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 info@vwattys.com.

VW Contributor: Skylar Young
© 2020 Vandenack Weaver LLC
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Are Your Business’s Posts on Instagram Protected?

Whether you run your own independent photography business, or you operate a virtual online coaching and nutrition business, the reality is, you have an Instagram, and you use that Instagram to market your services and attract clients. In fact, for many businesses, maintaining a publicly searchable account on Instagram to share photos and videos is a necessity for a successful business. Now, imagine the nightmare scenario where Instagram sells one of your images on your business’s Instagram account to a third-party vendor. That would surely be a copyright infringement and you as the business owner would have a viable and enforceable claim against that third party for copyright infringement, right? Recently, the Southern District for New York has addressed this specific issue, and so far, the answer is less than clear.

Back in April of 2020, a Judge in the Southern District of New York dismissed a plaintiff’s complaint filed against two defendants’ alleging a copyright claim. The plaintiff is a photographer, and Ziff Davis is a digital media and advertising company that owns multiple online brands and print titles. Ziff Davis owns Mashable, a media and entertainment platform that operates the website www.mashable.com.  The plaintiff uploaded an image titled “Child, Bride, Mother/Child Marriage in Guatemala,” in which she owns an exclusive United States copyright, on her public Instagram account. In 2016, Mashable contacted the plaintiff to license the image to showcase on their website. The plaintiff declined the offer. Nonetheless, a few days later, Mashable published an article and included a copy of the image. Mashable was able to do this with relative ease by embedding the content on Instagram to their website. Embedding occurs where a third party publishes content from Instagram’s servers in an Instagram frame on the third-party users’ website. In the complaint, the plaintiff agreed that rather than copying her photograph directly, the defendant posted “embed code” on its site which embedded the image in its article. The reality is, internet platforms including YouTube, Twitter, Facebook, Instagram, and LinkedIn provide their users with embed code, with which users may embed their content either on the social media platform or on other sites. Users have control to restrict or prevent embedding of their content if they designate their content as private.

The governing document central to the dispute is Instagram’s “Terms of Use.” When the plaintiff, and any other individual or business that enters into a contract with Instagram, accepts the Terms of Use, they are licensing to Instagram any photo they share while their account is set to public. Images may be sub-licensed by Instagram to a third-party user of Instagram’s services. Additionally, the defendants cited to Instagram’s “Platform Policy” which states that Instagram “provides the Instagram application programming interface (“API”) to help broadcasters and publishers discover content, get digital rights to media, and share media using web embeds.” The judge agreed with defendants and affirmed that the use of a public Instagram photo as embedded in an article on a third-party website is covered by Instagram’s Terms of Use.

                However, last week, the Southern District in New York reconsidered its ruling in Sinclair v. Ziff Davis, LLC after a different judge in the same district addressed the same issue but ruled in the opposite. Earlier this month in McGucken v. Newsweek LLC, the court refused to dismiss the photographer’s copyright infringement claims based on Instagram’s Terms of Use, despite the defendant relying on the Sinclair decision in their argument.

Upon reconsideration, the judge reversed the earlier opinion and instead denied Mashable’s motion to dismiss plaintiff’s second amendment complaint. Relying on McGucken, the District Judge reasoned that there are various interpretations of Instagram’s Terms of Use and Platform Policy. Upon reconsideration, the court agreed with the earlier opinion that the plaintiff in Sinclair agreed to the Terms of Use and by doing so, authorized Instagram to sub-license her public content. However, the court did not find evidence that Instagram had exercised this right by extending a license to Mashable, the defendant. The earlier opinion did not give full force to the requirement that a license must convey the licensor’s explicit consent to use a copyrighted work.

Then, on June 4, 2020, Instagram publicly clarified that its policies do not grant a blanket license to API users to embed public third party content. The social media tycoon stated “Our platform policies require third parties to have the necessary rights from applicable rights holders. This includes ensuring they have a license to share this content, if a license is required by law.” This declaration by Instagram is a victory for business owners who use public facing Instagram accounts and provides an answer to the possible interpretations the court alluded to on reconsideration in Sinclair with respect to Instagram’s Terms of Use. Now, business owners who upload content on their Instagram have a powerful tool in their toolbox when it comes to fighting copyright violations.

