Booking.com B.V. v. U.S. Patent & Trademark Office, No.
17-2458 (4th Cir. Feb. 4, 2019)
In some ways, the biggest change in trademark law since the
Lanham Act was adopted was the shift of the courts from accepting prophylactic
rules to protect competition—limiting the registration/protection of trade
dress, territoriality, and numerous other rules—to prioritizing the idea that
all interests other than the protection against likely confusion should be
considered only in individualized circumstances. Let putative owners claim a mark, the
reasoning goes, and any anticompetitive or speech-suppressing consequences can
be dealt with as defenses for individual defendants. Wal-Mart
is the biggest counterforce, and it is about requiring a showing of secondary
meaning rather than a prophylactic exclusion from protection. This case about
genericity of top-level domains takes the same tack: the biggest reason not to
register BOOKING.COM is the power it gives the registrant to credibly threaten
competitors like hotelbooking.com even though its rights shouldn’t extend that
far. The majority thinks that
case-by-case ajudication will protect potential competitors; the dissent thinks
forcing them to litigate is too dangerous.
(It should also be noted that the disappearance of unfair competition as
a protection for unregistrable marks plays a role here—while the Fourth Circuit
previously recognized that unfair competition can fill in the gaps for marks
unregistrable due to lack of US use, the majority seems to think that
Booking.com’s only defense against truly deceptive imitation is the
protectability of BOOKING.COM as a mark, which is historically untrue.)
Booking.com lets customers book travel and hotel accommodations.
It applied for four registrations for the use of BOOKING.COM as a word mark and
for stylized versions of the mark with the USPTO. At issue here are Class 43
services, which include online hotel reservation services. The TTAB affirmed the resulting refusals of
registration, concluding that BOOKING.COM was generic for the services because
“booking” generically refers to “a reservation or arrangement to buy a travel
ticket or stay in a hotel room” or “the act of reserving such travel or
accommodation”; “.com” indicates a commercial website; and “consumers would
understand the resulting composite BOOKING.COM to primarily refer to an online
reservation service for travel, tours, and lodging, which are the services
proposed in Booking.com’s applications.” In the alternative, the terms were
descriptive and lacked secondary meaning.
Booking.com appealed to the E.D. Va., which reversed and
ordered the registration of the marks, but also, following circuit precedent,
ordered Booking.com to pay the PTO’s expenses of over $74,000, including a
portion of lawyers’ salaries. (At the
end of this opinion, the court expressed some doubt whether this precedent was
still good given a conflict with the Federal Circuit interpreting the same
language for patents and subsequent Supreme Court precedent on the necessity of
explicit statutory language to create departures from the American rule, but it
stuck with precedent. If Booking.com wants
to roll the dice on en banc review or even Supreme Court review, it might do
well given that signal.)
The district court accepted Booking.com’s new evidence, a
Teflon survey indicating that 74.8% of consumers recognized BOOKING.COM as a
brand rather than a generic service. It further found that Booking.com
established secondary meaning, a ruling that the PTO did not challenge on
appeal.
The court of appeals found that the PTO had the burden of
proving genericness, given the harsh consequences of unregistrability. (And a
generic term can’t become non-generic, even with subsequent secondary meaning.) [Note that this creates a real opportunity for
arbitrage: if you attempt to register your borderline term, the PTO has to show
genericness so if the evidence is in equipoise you get your registration, and
then there’s a presumption of validity you can deploy against subsequent genericness
challenges, as there wouldn’t be if you didn’t register. One might think this risk is minimal because
the burden of proof so rarely matters—but I think this case might be evidence
to the contrary.]
The key question is what booking.com primarily refers to,
which depends on public understanding, which can be determined by reference to
different sources, including “purchaser testimony, consumer surveys, listings
and dictionaries, trade journals, newspapers, and other publications.” The term
is considered as a whole, even when it’s a phrase: “the relevant inquiry is the
public’s understanding of the entire mark, not its understanding of the mark’s
separate components independently.”
