Type: Law Bulletins
Date: 07/01/2020

SCOTUS Eliminates Bright Line Rule Against Generic Term + Top Level Domain Name Trademarks

On June 30, 2020, the Supreme Court of the United States (SCOTUS) sided with the respondent, Booking.com, in a sea-changing decision — holding that BOOKING.COM is a registrable trademark. Delivered by Justice Ginsburg, the 8-1 decision settled on the premise that because BOOKING.COM as a whole is not a generic name to consumers, it is not generic – and therefore registrable. 

Consumer minds matter. SCOTUS focused on a “bedrock” principle of trademark law— i.e., whether a term is generic depends on its meaning to consumers. After all, a mark’s eligibility for registration turns on the mark’s capacity to “distinguish[h]” goods “in commerce.” 15 USC § 1052. That said, SCOTUS was careful to note that while they reject the United States Patent and Trademark Office’s (USPTO) sweeping rule that “generic.com” terms are per se generic names incapable of trademark significance, SCOTUS has not imposed an automatic rule classifying such terms as nongeneric either. The classification of such marks will now fall to how consumers view them, rather than to automatic binary categories. This is consistent with how descriptive marks fare in the examination process.

This case concerns eligibility for federal trademark registration, with important domain name law implications. The respondent, Booking.com, is a well-known travel enterprise that facilitates travel registrations through an online platform. The respondent sought to register the mark BOOKING.COM. The USPTO forcefully argued that the term “booking” is generic, and as such, is not registrable, which Booking.com did not dispute. In furtherance of their argument, the USPTO reasoned that the composite mark made up of “booking” and “.com” was generic as “.com” is equivalent to that of an entity designation (e.g., company, Inc., Co., LLC) that is incapable of any source-identifying capacity. SCOTUS was not persuaded as consumers have come to identify BOOKING.COM as a brand name, as opposed to a generic category or class of goods or services.

The USPTO asserted that even if consumers view BOOKING.COM as a brand name, it should still not be registrable on the premise that granting a registration for such generic terms, even when viewed as a whole, threatens the market with anticompetitive effects. This provides a monopoly over generic terms that others rely on to describe their businesses' goods and services. SCOTUS did not agree.

USPTO’s concerns about anticompetitive effects are misguided. SCOTUS explains that trademark policies already in place guard against such concerns. First, generic terms are capable of conveying source-identifying characteristics in the minds of consumers. Second, only one entity is capable of claiming the domain name BOOKING.COM. No other entity can register the domain name “booking.com” and any attempt to do so would result in an “already registered” message from the registrar. Third, a fundamental concept of trademark law is that a competitor’s use does not infringe a mark unless it is likely to confuse the consuming public. Others are free to use the terms “booking” and “.com” without creating a likelihood of confusion with BOOKING.COM. Further, the fair use doctrine protects one who uses the term “booking” in a descriptive manner, “fairly and in good faith” and “otherwise than as a mark,” to describe one’s own goods. See Majority Opinion, Page 12. These longstanding trademark doctrines shield anticompetitive effects that concern the USPTO.

Justice Breyer, the sole dissenter, argues that the majority’s rationale will be “cold comfort” to competitors of “generic.com” brands. See Dissent, Page 12. “Owners of such marks may seek to extend the boundaries of their marks through litigation, and may, at times succeed,” though this does not come without a cost. Id. Justice Breyer also notes that the decision will have effects on the new generic top-level domain (gTLD) marketplace. There is a raging battle within the Internet Corporation for Assigned Names and Numbers (ICANN) regarding whether or not ICANN should ban so-called “closed generics” in the next round. In the last round, gTLDs were either modified to be open, deferred to the next round, or withdrawn. 

Takeaway. While this decision is a win for Booking.com, it could:

  • Create some room for argumentation for the use, protection, and registrability of trademarks in the “generic” or “descriptive” category on the spectrum of distinctiveness — although the use of consumer studies will very likely be involved.
  • Complicate trademark infringement matters involving trademarks on the weaker end of the spectrum.
  • Provide ammunition to those within ICANN attempting to ensure that there is no ban of the so-called “closed generics” in future rounds of new gTLD applications. However, gTLDs now appear to be capable of obtaining trademark significance through use.
  • Require that trademark owners step up the policing and protection of their marks, and to do so, they must have an understanding of the scope of protection to which they are entitled.
  • Increase the value of “generic term” + TLD extension domain names. Those with close ties to a generic term that might be interested in acquiring should not wait.

Taft’s Intellectual Property Practice group is well equipped with the knowledge and skills to assist and care for trademarks throughout the application and registration process. Taft has a robust trademark, technology, and internet practice, including a partner who is nationally ranked in the new gTLD practice area. Taft is uniquely positioned to help navigate the follow on consequences from this important Booking.com decision.

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