The U.S. Supreme Court Finds Booking.com Registrable, Leading to Potential Growth in Generic.com Brand Building
Booking.com’s eight-year quest for registration of four trademarks on the Principal Register maintained by the United States Patent and Trademark Office (USPTO) came to a successful end on June 30, 2020, when the United States Supreme Court, in an 8 to 1 decision, with an opinion authored by Justice Ruth Bader Ginsburg, affirmed the finding of the Fourth Circuit Court of Appeals that “Booking.com” is non-generic and, consequentially, registrable. Patent and Trademark Office v. Booking.com B.V., 591 U.S. __ (2020).
The Supreme Court seemed keenly aware that the “invisible hands of capitalism” rightfully belong to the consumer, holding that whether a “generic.com” term such as “Booking.com” is generic, and therefore not entitled to registration on the Principal Register with all of the rights and protections that affords, depends on whether the consumer perceives the term as such. The outcome hinged largely upon the Court’s confidence in the public’s familiarity with the basic mechanics of the internet: that the consumer knows each domain name can be owned by only one company. While the Court resisted holding that all domain names are non-generic and registrable, the ruling opens the door for generic.com domain owners to build brand equity with the potential for trademark registration and the benefits that accompany such registration in enforcement.
This matter originated when Booking.com filed applications to the USPTO to register four marks, each of which featured the term “Booking.com.” In 2012, a USPTO examining attorney concluded that the term “Booking.com” is generic and therefore unregistrable. The USPTO’s Trademark Trial and Appeal Board (TTAB or Board) agreed.
Booking.com sought review in the U.S. District Court for the Eastern District of Virginia pursuant to 15 U.S.C. § 1071(b), which permits a party dissatisfied with a decision of the Board to appeal it by filing a civil action in federal court, where a broader array of evidence may be considered. There, Booking.com submitted evidence not presented to the Board, including consumer surveys showing the public’s decisive recognition of Booking.com as a single business and not a term for the entire class of online hotel booking businesses.
On the basis of this new evidence, and a finding that Booking.com had acquired secondary meaning, i.e., an association with a particular company, the District Court concluded that “Booking.com” is not generic. The USPTO appealed and the Fourth Circuit affirmed the lower court, rejecting the USPTO’s argument that “.com” combined with a generic term such as booking “is necessarily generic.” The Supreme Court granted certiorari specifically as to the issue of whether “Booking.com” is generic and, accordingly, unregistrable, and has affirmed the Fourth Circuit’s decision, opening the path for other generic.com owners to establish secondary meaning and enforce their rights with a trademark registration in hand.
Using the backdrop of an analysis of a generic.com, the Court reasserted the dual intent of trademark law in distinguishing a producer’s goods or services from another’s: (1) Securing to the owner of goodwill in the business and (2) protecting the ability of consumers to distinguish the goods and services of competing producers. After describing the scale of the five types of marks (Generic, Descriptive, Suggestive, Arbitrary and Fanciful), the Court outlined various “guiding principles” to follow when deciding whether a term is generic. It reaffirmed the principle that generic terms name a class of goods or services, as opposed to a particular feature or exemplification of a class. Additionally, when a compound term is at issue, it must be considered as a whole. Signaling its eventual holding, the Court took care to underscore that the determination of whether a term is generic hinges on the perspective of and relevant meaning to consumers.
Applying these principles, the Court evaluated whether the public would perceive Booking.com as “the class of online hotel-reservation services.” For this to be true, the Court suggested that, for example, Travelocity® would need to be understood as “a Booking.com.” Similarly, the Court would 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.” The Court determined that consumers do not perceive the “Booking.com” term in that manner, and accordingly the term is not generic.
The USPTO argued that the Supreme Court must find “generic.com” terms to be generic in order to stay out of conflict with its 1888 decision, Goodyear India Rubber Glove Mfg. Co. v. Goodyear Rubber Co. 128 U.S. 598. In that case, the Court found “Goodyear Rubber Company” to be generic because “Goodyear Rubber” was a “well-known” process in those days and the “addition of the word ‘company’ supplied no protectable meaning.” The distinction between the Goodyear precedent and facts at hand, however, appears to serve as the driving force behind the majority opinion’s conclusion. As the opinion discusses, what distinguishes “Booking.com” from the mark in the Court’s earlier precedent is the fact that “a significant portion of the public will always understand” that a “generic.com” term refers to a specific business. In fact, use of the top-level domain signifies by definition that the mark belongs to a specific business, since only one business can own a particular domain name.
In his dissent, Justice Breyer argues that permitting the registration of “Booking.com” will provide the company with unfair competitive advantages in the market. While Justice Ginsburg does not dispute that competitive advantages will follow, she explained that the advantages are marginal and counterbalanced by the potential weakness in the mark as acknowledged by Booking.com’s counsel. The majority opinion acknowledged the USPTO’s concern that trademark protection for a term such as “Booking.com” could hinder competitors from using the term “booking” in their names or domain names. The Court, however, noted that such a concern arises with descriptive marks as well, and the trademark law “hems in the scope of such marks short of denying trademark protection.” The Court reasoned that a competitor’s use of the word “booking” would not infringe unless it is likely to cause consumers to be confused.
The Court appeared to accept Booking.com’s concession that the mark would be weak, and acknowledged that it could find itself in a very crowded field. However, the more that the Court recognized there were weaknesses to the mark, the more it seemed to accept that there was a basis for which to grant protection to the mark. The Court recognized that Booking.com had conceded that its registration would not preclude competitors from using the term “booking” to describe their services, and that “close variations are unlikely to infringe.” Accordingly, recognizing that “Booking.com” appeared to have some secondary meaning, there was no basis to deny Booking.com the legal protections and greater benefits offered to registered trademark owners (including the right to stop cybersquatters through the use of private dispute resolution instead of litigation pursuant to the Anticybersquatting Consumer Protection Act, 15 U.S.C. 1125(d)).
While the Booking.com decision specifically pertains to companies seeking registration of “generic.com” marks, the opinion provides guidance on how trademark applicants can establish consumer recognition of the term as distinctive and, accordingly, earn primary registration of their generic.com mark. The Court specifically identifies consumer surveys, dictionaries and usage by consumers and competitors, but also states that parties are free to resort to “any other source of evidence bearing on how consumers perceive a term’s meaning.”
Generic.com domains have been some of the most valuable domains ever sold or valued. For example, GoDaddy reported that Cars.com was valued at $872 million, carinsurance.com was sold in 2010 for $49.7 million, and VacationRentals.com was sold for $35 million in 2007. In 2001, Hotels.com was sold for $11 million. Building off that brand equity (yes, brand equity in a generic name), the company that had changed its name to Hotels.com sold for more than $1 billion.
The Court’s rejection of a bright-line rule in favor of a fact-specific one may render certain business considerations (e.g., likelihood of registration, enforceability of a mark) a less exact science. However, the value attributed to generic domain names now may have an additional tool to use to protect a domain owner’s rights. Under the right circumstances, and with proper marketing, a generic.com domain could become even more valuable. Being able to take advantage of the benefits of federal trademark registration will likely give rise to more efforts to build brand equity in valuable online domains.