellation of generic terms, and the Supreme Court's unfair competition decision in Kellogg Co. v. National Biscuit Co.2
Under that test, a mark will not be deemed generic if the relevant consumers believe that the mark as a whole is not the generic name for the class of goods or services, but instead refers to a particular source or provider of goods and services. Primary significance may be demonstrated by consumer surveys, such as the one that Booking.com submitted in the district court proceeding, as well as by reference to dictionaries and periodicals. This standard requires a case-by-case evaluation; some "generic.com" domain names do not pass muster, and others, such as "Booking.com," do.
Booking.com likewise dismissed potential antitrust worries: There shouldn't be any anti-competitive concern because the trademark protections accorded to "generic.com" marks is necessarily thin and would not necessarily bar the registration or use of highly similar domain names. In fact, Booking.com's counsel claimed that her client had no desire to pursue trademark claims against owners of domain names like "ebooking.com."
When asked by the justices why Booking.com does want trademark registrations, counsel answered that Booking.com was primarily interested in the ability to pursue counterfeiters and cybersquatters, including by invoking in rem jurisdiction over foreign-owned, often elusive domain names under Section 1125(d) of the Lanham Act, the provision allowing a court to exercise jurisdiction over a domain name where the trademark owner demonstrates that personal jurisdiction cannot be had over the domain name holder. This is a compelling argument, but one that was curiously absent from Booking.com's brief.
Emerging Themes and What to Watch For
This case typifies the square-peg, round-hole situation. The justices struggled with how to address the level of protection — if any — that is added by combining ".com" with an otherwise generic term given the existing legal tools, namely, the Lanham Act and common law trademark principles. In some ways, the use of domain names turns traditional trademark protection on its head: The generic term plus ".com" becomes a valuable commodity and an important means for consumers to distinguish one website and its contents from other sites.
The court must decide how much protection to accord to these domain names, in a manner that not only is consistent with the domain name holders' investment but, more importantly, informs the public about content on the internet and guards against confusion. In the authors' view, these are the aims on which the court should be focusing in rendering its decision.
Although Goodyear may have been relevant in this area for years and, on its face, seems to concern the potentially analogous addition of "company" to a generic term, its viability going forward is much in question. No member of the court who discussed Goodyear seemed inclined to apply the 130 year-old standard here, or to agree with the government's briefing and argument that the addition of "company" to a generic term ala Goodyear is akin to adding ".com" to a generic term in the age of URLs and the internet.
Finally, and somewhat unexpectedly, other than one passing mention of ".net", there was no treatment of other top- level domains and their possible role in distinguishing between sources. For example, wouldn't the top level domain ".aero," limited for use by those in the aeronautical industry, help to address some of the concerns that the justices and parties articulated both about preventing likelihood of confusion and anti-competitive measures through use of domain names?
The court's limited discussion of ".com" suggests that the focus is still, knowingly or unknowingly, shaped by the Goodyear decision and its application of trademark principles to the combination of the generic term "company" with another generic term.
The justices' struggle with these issues suggests that the usual tests for determining trademark protection were not designed to work flawlessly in the new space that is the internet.