Looking Back at the Highest Impact Trademark Cases of 2020

This year saw its fair share of high profile trademark cases: the Second Circuit vacated Tiffany & Co.’s $25 million summary judgment win against Costco Wholesale Corp. in a dispute over Costco’s use of the word “Tiffany” to identify a specific type of six-prong diamond ring setting in Tiffany and Co. v. Costco Wholesale Corp., 971 F.3d 74 (2d Cir. 2020);* the District Court for the Southern District of New York held that the First Amendment protects the use of Humvees in the acclaimed video game Call of Duty from claims of trademark infringement and dilution, and unfair competition in AM General LLC v. Activision Blizzard, Inc., 450 F. Supp. 3d 467 (S.D.N.Y. 2020).; and the District Court for the Western District of Texas refused to grant a “Brizzy” hard seltzer brand a preliminary injunction against Molson Coors over a competing “Vizzy” product because both names were based on the common descriptive term fizzy in Future Proof Brands, LLC v. Molson Coors Beverage, 2020 WL 3578327 (W.D. Tex. Mar. 24, 2020), aff’d, 2020 WL 7064607 (5th Cir. Dec. 3, 2020).

But among all of the cases, a select few stand out as ones that have shaped trademark law and are already having an impact that may last for years to come.

‘Generic.com’ Marks Can Be Registered

In United States Patent and Trademark Office v. Booking.com B.V., 140 S. Ct. 2298 (2020),* the Supreme Court addressed the novel question of whether the addition by an online business of a generic top-level domain (“.com”) to an otherwise generic term can create a protectable trademark. The case also was notable for being the first in U.S. Supreme Court history to be argued telephonically (due to the COVID-19 pandemic) and for being the last opinion written by Justice Ginsburg.

In an 8-1 ruling, the Court held that Booking.com, N.V. (“Booking.com”)—one of the world’s leading digital travel companies—could register as a trademark its eponymous domain name BOOKING.COM. The Court rejected the U.S. Patent and Trademark Office’s (USPTO) proposed per se rule that a generic term, when combined with the .com top level domain, must automatically be deemed generic and is therefore ineligible for trademark protection. Rather, the Court held, whether a term is generic or is a protectible trademark must be determined by reference to consumers’ perception. Because survey and other evidence showed that consumers perceive BOOKING.COM as a brand name, not a generic term, the Court concluded that Booking.com was entitled to its registration.

The Court explained that whether BOOKING.com is generic “turns on whether that term, taken as a whole, signifies to consumers the class of online hotel-reservation services.” Because consumers do not perceive the term in that manner—as the lower court found based on the evidence presented—it is not a generic term, and that resolves the case. The Court explained that the USPTO’s proposed per se rule found no support in trademark law or policy, and noted that even the USPTO’s past practice did not embrace such a rule, pointing to examples of registered trademarks such as ART.COM for online retail stores offering art, and DATING.COM for dating services. The Court recognized that adoption of the USPTO’s proposed rule would have “open[ed] the door to cancellation of scores of currently registered marks.”

The Court expressly rejected the USPTO’s reliance on a 132-year-old case involving the trademark Goodyear Rubber Co., in which the Supreme Court held that adding “Company” to a generic term (i.e., “Generic Company”) is generic as a matter of law.

Since the decision came down, the USPTO released an Examination Guide on “generic.com” domain names that provides guidance on how to apply the Court’s decision; it also provides guidance to trademark applicants on the standards they can expect the USPTO to apply in considering whether their domain names are registrable trademarks. We have criticized the Guide as paying lip service to the Supreme Court’s ruling, and slipping back towards the USPTO’s discredited per se rule by emphasizing the importance of factors other than consumer perception. Since Booking.com was decided, applications for hundreds of generic.com trademarks have been filed with the USPTO. Depending on how the USPTO treats those applications, there may be even more litigation. For example, on December 10, the USPTO refused registration of wine.com for retail services in the field of alcoholic beverages on the ground that the term is—you guessed it—generic.

Innocent Infringers Can Have Their Profits Disgorged

The Supreme Court resolved a longstanding circuit split in Romag Fasteners, Inc. v. Fossil Group, Inc., 140 S. Ct. 1492 (2020), as to whether willfulness is a prerequisite to an award of profits under the Lanham Act.  The First, Second, Eighth, Ninth, Tenth, and District of Columbia Circuits previously held that a finding of willful infringement was a prerequisite to an award of profits, while the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits rejected that requirement.

The Court unanimously held that a showing of willful infringement is not required before a court may order a trademark infringer’s profits to be disgorged. Section 35 (15 U.S.C. § 1117 of the Lanham Act, which sets for the remedies for trademark infringement, provides that, subject to the principles of equity,” a successful plaintiff may recover the defendant’s profits, among other remedies. Although the Lanham Act requires willfulness as a prerequisite for any award of profits or damages for a trademark dilution plaintiff, the statute sets out no such explicit mens rea requirement for a trademark infringement plaintiff. In the absence of clear statutory language, those circuit courts that held that willfulness was a prerequisite for an award of profits generally relied on the assertion that equity courts historically required a showing of willfulness before granting profits in trademark disputes.