VW Contributor: Skylar Young
© 2020 Vandenack Weaver LLC
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Supreme Court to Determine Whether Fossil Must Turn Over Profits for Trademark Infringement

Fossil, Inc., the luxury goods retailer, could owe a manufacturer, Romag Fasteners, Inc., its profits for infringing on Romag’s trademark. The issue of whether Fossil owes Romag approximately $6.7 million dollars in profits gained by using the infringing trademark depends on whether the remedy of disgorgement of profits by a party infringing on a trademark requires willfulness by the infringing party.

The issue arises from Fossil using a magnetic snap fastener on some of its bags, purchasing some of the fasteners directly from Romag. However, Fossil also purchased some fasteners that looked nearly identical to those of Romag from another source, likely knowing that the fasteners were counterfeit and infringed on the trademark of Romag. Despite this knowledge, Fossil proceeded to use them anyways in “callous disregard” to the rights of Romag. In a moment of luck for Romag, an employee discovered the counterfeit products when visiting a Macy’s, finding the Fossil bags with the counterfeit fastener. Romag successfully argued that Fossil infringed on their trademark rights, but an open question regarding the remedy remains. The United States Supreme Court will determine whether the remedy includes the profits of Fossil, and such decision will be based on whether Fossil must willfully infringe on Romag’s trademark rights or if “callous disregard” is sufficient to entitle Romag to the profits of Fossil.

This case highlights the broader importance of protecting the brand and intellectual property of a company. Traditionally, this means taking active steps to ensure that the trademarks, copyrights, trade secrets, and patents are protected under applicable law, but it should also mean proactively verifying that the initiatives of the company don’t infringe on the rights of another. Failure to take consider trademark rights, as Fossil is learning the hard way, could result in disgorgement of profits.

VW Contributor: Alex Rainville
© 2020 Vandenack Weaver LLC
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Intellectual Property: A Peloton Story

Most people know Peloton because of their flashy and controversial ads, as well as for revolutionizing the indoor cycling industry. However, as Peloton forges forward in the competitive fitness equipment industry and fights to keep its stock price above its IPO level, they have also been litigating trademark and copyright claims. Recently, a Federal District Court ruled in favor of Peloton in the trademark matter, which means, for now, Peloton will be able to retain its name.

In the case, Move Press, LLC v. Peloton Interactive, Inc., Move Press claimed that Peloton was infringing on their trademark rights because Move Press has a cycling publication named Peloton Magazine. Move Press had registered this trademark with the United States Patent and Trademark Office, and its use of the mark clearly preceded the use by Peloton. However, Move Press did not file the claim against Peloton for well over four years. As a result, Peloton argued that this claim was barred under an equitable legal theory known as laches, which means that Move Press waited an unreasonable period of time to bring the claim. Peloton had to argue laches, as opposed to a statute of limitations, because the Lanham Act, which governs registered trademarks, does not have a statute of limitations. The Federal District Court, after undergoing a rigorous review of the elements in the laches defense, ruled in favor of Peloton.

Had Move Press timely made the claim against Peloton, the result would have likely been in favor of Move Press and the public would know Peloton as something different. For business owners, this raises two important points. The first is that every registered trademark owner has an obligation to police their marks and, should they find someone infringing on their mark, timely bring a claim. The second is that a business, when selecting its name, branding a new product, or re-branding, should review its rights in the marks prior to making a significant marketing investment.

VW Contributor: Alex Rainville
© 2019 Vandenack Weaver LLC
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Copyright Ownership when Using Independent Contractors and Service Providers

Businesses often utilize a third-party for services, especially when directly employing someone to perform the task will not add value to the organization. By way of example, it is common practice for a business to hire a freelance photographer, a marketing company to write advertising copy, or an independent contractor to write specific policies and procedures. For many, the business needs require the decision maker move fast and little consideration is given the intellectual property rights. Unfortunately, this can lead to a number of challenges for both the business and the independent contractor.

