Argument analysis: A very orderly argument
on May 5, 2020 at 10:57 am
The Supreme Court’s first telephonic oral argument raised the question whether a business can create a registrable trademark or service mark by combining an unprotectable generic term for the services it offers with the generic top-level domain name “.com.” Trademark law bars registration of generic terms, but it permits the registration of merely descriptive terms if they have acquired enough secondary meaning that the public understands them as trademarks rather than as terms that describe goods and services. The U.S. Patent and Trademark Office refused to register BOOKING.COM as a service mark for hotel reservation services. The U.S. Court of Appeals for the 4th Circuit held that the mark was entitled to registration, and the Supreme Court agreed to review that decision. The legal and policy issues raised by the case are straightforward, and both parties are represented by experienced lawyers, so the case presented a good vehicle for the first remote argument in this unusual May session. The court adopted a new, more formal procedure under which each justice, in order of seniority, could ask a single round of questions of each lawyer.
Erica Ross, representing the Patent and Trademark Office, argued first. Ross relied heavily on an 1888 Supreme Court decision, Goodyear’s India Rubber Glove v. Goodyear Rubber Co., which held that the combination of a generic term with a corporate designation like “Company” did not create a protectable trademark. She emphasized that the principle that generic terms cannot be protected as trademarks is longstanding and fundamental. For that reason, courts have long held that evidence that seems to show that a generic term has acquired secondary meaning will not allow the term to be protected as a trademark. Further, she explained, 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, even if the consumers are not familiar with that business. That would allow online businesses to monopolize generic terms even though they would not be able to do so for an equivalent brick and mortar business.
Attorney Lisa Blatt argued on behalf of Booking.com. Blatt insisted that when Congress passed the Lanham Act, the primary federal trademark law, it repudiated the 1888 Goodyear case, in favor of a rule that asks what consumers believe that a term signifies. The statute tells trademark examiners and the courts to determine whether a term is generic by examining the primary significance of that term to consumers. This test allows consumers to decide which terms merit trademark protection. Blatt insisted that the anticompetitive harms the government predicted would not materialize. Her client has no interest in suing a company that uses a similar domain name, she argued, because it would be unable to show a likelihood that consumers would be confused. A registered mark would give her client a weapon against counterfeiting, fraud and cyberpiracy.
Chief Justice John Roberts asked the initial questions of both advocates and closely managed the time spent on the other justices’ questions. More than once, the chief justice truncated both lawyers’ responses mid-answer, and the next justice began by asking the lawyer to continue to answer the last justice’s question. That gave the overall argument a linear feel. Roberts’ questions to both parties focused on whether the language of the statute should be read to supersede or to supplement the authority of the Goodyear decision.
Justice Clarence Thomas, who has seldom asked questions at oral argument, came next. To the surprise of many listeners, he had questions for both lawyers. Thomas asked Ross to explain why, if businesses could register trademarks that incorporate generic terms into 1-800 telephone numbers, the same rule shouldn’t apply to internet domain names. Ross explained that the PTO follows the precedent of the U.S. Court of Appeals for the Federal Circuit, even if it disagrees with the rationale, and the Federal Circuit has ruled that 1-800 numbers incorporating a generic term could become registered marks. The anticompetitive concerns raised by allowing generic internet domain names to be registered, Ross argued, are more serious than those raised by 1-800 numbers, because a registered mark might allow Booking.com to block competitors from using the generic term in their domain names. Thomas queried Blatt’s reliance on the primary significance test, asking whether her client needs the court to adopt that test in order to prevail. Blatt replied that, even without the primary significance test, multiple sections of the trademark statute “overrule, repudiate, abrogate and completely eradicate any notion that you could have a per se rule that would ignore what consumers think.”
Justices Ruth Bader Ginsburg and Stephen Breyer followed up on Thomas’ 1-800 number question: If the Federal Circuit was wrong about 1-800 numbers, Ginsburg asked, how should the Supreme Court frame the rule? Breyer asked about registered trademarks that incorporate street addresses. If phone numbers and street addresses can be trademarks, why not .com domain names? Ross explained that street addresses typically convey no information about the nature of the business at that address. In this case, the business that adopts a generic term for its service mark gets an immediate advantage over its competitors.
Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch and Brett Kavanaugh all indicated that they were reluctant to adopt either side’s bright-line rule, and invited the advocates to propose a middle ground. Neither seemed inclined to offer one. Sotomayor asked both lawyers what factors the PTO should examine in assessing whether a mark is generic or descriptive. Kagan and Gorsuch asked Ross what the court should say about when generic.com marks are registrable if it were unwilling to adopt a categorical rule completely barring their registration. Ross responded that the Goodyear case had appropriately balanced the competing policy concerns. Kagan asked Blatt whether the primary significance test would yield biased results for generic.com marks because consumers understand that URLs are unique. Kavanaugh asked Blatt whether her argument would allow every .com business to register its domain name as a trademark or service mark. Blatt explained that the courts and the PTO had successfully applied the primary significance test to domain name marks for the past 20 years.
A number of questions focused on the survey evidence that Booking.com had presented to the trial court to show that its name was not generic. This sort of survey is common in trademark litigation. 400 survey respondents were presented with seven terms – three brand names, three generic words or phrases and BOOKING.COM – and asked to identify whether the terms were brand names or common names. More than 96 percent of respondents identified PEPSI, ETRADE.COM and SHUTTERFLY as brand names. 74.8 percent identified BOOKING.COM as a brand name. Fewer than 1 percent identified SPORTING GOODS as a brand name, and no respondent identified SUPERMARKET as a brand name. Finally, 33 percent of respondents identified the third generic term, WASHINGMACHINE.COM, as a brand name. Blatt argued that the survey results showed that a substantial majority of respondents recognized that WASHINGMACHINE.COM was a generic term and BOOKING.COM was a brand name. Breyer suggested that the fact that 33 percent thought that WASHINGMACHINE.COM was a brand demonstrated that consumers’ knowledge of the internet persuaded them that any .com domain name belonged to a single business, whether that business existed or not. Gorsuch observed that if one were to disregard the 33 percent who believed that WASHINGMACHINE.COM was a brand name, that would leave only about 41 percent who identified BOOKING.COM as a brand name – well short of a majority.
Ross referred back to the survey in her rebuttal. She argued that the addition of “.com,” rather than any actual secondary meaning acquired by the company, was what persuaded respondents that a term was a brand name. Moreover, she argued, if Booking.com does not intend to assert its trademark rights against competitors like ebooking.com and hotelbooking.com, it is difficult to figure out why the company is insisting on a registered service mark. The trademark statute and the law of unfair competition give businesses without registered marks the same weapons against passing-off, fraud and cyberpiracy as are available for businesses with registered marks, she explained.
Ross’ bottom line was that the 1888 Goodyear decision expressed the right balance between competing policies and should govern the result in this case. Blatt insisted that Congress had repudiated Goodyear, that the controlling test should be one that relies on consumer perception, and that courts and the PTO have routinely applied that test to domain name marks. The justices’ questions suggested that a majority of them would like to find a middle ground that draws a coherent line between generic and merely descriptive terms and makes good policy sense.