Justice Gorsuch, writing for the Romag Court, observed that there is no textual hook in the Lanham Act for a willfulness requirement to recover profits as a remedy for trademark infringement. Justice Gorsuch exhaustively documented how the Lanham Act repeatedly talks about mens rea, intent, and willfulness—including in the remedies section, with respect to dilution claims—yet Congress included no such intent language in the section concerning disgorgement of profits for trademark infringement. The Court rejected the argument that the statute’s reference to “principles of equity” impliedly included a willfulness requirement because such a reading would require the Court “to assume that Congress intended to incorporate a willfulness requirement here obliquely while it prescribed mens rea conditions expressly elsewhere throughout the Lanham Act.”

The Court did emphasize in its opinion that willfulness, or a defendant’s intent more generally, will be a “highly important consideration in determining whether an award of profits is appropriate.”  While it remains to be seen whether lower courts at large will give a defendant’s intent a central role in making the equitable determination of when an award of profits is appropriate, at least two district courts have addressed the issue since Romag was decided.

In PlayNation Play Sys., Inc. v. Velex Corp., 2020 WL 6895302 (N.D. Ga. July 9, 2020), the court ordered disgorgement under a theory of unjust enrichment, finding that the plaintiff’s trademark was strong and there was a likelihood of confusion by the defendant’s use of the plaintiff’s mark, thus resulting in the defendant being unjustly enriched. Although the court did not consider the defendant’s intent under this rationale for disgorgement, it held that disgorgement also was appropriate to deter the defendant from engaging in similar conduct in the future. Under this deterrence rationale, the court considered the defendant’s intent, noting that the defendant “sought to obfuscate the facts and explain away its conduct.”

In Vitamins Online, Inc. v. HeartWise, Inc., 2020 WL 6581050 (D. Utah Nov. 10, 2020), the court considered a number of factors, including the defendant’s intent, in ordering disgorgement in a false advertising claim under the Lanham Act. The court found that disgorgement was appropriate, in part, because the defendant “willfully made false representations” with respect to the products at issue “and artificially altered [online] reviews in order to make [its product] more profitable.”

Allegedly Parodic Commercial Goods Are Protected Under the First Amendment (at Least for Now)

In April, the Ninth Circuit held that a squeaking dog toy resembling the iconic Jack Daniel’s whiskey bottle is an expressive work entitled to First Amendment protection. VIP Prods. LLC v. Jack Daniel’s Prop., Inc., 953 F.3d 1170 (9th Cir. 2020). The decision is notable for expanding the scope of First Amendment protection far beyond traditionally expressive works, and exposing a wide variety of brand owners to infringements based on alleged parody.

The “Bad Spaniels Silly Squeaker” at issue replaces “Jack Daniel’s” with “Bad Spaniels.” It also replaces “Old No. 7 Tennessee Sour Mash Whiskey” with “Old No. 2 on your Tennessee Carpet,” and it replaces “40% ALC BY VOL (80 PROOF)” with “43% POO BY VOL” and “100% SMELLY.”

The district court held that the toy was not an expressive work, and therefore not entitled to First Amendment protection. The court held there was no need to balance free speech interests against trademark interests. Rather, whether the toy was infringing or diluting should be decided by applying traditional trademark law principles.

The Ninth Circuit saw things differently. It said on appeal that the dog toy conveyed a “humorous message”; was therefore an expressive work; and should be judged under the test first articulated in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Under that test, in order to prevail on a claim of trademark infringement against an artistic work, a plaintiff must show that the defendant’s use of the mark either (1) is not artistically relevant to the underlying work or (2) explicitly misleads consumers as to the source or content of the work. The Ninth Circuit also reversed the district court’s finding of dilution by tarnishment—holding that because the toy was an expressive work, it fell under the “noncommercial use” exception of the Trademark Dilution Revision Act (TDRA).

After the Ninth Circuit denied Jack Daniel’s motion for rehearing or rehearing en banc, Jack Daniel’s filed a petition for certiorari in which it argued that the Ninth Circuit’s decision was “egregiously misguided.” The Lanham Act’s likelihood-of-confusion test and the parody defense under the TDRA already take free speech interests into account—enough, certainly, to deal with what the Jack Daniel’s petition called “poop humor.” Jack Daniel’s thus argued for the traditional artistic-works limitation on Rogers, and for a comparably narrow reading of the TDRA’s “noncommercial use” exclusion.

A number of amici weighed in to urge the Court to grant Jack Daniel’s petition. The International Trademark Association,* for example, argued that the Ninth Circuit’s decision “creates a sharp circuit split on how to balance competing claims of trademark protection and free speech in the context of claimed parodies embodied in commercial products as contrasted with artistic works.”  And several alcoholic beverage industry associations argued that it was important for the Court to grant the petition to ensure that industry participants do not lose control over their trademarks and so that the self-regulatory efforts of the alcoholic beverage industry to use trademarks to promote responsible drinking are not undermined.