Generally, when a business hires an independent contractor, the ownership of the creative work belongs to the hiring business. That means the independent contractor is unable to use the work that they actually created without the permission of the business. By way of example, a freelance photographer is infringing on the businesses copyright ownership when posting the photo they took on behalf of the business to their personal portfolio website. Conversely, if the agreement between the business and the independent contractor provides that the independent contractor will have ownership rights, the business may be limited in how they can use the work that they specifically hired the independent contractor to complete. Even more complicated is when no written agreement exists at all or if the business is operating in certain states that have rules that alter the ownership analysis.

To avoid intellectual property disputes that arise from hiring independent contractors, a business should ensure that they have an agreement in place with each independent contractor. The agreement should address ownership and, in many of the more complex business relationships, ensure that the licensing adequately protects the interests of both parties.

VW Contributor: Alex Rainville
© 2019 Vandenack Weaver LLC
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Pre-registration of a Copyrightable Work

An often overlooked method to protect copyrightable works is pre-registration. This method will likely become a little more prominent because, earlier this year, the United States Supreme Court determined in Fourth Estate Public Benefit Corp. v. Wall-Street.com, 585 U.S. ___ (2019) that a copyright owner must wait to bring suit for copyright infringement until their works have been registered. Previously, in the view of certain lower courts, the copyright owner simply had to apply for registration. This decision increased the burden on copyright owners to bring a suit for infringement, but the Supreme Court noted several reasons for its decision, including pre-registration.

Pre-registration is a tool used to protect unpublished works that are in the final stages before commercial distribution, making them particular susceptible to copyright infringement. Instead of following the full registration process that will take over half a year, the copyright owner would submit the work to the United States Copyright Office and, after a limited review, will receive pre-registration. Under Section 408(f) of the Copyright Act, a work that has been pre-registered provides the copyright owner an opportunity to immediately bring a suit for copyright infringement.

Although this particular method of protection might have limited application, it is an important tool to ensure that owners of particularly vulnerable copyrightable works are able to bring suit immediately against those infringing on their works. Otherwise, the copyright owner will have to wait eight or nine months to receive actual registration from the copyright office before they can bring a suit for copyright infringement, which would likely damage the value of the underlying intellectual property. As always, the attorneys at Vandenack Weaver are available to assist with protecting your intellectual property.

VW Contributor: Alex Rainville
© 2019 Vandenack Weaver LLC
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Copyright Infringement: Will Congress Make it Easier to Obtain a Remedy?

On October 22, 2019, the United States House of Representatives passed H.R. 2426, The Copyright Alternative in Small-Claims Enforcement Act of 2019. The intent of the legislation is to make it easier for copyright owners to seek enforcement of their rights in situations where the overall damages to the copyright owner are minimal. Essentially, the Copyright Office would create a Copyright Claims Board that would adjudicate infringement claims with damages under $30,000.

The rationale behind the legislation is that cost is a significant impediment to a copyright holder bringing a claim against someone infringing on their work. To bring a claim, as recently determined by the United States Supreme Court, the underlying work must be registered with the United States Copyright Office, which takes time and includes certain expenses. Once registered, the copyright owner can only seek a remedy in federal court, since that is the exclusive jurisdiction for a copyright infringement claim. This process is expensive and, although attorney’s fees can be recovered pursuant to section 505 of the Copyright Act, the United States Supreme Court has also recently limited the scope of recovery. The end result is that many copyright owners are unable to seek a remedy.

This legislation passed with near unanimous support in the United States House of Representatives and moves to the United States Senate for consideration. Should this legislation ultimately become law, it will likely have a significant impact on how copyright owners protect their intellectual property.

VW Contributor: Alex B. Rainville
© 2019 Vandenack Weaver LLC
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Foreign-Domiciled Applicants; Why the Change at the Trademark Office?

By Alex Rainville

In a long anticipated decision, starting on August 3, 2019, foreign domiciled trademark applicants, registrants, and parties must be represented by a US licensed attorney in front of the United States Patent and Trademark Office (“USPTO”). This means that any foreign-domiciled person or business wishing to seek trademark registration with the USPTO must appoint a US licensed attorney to file and prosecute the trademark registration application. This may appear like an unnecessary burden, but it is part of fixing overarching administrative problems.

