Trademark law is entering the new decade hot. From big Supreme Court cases over damages and generics to a long-running battle between Tiffany and Costco, here are the big trademark cases you need to watch in 2020.
Profit Sharing: Romag v. Fossil
For the past 15 years, the high court has mostly avoided substantively important issues of trademark law.
There have been procedural rulings. There have been wonky rulings. There have been rulings we thought would be important. There have rulings that were important, but hit more on trademark-adjacent subjects.
With Romag v. Fossil, trademark experts are hoping those days are over.
“We don’t always have a lot of cases out there that will resolve big questions,” said Mark S. Puzella, an attorney at Orrick Herrington & Sutcliffe LLP. “But Romag seems to be the case that really will answer a big question.”
Namely: When can courts can order trademark infringers to hand over their profits to a brand owner?
That’s a huge question in trademark law, because such a so-called disgorgement of profits is often the only monetary remedy available. The Lanham Act lacks the kind of statutory damages available under the Copyright Act, and actual damages are difficult to prove in trademark cases, where harm is often abstract and intangible.
“Disgorgement is the big hammer in trademark cases, because it’s often difficult to identify actual damages,” Puzella said. “Unless your sales actually fall off, you’ve probably been harmed by the infringement, but you can’t demonstrate it. There’s a proof problem.”
But over the years, circuit courts have split on when to use that hammer. Some have ruled that profits can only be awarded when an infringer has acted willfully; others have weighed such “willfulness” as part of a broader, more holistic analysis of how the infringer behaved.
In the case before the high court, a company called Romag Fasteners successfully sued Fossil Inc. for infringing its trademarks, but later saw a $6.8 million award of Fossil’s profits revoked because Romag hadn’t proved the company acted willfully.
For some experts, that kind of bright-line rule is difficult to square with the case-by-case nature of trademark law.
“Trademark cases are so fact specific, and each one is so unique,” said Claudia Ray, an attorney at Kirkland & Ellis LLP. “To say here’s a blanket rule that you must meet to get an award of profits is a thing I think a lot of people struggle with.”
Which approach the court eventually chooses could impact nearly every trademark case — or, perhaps more accurately, whether cases are filed at all.
“As a very practical matter, it could impact that calculus in deciding whether to bring a case,” said Ray. “Is this a situation where I can afford to bring this case? It raises those kinds of questions about how companies enforce their marks, so it really has a potential for broad impact.”
The case is Romag Fasteners Inc. v. Fossil Inc. et al., case number 18-1233, in the U.S. Supreme Court.
Web Cites: USPTO v. Booking.com
Once generic, always generic. Right?
Maybe not. In USPTO v. Booking.com, the justices are set to decide whether an otherwise generic term — “booking” in reference to hotels and flights — can be transformed in a trademark by tacking on ".com" to the end.
For both federal courts and longtime trademark attorneys, it’s something that didn’t seem like an open question until recently.
“The issue here is whether you take a generic word, combine it with a generic top level domain, and create something that is protectable,” said Deborah A. Wilcox, the head of the trademark practice at BakerHostetler.
“There’s precedent that goes back hundreds of years that you can’t just call yourself a generic word and put 'company' after it and say you’re the only one in the United States who can use that generic word,” Wilcox said.
But of course, it’s not as simple as all that.
Though the Trademark Trial and Appeal Board initially refused to register Booking.com’s name based on that longstanding caselaw, a federal judge overturned the ruling in 2017. Acknowledging that she was breaking new legal ground, the judge said the addition of .com could turn a word into something consumers would recognize as a source-designator.
In February, the Fourth Circuit affirmed that ruling, rejecting the USPTO's pleas for a bright-line rule that such trademarks are always generic.
With the justices set to affirm or overturn that ruling, trademark experts say it makes a certain amount of sense that the law would evolve with the internet age.
“There’s only one company who can have that exact address,” Wilcox said. “That’s what this case is asking: Has the internet created a new right? Because nobody else can have it, does that mean somebody can own this exclusively?”
The case is U.S. Patent and Trademark Office et al. v. Booking.com BV, case number 19-46, in the U.S. Supreme Court.
Counterfeiting Ring: Tiffany v. Costco
After more than six years of litigation, the Second Circuit is finally set to rule next year on a closely watched case filed by Tiffany & Co. over Costco’s unauthorized use of “Tiffany” on signage for diamond engagement rings.
The case, which resulted in more than $25 million in damages against the big-box retailer, gives the influential appeals court a chance to weigh in on two interesting questions of trademark law.
The first is Costco’s primary defense: That it was merely using the name “Tiffany” as shorthand for “Tiffany setting,” a term used by some jewelers to refer to the multi-pronged style of engagement ring created and popularized by Tiffany’s founder.
A trial judge rejected that argument, but Costco has made it the central thrust of its appeal to the Second Circuit, arguing that “Tiffany is the only word in the English language that describes this particular type of setting.”
That argument — that the retailer made descriptive fair use of the term in a way that wouldn’t confuse consumers — is one trademark lawyers will be watching.
“I think the Tiffany case raises interesting fair use issues over this claim by Costco that it was only using the name to describe the nature of the setting,” said Puzella. “Markholders have an obligation to police their marks, but the Tiffanys of the world can sometimes take that to an extreme.”
The case also raises big questions about federal counterfeiting law. Though more typically associated with Canal Street fakes, the judge overseeing Tiffany’s lawsuit ruled that Costco’s use of the term amounted to counterfeiting.
Costco is urging the Second Circuit to overturn that ruling, saying courts should only label something a counterfeit if it’s a “stitch-for-stitch” copycat. Tiffany, meanwhile, argues that its full name was used, alone, to sell seemingly identical goods.
Counterfeit liability carries far more severe penalties than traditional trademark infringement, so figuring out exactly what it covers is an important question.
“It’s an interesting case, because Costco is pushing back on this idea of what counterfeiting is” said Ray. “A lot of people think of counterfeiting as fake handbags, and Costco is saying: We’re not those guys.”
“Tiffany looks at it and says: You guys are those bad guys, and we have the factual evidence to prove it,” Ray said. “It’ll be really interesting to have that clarified.”
The case is Tiffany & Co. v. Costco Wholesale Corp., case number 17-2798, at the U.S. Court of Appeals for the Second Circuit.