Did The U.S Supreme Court Just Ratify Monopolies?

Did The U.S. Supreme Court Just Ratify Monopolies?

By Barbara L. Mandell

Everybody knows that a patent gives the owner a monopoly over the claimed invention. The monopoly is not, however, without limits; the invention enters the public domain twenty years from the application’s U.S. filing date. Many people also know that, unlike a patent, so long as a trademark is correctly used and maintained at the U.S. Patent & Trademark Office (“PTO”), a trademark registration lasts forever. The catch, however, is that one may not register a “brand” that is simply generic for the product or service. The reason is that fair competition requires that generic words reside in the public domain for everyone’s use. Thus, for example, no one can own a trademark registration for COFFEE, as a brand for coffee. (We hear that someone actually owns a trademark registration for APPLE, but not for a fruit). By the same token, no one can own the trademark BOOKING for the service of enabling travel bookings. Wait, what?

Yes, on June 30, 2020, the longstanding trademark rule preventing the registration of generic words was the subject of a well written Supreme Court majority opinion (Justice Ginsburg) and a compelling solo dissent (Justice Breyer) in the case titled, U.S.P.T.O. v. Booking.com B.V., 591 U.S., 140 S. Ct. 2298, 207 L.Ed. 2d 738 (June 30, 2020).

By way of background, Booking.com applied for a trademark registration for BOOKING.COM and, by refusing registration, the PTO followed the long-standing rule. Booking.com challenged the refusal, in a case that ultimately was taken up by the Supreme Court. In fact, due to the pandemic, the dispute was the first Supreme Court case to be argued over the phone, as opposed to in person.

Interestingly, the parties did not dispute that the word “booking,” is generic for travel reservation services. They diverged, however, as to whether “Booking.com” must also be generic, i.e., whether the combination of a generic word and “.com” must likewise be generic.

The majority rejected such an inflexible rule, stating, humorously, that if “Booking.com” were generic, “we might expect consumers to understand Travelocity—another such service—to be a “Booking.com.” Yet, given that consumers do not perceive Booking.com to be generic, but as the name of a business, in the majority’s view, such a perception was sufficient to ‘de-genericize’ the mark. This is a marked departure from Supreme Court precedent, in particular, Goodyear’s India Rubber Glover Mfg. Co. v. Goodyear Rubber Co., 128 U.S. 598 (1888), which held that a generic term modified by “Corp.” or like designation produces a generic composite barred from registration. Until now, consumer perception has been irrelevant.

In his dissent, Justice Breyer expressed his belief that the switch from a per se rule prohibiting registration of generic marks to one dependent on consumer perception was a dangerous one. His key problem is that permitting registration of a combination of two such generic terms “would grant the owner of the mark a monopoly, since a competitor could not describe his goods as what they are.” He asked:

“What is Booking.com? To answer this question, one need only consult the term itself. Respondent provides an online booking service. The company’s name informs the consumer of the basic nature of its business and nothing more. Therein lies the root of my disagreement with the majority.”

The immediate outcome of this decision may be a rush to purchase generic domain names relevant to one’s business (e.g., wine.com, wine.org, wine.net) and then file trademark applications for those domain names. The long-term outcome may be a host of government-sanctioned monopolies of what were once considered unprotectable generic terms for unlimited duration, with legal barriers to entry fashioned by trademark registrations and associated rights. Trademark rights may ultimately trump patent rights. We shall see.