On December 16, VIP Products filed its response to the petition, in which it argued that Jack Daniel’s petition should be denied because there are “no conflicts, let alone cert-worthy conflicts,” for the Court to resolve. In particular, it contended that the Ninth Circuit correctly held that Rogers applies to the facts at issue and remanded the case to the district court for application of that standard. Similarly, VIP argued, the Ninth Circuit correctly held that the parody at issue was noncommercial speech and therefore excepted from liability under the noncommercial use exception of the TRDA. A group of trademark law professors also filed an amicus brief in opposition to the petition, in which they argued that this case is the “wrong vehicle” to address the Rogers framework and whether it needs further development to make it fully compatible with commercial speech because “VIP’s speech is inseparable from the medium in which it conveys that speech.”

Sugar Coated Trade Dress Cannot Be Protected

In a case that has significant implications for trade dress protection, the Third Circuit held that the Lanham Act does not protect product features that are “useful.” Ezaki Glico v. Lotte Int’l Am. Corp., 977 F.3d 261 (3d Cir. 2020). The case involved Pocky snacks, which are long, thin biscuit stick that are partially covered in chocolate. In 1989, Ezaki Glico, a Japanese confectionery company, successfully registered the design of its chocolate covered biscuit sticks with the United States Patent and Trademark Office as a trademark. As a registered trade dress, the Pocky stick joined such other registered trademarks as the shape of Goldfish crackers, the shape of Hershey and Toblerone candy bars, the shape of Coca-Cola bottles, the dripping wax seal on bottles of Maker’s Mark bourbon, and the overall configuration of Ferrari and Volkswagen cars.

When a competitor began to sell an identically shaped chocolate covered biscuit stick, Ezaki Glico sued for trademark infringement. But, the Third Circuit rejected the claim and invalidated Ezaki Glico’s trademark registration because it found the design to be functional and therefore unprotectible as a trademark. In considering whether the design of the Pocky stick was functional, the Third Circuit applied only the dictionary meaning of functional, and held that a design is functional, and hence not protectible as a trademark, if it is merely “useful” in some way. Because the partial chocolate covering on the Pocky stick made it useful to hold and eat the snack, the court found the design of Pocky sticks functional.

On November 23, Ezaki Glico filed a petition for rehearing or rehearing en banc in which it argued that the panel’s opinion conflicts with the Supreme Court’s test for functionality. The Supreme Court has held that a product feature is functional if “it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 850 n.10 (1982). Thirteen years later, the Court adopted a test for aesthetic functionality, holding that a product’s features are functional if “exclusive use of the feature would put competitors at a significant non-reputation related disadvantage.” Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 165 (1995). Ezaki Glico argued that the Third Circuit improperly rejected the Inwood test as too narrow and that the panel cited no authority for ignoring the Inwood formulation “that has been repeatedly been recited by the Supreme Court as the governing test when, as in this case, neither improved cost and quality nor aesthetic functionality are at issue.”  The International Trademark Association,* Mondelez Global, and the National Confectioners Association filed amicus briefs in support of Ezaki Glico.

Color Marks May Be Inherently Distinctive

Calling into question decades of precedent holding that color trademarks are protectable only if they have acquired distinctiveness, the Federal Circuit held that at least one specific class of color marks—namely, multi-color marks used on product packaging—may be inherently distinctive and therefore registrable without proof of acquired distinctiveness. In Re Forney Indus., Inc., 955 F.3d 940 (Fed. Cir. 2020). The Trademark Trial and Appeal Board (TTAB) had previously affirmed the USPTO examiner’s decision that Forney’s yellow-to-red rectangular mark used on product packaging was not registrable because there was no evidence of acquired distinctiveness; although certain product packaging can be inherently distinctive, color marks—whether applied to product packaging or to product design—cannot be as a matter of law. In re Forney Indus., Inc., 2018 WL 4348337, at *5 (T.T.A.B. Sept. 10, 2019). The TTAB further held that a color mark cannot be inherently distinctive unless it is used in association with a peripheral shape or border. Id. at *6. Forney appealed to the Federal Circuit, which reversed, reasoning that the United States Supreme Court has never held that a color as applied to a product packaging must acquire distinctiveness to be registrable. In the absence of Supreme Court precedent, the court found as a matter of first impression that, although color is usually ornamentation, “a distinct color-based product packaging mark” could serve as a source identifier and could be inherently distinctive.

In practice, applicants today may seek to register multi-color product packaging marks at the USPTO by arguing that they are inherently distinctive. Notably, the USPTO examiners (and the courts) never before had to confront the question of what characteristics would make a color mark inherently distinctive, and the Forney opinion offered only the most general guidance, pointing to the Federal Circuit’s holdings about inherent distinctiveness in the context of word and image marks. Since the Forney decision, the ruling has begun popping up in briefs, but has yet to be addressed directly by any other court or the USPTO or TTAB.

* Debevoise & Plimpton represented Costco Wholesale Corp. in its appeal to the Second Circuit, served as co-counsel to Booking.com B.V. before the United States Supreme Court in Booking.com B.V. case, and represented the International Trademark Association in its amicus briefs filed in The Ninth Circuit and United States Supreme Court in the VIP Products case and The Third Circuit in the Kaisha case.

Image Source: Deposit Photos
Author: donscarpo
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