Opinion analysis: Court holds that “generic.com” marks may be registered trademarks or service marks when consumers do not perceive them as generic

When the digital travel company Booking.com sought to register its domain name as a service mark for hotel reservation services, the U.S. Patent and Trademark office denied registration under a longstanding policy that the combination of a generic term for goods and services with the “.com” suffix did not create a protectable trademark. Booking.com sought review of the PTO’s decision in federal district court, and introduced survey evidence supporting an inference that 74 percent of consumers recognized “Booking.com” as a brand name. The district court concluded that even though the word “booking” is an unprotectable generic term, combining that term with “.com” transformed it from an unprotectable generic term into a descriptive term that could be protected once it had acquired secondary meaning, and the survey evidence demonstrated that it had. The U.S. Court of Appeals for the 4th Circuit affirmed, and today the Supreme Court affirmed the 4th Circuit by a vote of 8-1 in U.S. Patent and Trademark Office v. Booking.com.

The case presented a clash between two longstanding and fundamental trademark law doctrines. First, in order to protect consumers from confusion, the law offers trademark protection to words or symbols that consumers understand to designate the source of goods or services. Second, in order to protect competition in the marketplace, the law refuses to give trademark protection to words or symbols that are the generic names for goods or services. Even when a long period of exclusive use or an extensive advertising campaign has persuaded consumers to understand a generic term as a brand name, generic terms are ineligible for trademark protection. That rule protects competitors’ ability to use the terms they need to describe their competing products. On the other hand, a word or symbol can be protected as a trademark if it is “merely descriptive” of a product and consumers have come to understand it as a name or symbol for a single producer of that product, rather than a description of its characteristics.

That puts considerable pressure on the decision whether a word or symbol is generic or descriptive. The trademark statute doesn’t define the terms “generic” or “descriptive,” and courts have applied a variety of inconsistent tests, generating results that appear arbitrary. If a trademark is arguably a generic term, but at least some consumers understand it to be a brand name, refusing to protect it risks confusing some consumers about the source of goods or services, but granting trademark protection risks undermining competition in the marketplace for those goods and services.

Booking.com conceded that the word “booking” was the generic term for its services, but insisted that combining it with the suffix “.com” generated a descriptive term, and that the test for whether a word or symbol is generic is whether consumers perceive it to be generic. The PTO maintained that the competition-enhancing policies embodied in the trademark statute forbid enabling one competitor to monopolize generic terms. The anticompetitive dangers are more pronounced when the asserted trademark is a domain name, the PTO argued. Because only one entity at a time can use any given internet domain name, it will be easy for a generic.com business to generate a survey that proves that a significant number of consumers associate any domain name with a specific business. (Indeed, the survey evidence Booking.com introduced in the lower courts showed that 33 percent of consumers believed that “washingmachine.com” was a brand name, even though there is no such company.) Further, the PTO maintained that giving trademark protection to a generic.com mark risked allowing the trademark owner to prevent its competitors from using the generic term in their domain names.

Justice Ruth Bader Ginsburg, writing for an eight-justice majority, credited the district court’s determination that consumers perceived “booking.com” as a brand name, and found that determination dispositive:

[W]hether “Booking.com” is generic turns on whether the term, taken as a whole, signifies to consumers the class of hotel reservations services. … Consumers do not in fact perceive the term “Booking.com” that way, the courts below determined. … That should resolve the case: because “Booking.com” is not a generic name to consumers, it is not generic.

In adopting a standard that determines whether a term is generic solely with reference to consumer perception, the majority implicitly discarded the longstanding rule that generic terms cannot become protectable marks even if consumers recognize them as brand names. The majority also rebuffed the PTO’s arguments that the domain name context posed increased risk of anticompetitive harm. Instead, Ginsburg suggested that because a “generic.com” term might suggest to consumers that it was associated with a particular website, it would be more likely to identify the source of a product rather than a class of goods or services. Anticompetitive harms would be mitigated because trademark infringement requires the trademark owner to show a likelihood of confusion, and consumers would be less likely to be confused by similarities between the generic or highly descriptive components of a generic.com mark and other businesses’ uses of similar words or symbols. Ginsburg also observed that the trademark statute allows businesses to make descriptive uses of terms so long as they use the terms “otherwise than as a mark” and “fairly and in good faith” merely to describe their own products. Even if a generic.com trademark owner sued a competitor whose domain name incorporated the generic term and were able to show consumer confusion, this exception could shield the competitor from liability.

Justice Sonia Sotomayor joined the majority opinion but wrote separately to emphasize two points. First, consumer surveys may be unreliable proof of whether a term is generic, Sotomayor suggested, and the Supreme Court was not endorsing them as the most persuasive evidence. Second, the PTO may have correctly determined that “Booking.com” was generic and the district court may have been wrong to overrule it, but that question was not before the court.

Justice Stephen Breyer dissented. He argued that the majority disregarded important trademark principles and sound trademark policy: “Terms that merely convey the nature of the producer’s business should remain free for all to use.” Under the majority’s approach, many businesses could obtain a trademark by adding “.com” to the generic names of their products, which Breyer claimed could have widespread anticompetitive effects. The majority’s reliance on the need to prove confusion and the statutory descriptive use privilege to protect competitors, Breyer felt, underestimated the chilling effect of the threat of costly litigation.

Today’s decision significantly expands the availability of trademark protection for domain names, and limits the number of terms that will be deemed unprotectable because they are generic. The court did not explicitly discard the rule that generic words cannot be made into trademarks by persuading consumers to perceive them as trademarks, but it is difficult to see how that rule can be reconciled with the court’s rationale. Moreover, despite Sotomayor’s qualifications, it seems likely that the decision will make surveys even more essential in trademark litigation, and will encourage their use in the registration context as well.