The internet becomes trademarkable, sort of, with near-unanimous Supreme Court ruling on Booking.com

Lawyers lick their lips at litigation to come

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Analysis The internet's domain names have become potentially trademarkable following a decision by the US Supreme Court today that Booking.com can in fact be registered with America's Patent and Trademark Office (PTO) – against officials' objections.

The near-unanimous decision [PDF] – Justice Stephen Breyer was the sole rebel – went against the PTO’s legal arguments that adding “.com” to a generic term was like adding “company” to a word and so “conveys no additional meaning that would distinguish [one provider’s] services from those of other providers.”

The Supreme Court disagreed; at some length. It agreed with both the district court and the appeals court that “consumers do not in fact perceive the term ‘Booking.com’ that way.” It cited as a key piece of evidence a survey that showed 75 per cent of respondents thought ‘Booking.com’ was a brand name, whereas just 24 per cent believed it was a generic name.

It didn’t help that the PTO hasn’t followed its own argument in the past, with the court noting trademark registration #3,601,346 for Art.com and #2,580,467 for Dating.com. If the decision went against Booking.com, the Supreme Court reasoned, then existing approved trademarks would “be at risk of cancellation.” But it was also scathing in its assessment that “we discern no support for the PTO’s current view in trademark law or policy.”

The same survey that showed 75 per cent of people felt Booking.com was a brand however also revealed that only 33 per cent felt “Washingmachine.com” was a brand whereas 61 per cent though it was generic. And that subjective measurement is likely to prove to be a major headache for the PTO in deciding on what presumably will now be a rush of .com trademark applications.

Support

Trademark lawyers are also, understandably, near unanimous in their support of the decision.

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One of Booking.com’s lawyers, David Bernstein, said: “The Supreme Court has confirmed what millions of consumers have known for years - Booking.com is a brand name, not simply a web address. The Court confirmed that the consumer is king when it comes to brand names, and if consumers perceive a term to be a brand name and not merely a generic or descriptive reference, then that name is entitled to trademark protection.”

He called it “a victory for countless brand owners that have invested significant resources in building their brands - such as Weather.com, Law.com, Wine.com and Hotels.com, as well as others like Home Depot, Salesforce, TV Guide, Pizza Hut, and The Container Store - whose trademarks, the Court acknowledged, would have been at risk if the government’s position was accepted.”

Another IP lawyer - Mitchell Stein of Sullivan & Worcester said that the decision “firmly plants ‘generic.com’ domain names into the field of protectable trademarks” and argues that this was “a sensible result, and accords with what is likely a widespread understanding that ‘Booking.com’ refers to a specific company, and therefore functions as a brand name.”

There is a much bigger issue at the heart of the case: although it is centered around the internet’s domain name system and the .com suffix, the court refused to consider how those naming systems themselves fit within the trademark system.

In a footnote, the decision notes that the PTO urged the court “to disregard that a domain name is assigned to only one entity at a time” under the logic that the .com suffix is “a functional characteristic of the Internet and the domain-name system,” and that functional features cannot receive trademark protection.

But the court rejected that urging because, it argued, “this case does not concern trademark protection for a feature of the Internet or the domain-name system; Booking.com lays no claim to the use of unique domain names generally.”

It went on: “We have no occasion to decide the applicability of [the] functionality bar, for the sole ground on which the PTO refused registration, and the sole claim before us, is that ‘Booking.com’ is generic.”

Which is problematic because the main reason that Booking.com wants to register Booking.com as a trademark is because it has the domain name Booking.com.

Some problems

Which begs the question: what if you don’t have the domain name? Can you still trademark a generic dot-com without ownership of that address? And what happens if that domain is sold or transferred: do trademark rights automatically transfer with it? Or can you end up in the situation where one group owns the actual domain and another a trademark to the same name?

Equally, if someone has an example.com trademark, can they then claim ownership of the domain name, pushing a case through the UDRP process that was set up to decide domain name ownership and which relies heavily on trademark terms?

These issues are touched on by the PTO and the sole dissent by Justice Stephen Breyer.