The USPTO is actively trying to modernize and streamline the trademark registration application process, to ensure timely review of applications and increase efficiency to final outcomes. One of the challenges to this process has been a large number of foreign-domiciled applicants submitting inaccurate, and often times fraudulent, materials. By way of example, a common problem with these applications is the specimens are either failing to meet the required standards or are outright fraudulent. This increases the time required for the USPTO to examine and process applications, resulting in an inefficient registration process for all applicants. By using a US licensed attorney, the USPTO expects that the applications will be more accurate and eliminate much of fraud, ultimately increasing efficiency.

For businesses wishing to protect its intellectual property, even those based in the US, it is a good idea to hire a trademark attorney. For example, the attorney will be able to guide you on what can be protected under the Lanham Act and the common law, and the best avenue to obtain registration or, more generally, protection for your intellectual property. They will also ensure you and your business are not defrauded by the multitude of USPTO imposters, and will know how to file complaints regarding these imposters with the Federal Trade Commission, for the Department of Justice to prosecute. Although this change of policy at the USPTO may seem unfair to foreign-domiciled applicants, the change may ultimately benefit all the businesses relying on the USPTO to protect its brand and intellectual property.

© 2019 Vandenack Weaver LLC
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The Defend Trade Secrets Act

Last summer, Congress enacted the Defend Trade Secrets Act (“DTSA”), which created a federal civil cause of action for misappropriation of trade secrets. Recently, various courts have started to interpret the DTSA, and determined that it does not preempt existing state law, but gives trade secret owners the option to enforce their claims and receive more consistent outcomes than they would in state court. Prior to the DTSA’s enactment, manufacturers and sellers had to bring trade secret misappropriation claims in state court, unless the parties could establish diversity jurisdiction or an independent federal cause of action.  Because state interpretations of the Uniform Trade Secrets Act vary in every state, consistent relief was not always possible.  For example, the definition of “trade secret” and the types of remedies differ across states. However, the DTSA applies nationwide and provides a uniform statute for trade secret owners to rely on in federal court.

The DTSA has important features that will impact trade secret owners.  Notably, it defines “misappropriation” and “trade secret”, which aids in consistent enforcement across state lines.  Additionally, it creates a civil seizure mechanism, which allows courts to order the seizure of property to prevent the propagation or dissemination of the trade secret, even before a formal finding of misappropriation is established and without notice to the alleged wrongdoer.  Last, a whistleblower provision provides immunity to employees from criminal or civil liability under federal or state laws for disclosing a trade secret to an attorney or government official for purposes of reporting or investigating a suspected violation of the law or filing a lawsuit made under seal.

Most controversial is the civil seizure provision, and courts are reluctant to permit seizures unless the plaintiff establishes necessity. Also controversial, federal courts are turning to state courts for guidance in interpreting the DTSA, thus, defeating its underlying purpose of providing uniformity. However, these issues are likely to be resolved over time. Since its enactment, it is estimated that less than seventy cases have been brought under the DTSA, but the law provides an important option for those pursuing trade secret claims.

© 2017 Vandenack Weaver LLC
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Federal Civil Remedy for Misappropriation of Trade Secrets Now Available

by M. Tom Langan, II

President Obama recently signed into law legislation that creates a federal civil remedy for the misappropriation of trade secrets. Trade secrets are a form of intellectual property that consist of a business’s methods, designs, formulas, and other confidential or proprietary information that helps a business obtain economic advantages over its competitors. While there were federal remedies for misappropriation of other forms of intellectual property (i.e. trademarks, patents, copyrights etc.), trade secrets were not protected at the federal level until now. The Defend Trade Secrets Act of 2015 offers a variety of remedies, from monetary penalties to injunctive relief to even seizure orders – all designed to stop the unlawful dissemination of trade secrets. There is a 3 year statute of limitations to bring a claim based off when the misappropriation is discovered or should have been discovered based off a reasonable investigation.

© 2016 Vandenack Williams LLC
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