Free trade and positive competition were ensured when the Sherman Antitrust Act was enacted in 1890. In essence, the Act relies on the fact that financial markets will work efficiently if there is a free flow of ideas amongst competitors. Still, some contracts or corporations have lately employed business techniques that have bordered on unfair practice, hence infringing the above Act. These firms, by the per se rule, have been held illegal.
When evidence is sufficient about the restraint of trade and the same is found violating the antitrust laws, the per se rule applies. Since the law demands that the less distinctive goods or services are not entitled to trademark protection, this paper discusses the per se rule as applied by the Supreme Court of the United States in relation to whether or not the rule applies to a class of non-unique goods or services.
While the protection of trademark has been extended to goods that are capable of being differentiated from others, still there remains the issue whether a generic phrase can be given a trademark and the conditions on which it may be granted. This essay also discusses the role played by advertising today and how in effect it can create unfair competition over time. This essay concludes by analyzing how consumers help businesses or companies get trademark protection and how it affects Internet businesses.
What is the rule of “per se”?
The per se rule is generally considered to hold that an act that suppresses commerce, or an agreement that appears to violate antitrust principles and to involve anti-competitive conduct is, per se, illegal or unreasonable. Price-fixing, manipulation of bids, boycotts by groups of persons, deliberate non-trade, and maintenance of resale prices are some anti-competitive practices that have been held unlawful. For instance, in applying the per se rule, it would be illegal if a number of wholesalers in a particular market agreed in confidence and withheld tomatoes for a while in order to create demand and, thereby, drive up the price of the tomatoes by demand. This would be considered to violate both procompetitive behavior and antitrust laws. Read More
Accordingly, under the per se rule, the burden lies on the putative person against whom the accusations are made to show that the allegations are not true. But in such cases, all that the plaintiff has to do is establish that the particular anti-competitive conduct occurred independently of the antitrust injury. It shall not be necessary for the plaintiff to prove that the conducts in question were anticompetitive, or that they caused injury to the relevant product and regional markets.
The per se rule, therefore, holds that there will be no further research where a specific conduct meets the accepted aspects of the rule’s requirements and all defenses designed to show the reasonableness of the act in question are barred. In this regard, the per se rule is applied where sufficient unreasonableness of a particular case is evident because the per se rule would save cost and time as the individual case would not be worth the irrationality.
Development of the “per se” rule
The Sherman Antitrust Act of 1890 This law prohibited any form of commercial activity that could have been competitive or monopolistic. It was also the one passed in response to businesses abusing their monopoly market power, which hurt farmers and shippers and other retailers.
However, courts later realized that while some restrictions are against the law as trade restraints may scope down to any type of simplest cooperation between two parties. Family Mission Statements In addition, the court also concluded that to evaluate whether a restraint unreasonably violated federal antitrust laws or not it will apply one of three different methodologies. Finally, include these 3 methods
1.The rule by itself
2.the rationale
3.The “fast look” guideline
The rule of reason test is used to determine whether contracts and agreements that unlawfully restrict trade violate antitrust statutes subject to the per se category. To sum it up another way, antitrust cases are judged based on a rule of reason where judges consider many things like factual apprehensions about a company & Type/History/Effects that some type (if any) isn’t already developed. It leaves it to the court to then determine whether these considerations constitute a limitation on commerce, having in all cases regard thereto.
The quick look rule is applied when the anti- competitive implications of the case are so substantial that a full investigation into any further depths is not worth the task. Over and against the per se rule calling for analysis of anti-competitive effects wherever it is found, here all that need be established by a plaintiff looking to sue under this statute is harm within the market in which he participates. This rule is in place to ensure cases are resolved more quickly.
Context of the case
Travel agency Booking. com which provides booking services online on behalf of travel-related goods and service suppliers as well offers flight, hotel & rental car reservations. On Tuesday morning, TMZ sold an ad on its front door to TheDirty. com brand — also the site’s domain name(s) of course. The company filed four trademark applications for travel services with the US Patent and Trademark Office (USPTO).
Four categories of trademarks are distinguished by the Lanham Act of 1946: generic, descriptive, suggestive, and arbitrary. Generic and descriptive marks are never distinctive and do not qualify for trademark protection; only arbitrary and suggestive markings are.
Simply put, a mark that is more distinctive will have higher odds of being able to register. Although each of the four programs had unique components, all were under one domain name: Booking. com.” However, the USPTO had denied registration of Booking. marks, saying Booking.com had not proven its mark became acquired distinctiveness and the term “booking” was simply a generic term for all marks in that class–those employed to detail goods or services belonging to others. It goes without saying that a product must be unique to become someone else’s trademark.
Booking. S.com sought judicial intervention by filing an appeal with the Trademark Trial and Appeal Board (TTAB). The USPTO’s decision was upheld by the TTAB which concluded that because “Booking. Since “com” stands for commerce (e-commerce), or commercial, people will naturally equate the name of your business with a location to book low-cost flights and travel-packages.
In the end, the Board determined that while Booking.com is a descriptive trademark rather than a generic name, it is nonetheless unregistrable due to its absence of a secondary meaning, indicating that the product was not significant enough in the eyes of the public.
STANDING: In the United States District Court for the Eastern District of Virginia, Booking. The ruling and the TTAB decision were not without their critics either: Just a week after the USPTO published its statement, confronting spam website Amigos.com filed an opposition to it. information sourced from Booking. com showed that Booking. A survey by Skift started with 75% of respondents as Booking. The court found that by considering the fact that most consumers know Lexus.com as a separate brand, TTAB erred. The court also said the term “Booking”. The Board found that “hotels.com” is a descriptive mark with secondary meaning for services to provide hotel reservations. The board determined “Booking. be” is non-generic as it meets the conditions required for registration.