“The principles discussed above may apply differently to the newly expanded universe of top-level domains, such as ‘.guru,’ ‘.club,’ or ‘.vip,’ which may “conve[y] information concerning a feature, quality, or characteristic” of the website at issue. Again though, he notes that: “These scenarios are not presented here, as ‘Booking.com’ conveys only a website associated with booking.”

Breyer also really disliked how much sway the consumer survey had on the decision, noting the fact that Booking.com can be trademarked because 75 per cent of some group of people said it was a brand but 33 per cent of that same group felt that Washingmachine.com was not.

“What could possibly account for that difference?,” he asked. “‘Booking.com’ is not inherently more descriptive than ‘Washingmachine.com’ or any other ‘generic.com.’ The survey participants who identified ‘Booking.com’ as a brand likely did so because they had heard of it, through advertising or otherwise.

If someone were to start a company called ‘Washingmachine.com,’ it could likely secure a similar level of consumer identification by investing heavily in advertising. Would that somehow transform the nature of the term itself? Surely not.”

Surveying the landscape

Justice Sonia Sotomayor, while agreeing with the court’s decision, also flagged some potential future problems, over both the survey approach and the fact that the decision took place in a narrow legal aspect of a much larger issue.

“The dissent wisely observes that consumer-survey evidence ‘may be an unreliable indicator of genericness,’” she notes, especially given “weaknesses inherent in consumer surveys generally.”

She also pointed out that “the PTO may well have properly concluded, based on such dictionary and usage evidence, that Booking.com is in fact generic for the class of services at issue here, and the District Court may have erred in concluding to the contrary.”

In other words, the PTO might be right in the broader context and this decision may effectively lead to the trademarking of the internet itself, with companies tussling over names and specific domain endings as a way to impose controls on the internet. But, she noted, “that question is not before the Court.”

The question that the Supreme Court was looking at was solely whether the PTO’s argument for why Booking.com shouldn’t get a trademark. And that was that under a legal case from 1888 in which Goodyear Rubber Co. lost its trademark claim that it asserted because it wanted to shut down the Goodyear Indian Rubber Glove company because it was decided that “company” was not something that could be used within a trademark.

That case was superseded in many respects by the 1946 Lanham Act, which still drives most trademark law in the US, where it was decided that the key to deciding whether something was trademarkable lies in its "primary significance" i.e. the word "booking" means to book something rather than "that company called Booking."

The PTO tried to argue that in this case the older Goodyear case was the right standard and that “company” in that time and “com” in our modern digital era were effectively the same. The Supreme Court rejected that argument and went with the Lanham Act because Goodyear “entirely disregards consumer perception.”

That was a point of law, but with the implications of this decision now pushing much more broadly, we may find in future that the PTO’s logic was not as bad as it at first seems.

What now?

The big unknown is what will happen now companies can register their dot-com names as trademarks. The court rejected the argument that those protections would be used to pressure, takeover or shutdown other dot-coms with similar names, pointing out that even Booking.com says its trademark would be a “weak” mark.

The court argues that other doctrines and laws will prevent a company from attacking other similarly named domain names: it cites unfair competition law that “ensures that competitors cannot appropriate a business’s actual domain name” and “will often separately protect businesses from passing off and false advertising.”

It also notes that “a competitor’s use does not infringe a mark unless it is likely to confuse consumers. And even where some consumer confusion exists, the doctrine known as classic fair use protects from liability anyone who uses a descriptive term, ‘fairly and in good faith’ and ‘otherwise than as a mark,’ merely to describe her own goods.”

Which it all well and good. But as anyone who has been at the end of a intellectual property lawyer’s furious indignation will tell you, it doesn’t play out like that in the real online world. Massive legal resources will be used to pressure other companies - often hosting companies, registrars, registries or search engine companies. Such campaigns are frequently successful despite going against the word of the law.

So, in summary, the Court made the right decision but has likely just opened the doors to ten years’ worth of fights over domain names with companies registering DNS suffixes as trademarks and then trying to impose their rights on otherwise. It’s really only a question of whether Facebook or Amazon does it first.

It may well be that we need a new Lanham Act for the internet era, in the same way we need a new Telecommunications Act to deal much more effectively with issues like net neutrality. This decision is only the beginning of the issue, rather than the end. ®

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