Although the district court made several errors of law, it
ultimately didn’t err in finding that the PTO failed to meet its burden of
showing genericness. (One such error:
the district court wrongly found trademark significance in the fact that a
domain name necessarily [in the current configuration of the internet] refers
only to a single source.) The key pieces of evidence were the absence of
evidence showing public use of “booking.com” as generic—the generic term is “booking
site”—and the Teflon survey. The court of appeals also rejected the PTO’s
argument that adding the TLD identifier .com to a generic term can never create
a non-generic term.
The PTO identified domain names containing booking.com, such
as “hotelbooking.com” and “ebooking.com,” as evidence of public understanding
of booking.com as a reference to online hotel booking services, but that wasn’t
good enough. Although the inclusion of
the proposed mark in longer domain names was evidence, even strong evidence, of
genericness, consumer surveys also matter. Anyway, you can book a lot of things,
including theater and music tickets, so booking.com might not mean hotel reservation
services. [This is trademark nonsense;
hotel booking is a subset of booking services, so it’s totally irrelevant that
there might be other things for which booking is also generic.]
“[T]he ultimate inquiry in determining whether a term is
generic is what the public understands the proposed mark to mean.” But the
survey was better evidence of that than the usage evidence. It’s true that
surveys aren’t relevant where a term was “commonly used prior to its association
with the products at issue,” in which case the survey can only demonstrate
legally useless de facto secondary meaning. But there’s no evidence here that
the term was commonly used, making survey evidence relevant.
The PTO argued that, like adding “company,” adding .com can
never convert a generic term to nongeneric. Goodyear’s Rubber Mfg. Co. v.
Goodyear Rubber Co., 128 U.S. 598 (1888), held that the addition of commercial
indicators such as “Company” to terms that merely describe classes of goods could
not be trademarked. But Goodyear predated the Lanham Act by more
than half a century and didn’t apply the current primary significance test; the
court here declined to adopt a bright line rule. Nor was the mark nothing more
than the sum of its generic parts. The
district court erred in finding that .com would itself usually bring source-identifying
significance (or at least descriptiveness) to a generic term. “Such a rule would effectively make any
domain name distinctive, which oversteps the focus of our trademark
jurisprudence on a mark’s primary significance to the public.” But that primary
significance wasn’t necessarily derived by taking the separate dictionary
definitions for the component parts and adding them together. Where, as here,
the composite term was not previously commonly used, additional evidence like
consumer surveys was relevant. Although
other cases have found generic.com terms to be generic (e.g., hotels.com), they’ve
considered consumer survey evidence in so doing and declined to create a bright
line rule.
The PTO argued that granting registration could prevent
other legitimate uses of marks incorporating BOOKING. But trademark protection wouldn’t “necessarily preclude another company
from using, for example, carbooking.com or flightbooking.com.” [Emphasis added. It just makes such use
risky, facilitating the plausible assertion of rights to deter potential
competitors or even noncompetitors.] And
“the purported overbreadth of the mark can be addressed in proceedings
regarding the scope of the trademark’s protection,” since likely confusion must
be shown—“often,” indeed, plaintiffs must show actual confusion. [News to me!]
And here’s something that might be quoted in many other contexts: “Given
that domain names are unique by nature and that the public may understand a
domain name as indicating a single site, it may be more difficult for domain name
plaintiffs to demonstrate a likelihood of confusion.”
[Should we be granting lots of registrations that are hard to infringe? Is there a role for unfair competition instead?]
Judge Wynn’s partial dissent (he concurred on the attorneys’
fees part and much of the legal structure of the analysis) described this as “a
problem that Booking.com chose to bring upon itself.” It chose to operate under a generic domain that
described the nature of its services, in order to “attract the wealth of
customers who simply search the web for that service.” But it should have had
to accept the tradeoff of foregoing “the ability to exclude competitors from
using close variants of its domain name.” The majority “allows Booking.com to
have its cake and eat it too.” To Booking.com,
such a result was warranted to prevent “unscrupulous competitors [from]
prey[ing] on its millions of loyal consumers.” But if competitors were using
the terms “booking” and “.com” in ways that might confuse Booking.com’s customers,
“this is the peril of attempting to build a brand around a generic term.”