The Fourth Circuit Court of Appeals in the United States upheld a decision made by a lower court regarding an appeal from the USPTO. The Appeals Court rejected the PTO’s argument that a product is generic simply because it has a .com suffix combined with a name like Booking.com. Furthermore the court stated that a trademark can only be granted to a product if its design, phrase, symbol or any variation of it distinguishes it from competing goods and services. If customers can recognize a product’s uniqueness it will not be deemed generic anymore. In this case almost 75% of those surveyed identified Booking.com as a service due to its domain name. In November 2019 the USPTO filed a petition for review.
Problems at hand
The following matters were brought before the US Supreme Court:
1.if a generic.com name is immune to trademark protection under the per se rule.
2.If a generic word is combined with a generic company name, does this result in trademark recognition?
The observation of the court
The US Supreme Court made its ruling on June 30, 2020. The Court upheld the decision of the Fourth Circuit with a vote of 8 to 1. The majority of judges concluded that any term that includes generic.com is deemed generic for a specific category of goods and services, which means those goods cannot be trademarked. However in such cases a product or service can still receive trademark protection if it is associated with a secondary meaning. The Court noted based on the evidence presented to the district court that in this instance people have come to view Booking.com as a unique service. As a result Booking.com is eligible for trademark protection.
The USPTO contested the Supreme Court’s decision, asserting that the per se rule which dictates that combining a term with a generic internet domain suffix such as .com renders the combination generic would still prevent Booking.com from being registered even with its distinct offering and evidence of consumer perception. The USPTO argues that the proposed objective test is based on a common law principle established in the case of Goodyears India Rubber Glove v. Goodyear Rubber Co. [128 U.S. 598 (1888)] which holds that adding a brand to a generic phrase does not grant trademark rights.
The judges argued that the USPTOs suggestion lacks any foundation in trademark law and is not backed by the USPTOs previous actions. In previous instances they had overlooked the aforementioned criteria and granted trademark registrations to companies providing dating services such as DATING.COM and art print services like ART.COM.
The judges went on to clarify that if the USPTO were to stick to its present rules and policies all previous trademark registrations it had granted would also have to be canceled. The court also stated that the Supreme Court’s ruling in 1988 regarding Goodyears India Rubber Glove Mfg. Co. v. Goodyear Rubber Co. established that the company couldn’t claim ownership since the methods used for manufacturing products back then were referred to as Goodyear’s inventions even though no such method was officially recognized at that time.
The term “company” does not have any other meaning that can be protected legally. Instead the court sees it as indicating that the involved parties have come together to establish a partnership or some kind of entity for business purposes. The court also mentioned that granting exclusive rights to Goodyear Rubber Company or Wine Company would infringe upon the right of others to engage in trade with similar products.
The Court found that there’s another problem with the USPTO’s reliance on Goodyear. Regardless of how consumers interpret the USPTO sees Goodyear’s unfitness for trademark protection as a legal issue. Nonetheless as mentioned earlier whether a term is generic or not is based on consumer perception. If customers are unable to differentiate a product from other similar offerings in the market it is deemed generic.
In his dissenting view Justice Breyer contended that because Booking.com is now seen as a term goods and services deemed generic don’t receive trademark protection. He emphasized that a domain suffix such as .com cannot independently identify the source of products and services; it merely serves as a component of a web address indicating that the owner operates a website. Breyer expressed his concern over the courts notion that appending .com to generic terms like booking could lead to trademark recognition arguing that this decision undermined trademark policy.
He went on to say that there had been substantial changes to common law brought about by the Lanham Act of 1946. Most notably, it gave descriptive marks with secondary meanings trademark status. The general consensus seems to be ignoring the enduring mentality that generic phrases are not eligible for trademark protection in this particular case.
Furthermore, the USPTO did pose a pertinent legal and logical question concerning Goodyear’s premise, and their justifications do seem logical. A product’s generic name does not become a trademark just because a corporate identity is added, nor does it give it the power to exclude other items.
Justice Breyer voiced his disagreement with the majority decision that permitted businesses to secure a trademark simply by adding.com to it. With an increasing number of companies using the internet for sales this kind of irrationality can result in unfair competition. Furthermore, granting a trademark with a.com prefix to every single company would lead to a significant downturn in the economy and undermine the core economic principles we aim to uphold.
Examining the verdict
Understanding how customers decide to approve or reject trademark applications is essential because the perceived value of a trademark is the main reason behind the decision. In situations like this one survey data plays a significant role in the choice. Surveys are commonly used to assess whether people associate a word with a particular source. While the backers of a product invest considerable resources and effort in building brand recognition mainly through marketing it can be relatively easy for a term to become familiar to consumers regarding their goods or services.
Besides the worries mentioned earlier the move to grant trademark protection to these brands will have an effect on the online sector. Owners of short and generic domain names can enjoy all the benefits of running a business under a name without being bound by trademark laws. Additionally generic names like Booking.com are memorable and require less effort from owners in terms of customer training as their logos convey the essence of the business. Non Public finance
The courts need to adhere to the Lanham Act strictly when ruling on cases because violating it could grant businesses and product owners complete monopoly over their products and services. Gaining control is as simple as promoting a product and choosing a popular and relevant domain. Instead of benefiting online businesses these actions are more likely to impede their progress.
In summary
The Supreme Court’s decision in the case of USPTO v. Booking.com B.V. shows that if a phrase becomes distinctive in how people view it, adding “.com” at the end can make it seem generic. However the Court did not provide guidelines on how to determine what actions would be considered genuinely unique. The key impact of this ruling is that businesses won’t need to invest time and effort educating their customers. This could potentially result in a monopoly over their product and increased profits for investors.
