U.S. Supreme Court Rules Public Perception Determines Trademark Eligibility – It May Affect How You Protect Your Brand Online

On June 30, 2020, the United States Supreme Court ruled in Patent and Trademark Office v. Booking.com B.V., that it is possible for a generic word combined with “.com” to receive a federally protectable trademark.

This landmark case strikes at the fundamental clash between two competing, yet central ideas in trademark law.

First, there is the notion that to protect the public from confusion, a company can receive trademark protection for works or symbols that the public understands to designate the source of goods or services.
Contrastingly, the second idea is that to protect unfair competition, a company cannot receive trademark protection for words or symbols that are “generic” names.

But what happens when a business has a generic name in which the public has come to associate that specific business with the specific goods or services it sells? The Supreme Court answered this very question, and found in an 8-1 decision that booking.com, owned by Booking Holdings Inc., is entitled to nationwide legal protection against competing trademarks.

Booking.com is a business that maintains a travel-registration website. The business sought federal registration of marks including the term “booking.com,” but the U.S. Patent and Trademark Office (PTO) denied the business’ trademark application. It is important to note that a trademark gives a business the ability to distinguish the goods or services it offers from another business. If a business’s application for a federal trademark is accepted, then that business has certain rights, including the right to protect its trademark against use by other businesses. This not only secures to the owner of the trademark the goodwill of her business, but it also protects consumers in that when they purchase a product bearing a particular trade-mark, they can be assured that they will get the product which it wants.

U.S. trademark law, however, does not confer trademark rights to companies that claim ownership of an entire category of goods, such as wine, or computers, or books. But what about the businesses that invested significant resources in building their brands, such as weather.com and hotels.com? When consumers think of weather.com, for example, most associate that domain name with a specific service.

Thus, the case turned on whether consumers perceived “Booking.com” to be generic. In its opinion, the Supreme Court hypothesized that if consumers thought “Booking.com” was generic, they might expect consumers to understand Travelocity — a similar service – to be a “Booking.com” or if a consumer was looking for a trusted online hotel-reservation service, they would ask a frequent traveler to name her favorite “Booking.com” provider.

The Supreme Court agreed with the lower court’s finding that consumers do not perceive “Booking.com” in this generic way. Moreover, the PTO did not dispute that determination. Instead, the PTO argued for a “per se” rule against trademark protection for any generic word followed by a “.com.”

Yet, the Supreme Court pointed to past instances where the PTO did not follow this rule. For example, the PTO granted trademark registration in the past to “art.com” and “dating.com.” The Court underscored that because domain names are one of a kind, a significant portion of the public will always understand a generic “.com” term to refer to a specific business. Thus, the Court rejected the PTO’s position that “generic.com” terms are categorically incapable of identifying a source or particular business.

There is a limiting principle to take away from this ruling. The Supreme Court did not rule that having a “generic.com” name automatically classifies that term as non-generic. The significance rests with whether consumers perceive that term as capable of distinguishing among members of the class. Booking.com collected consumer surveys to show that 74% of consumers of travel services recognize booking.com as a trademark. Because the PTO offered no evidence to challenge that booking.com enjoys unparalleled consumer loyalty in the travel industry, there was no dispute with respect to whether consumers perceive booking.com to be a generic term.

For businesses, this case proves that if you harness time and effort in building your brand it can pay off. But it comes at a cost. A simple google search reveals that in 2018, booking.com spent $4 billion on marketing. It is no surprise that booking.com spent a portion of those funds on buying Google Adwords to drive consumer traffic to their website. In the second quarter of 2019 alone, Booking Holdings, the parent company of Bookings.com spent $1.19 billion on performance marketing.

It is important to highlight the point that Justice Stephen Breyer made, as the sole dissenting opinion in this case. He cautioned that the majority’s decision will “lead to a proliferation of “generic.com” marks granting their owners a monopoly over a zone of useful, easy-to-remember domains.”

While consumer perception was central to this case, there is an additional cautionary tale with respect to how booking.com and other companies obtain that perception from consumers. Essentially, bookings.com bought the public perception that was central to winning this case through the billions it spent on advertising and marketing. Notably, this was not discussed in the Supreme Court’s opinion, but nonetheless is something business owners, as well as the public, should keep in mind.

Accordingly, businesses must consider the value of both their trademark and the internet domain associated therewith — and how to ensure they are legally protected. Simply registering an internet domain does not provide trademark protection and owning a trademark does not automatically provide your business with the right to the “.com” domain extension thereof.

As you consider how to promote your business, Vandenack Weaver attorneys can assist you in determining how to best protect your brand in commerce, social media and online. If you have questions, please call at 402-504-1300 or contact us via [email protected].