The dissent also wouldn’t have adopted a per se rule against
protecting generic.com. But such protections should be rare. The dissent thought the district court’s
legal errors (finding that a TLD like .com “generally” has source significance)
infected its weighing of the evidence, leading it to adopt a mistaken
presumption of descriptiveness and to require less of Booking.com than the law
demanded. The ultimate result “conflicts
with the determination that every other court has reached in cases, like the
instant case, involving the registration or enforcement of a proposed mark
composed of a generic Secondary Level Domain and a Top Level Domain.” [So if the PTO wants to try its own luck with
cert, there’s that. I’m not sure it gets
a different result at the Supreme Court, though there’s an outside chance of a
remand to the district court to do the analysis under the correct legal
standard.]
Until now, courts rejected the argument that “generic.com”
isn’t generic because consumers don’t explicitly call the relevant class of
websites “generic.com” websites. Until
now, courts have indicated that the “rare” circumstances in which a generic TLD
will allow a generic term to become protectable involve things like double
entendres, e.g., tennis.net. Rom.com for
romantic comedies might also work, but both those are “readily distinguishable
from the instant case.” A correct legal
analysis would have focused on whether Booking.com was one of the rare outliers. Instead, the district court’s faulty analysis
“upsets the careful balance the law has struck between assisting consumers to
identify the source of goods and preserving the linguistic commons.”
The real interest here is in preserving freedom against the
monopolization of language, even if a would-be monopolist briefly convinces
consumers that there’s secondary meaning in a generic term. “[N]o matter how
much money and effort the user of a generic term has poured into promoting the
sale of its merchandise and what success it has achieved in securing public
identification, it cannot deprive competing manufacturers of the product of the
right to call an article by its name.” Abercrombie & Fitch Co. v. Hunting
World, Inc., 537 F.2d 4, 9 (2d Cir. 1976).
The PTO correctly pointed out that no grocery business called
The Grocery Store could ever receive trademark protection because the name is generic,
regardless of secondary meaning. The majority, however, left in place the idea
that if consumers recognized an online grocery business called
“grocerystore.com,” that business would be entitled to trademark protection. “There
is no basis in law or policy for drawing such a distinction.” Online sellers
need freedom to use generic terms just as brick and mortar stores do.
The district court concluded that .com was different from
Company because only one entity can occupy a .com. But courts have long held
that “[t]he commercial impression created by ‘.com’ is similar to the
impression created by ‘Corp.’ and ‘Co.’, that is, the association of a
commercial entity with the mark.” Any difference came from functionality, and
functional features aren’t protectable even with secondary meaning.
Not correcting the district court’s legal errors “will
provide Booking.com with a weapon to freeze out potential competitors,” forcing
them to bear “the risk of a costly, protracted, and uncertain infringement
lawsuit.” Descriptive fair use wasn’t
good enough for competitors using “booking” in their own domain names, given the
power to threaten provided by a registration.
[Courts are very likely to accept the argument that use in a domain name
is “trademark use,” disqualifying the defendant from descriptive use as a
defense.] Even if the defense remains
available, it’s a defense, not an immunity from suit, so not much help. And the idea that car and flight booking sites
would be ok was “optimis[tic],” but even if true, not helpful to competitors
who want to use names like hotelbooking.com or ehotelbooking.com, “which
likewise describe such competitors’ services ‘as what they are.’” No class of services should be subjected
to this monopoly.
As for the majority’s statement that infringement will be
hard to prove, maybe, but protecting booking.com would still chill competition
based on the expense and risk of defending a lawsuit.
from Blogger http://bit.ly/2WYFe6I
